by Fresh Start Tax | Mar 25, 2014 | Tax Help
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Report of Foreign Bank and Financial Accounts (FBAR).
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). See the ‘Who Must File an FBAR’ section below for additional criteria.
Current FBAR Guidance FinCEN introduces new forms
On September 30, 2013, FinCEN posted, on their internet site, a notice announcing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used in prior years) and is only available online through the BSA E-Filing System website.
The system allows the filer to enter the calendar year reported, including past years, on the online FinCEN Form 114. It also offers an option to “explain a late filing,” or to select “Other” to enter up to 750-characters within a text box where the filer can provide a further explanation of the late filing or indicate whether the filing is made in conjunction with an IRS compliance program.
On July 29, 2013, FinCEN posted a notice on their internet site that introduced a new form to filers who submit FBARs jointly with spouses or who wish to have a third party preparer file their FBARs on their behalf.
The new FinCEN Form 114a, Record of Authorization to Electronically File FBARs, is not submitted with the filing but, instead, is maintained with the FBAR records by the filer and the account owner, and made available to FinCEN or IRS on request.
The IRS is aware that some taxpayers who are dual citizens of the United States and a foreign country may have failed to timely file United States federal income tax returns or Reports of Foreign Bank and Financial Accounts despite being required to do so.
Some of those taxpayers through the media and other sources are now aware of their filing obligations and seek to come into full compliance with the law.
This fact sheet summarizes information about federal income tax return and FBAR filing requirements, how to file a federal income tax return or FBAR, and potential penalties.Financial Accounts.
Penalty Note
Note that penalties will not be imposed in all cases.
As discussed in more detail below, taxpayers who owe no U.S. tax (e.g., due to the application of the foreign earned income exclusion or foreign tax credits) will owe no failure to file or failure to pay penalties.
In addition, no FBAR penalty applies in the case of a violation that the IRS determines was due to reasonable cause. This is big news!
This fact sheet is provided for information purposes only, and the topics discussed may or may not apply to a particular taxpayer’s situation.
The IRS continues to consider the topics discussed in this fact sheet and will provide additional information as it becomes available.
- 1. U.S. income tax return filing requirement
As a United States citizen, you must file a federal income tax return for any tax year in which your gross income is equal to or greater than the applicable exemption amount and standard deduction.
You are required to report your worldwide income on your federal income tax return.
This means that you should report all income, regardless of which country is the source of the income. Generally, you only need to file returns going back six years.
- 2. Penalties imposed for failure to file income tax returns or to pay tax
If you are required to file a federal income tax return and fail to do so, or you fail to pay the amount of tax shown on your federal income tax return, you may be subject to a penalty under Internal Revenue Code (IRC) section 6651, unless you show that the failure is due to reasonable cause and not due to willful neglect.
The penalty is 5 percent of the amount of tax required to be shown on the return. If the failure continues for more than one month, an additional 5 percent penalty may be imposed for each month or fraction thereof during which the failure continues.
The total failure to file penalty cannot exceed 25 percent.
Note that there is no penalty if no tax is due.
If you fail to pay the amount of tax shown on your federal income tax return, you may be subject to a penalty for failing to pay under IRC section 6651(a)(2), unless you show that the failure is due to reasonable cause and not due to willful neglect.
The tax penalty begins running on the due date of the return (determined without regard to any extension of time for filing the return) and is 1/2 percent of the amount of tax shown on the return.
If the failure continues for more than one month, an additional 1/2 percent penalty may be imposed for each additional month or fraction thereof that the amount remains unpaid. The total failure to pay penalty cannot exceed 25 percent.
Note that there is no penalty if no tax is due.
Under IRC section 6651(c)(1), the failure to file penalty is reduced by the amount of the failure to pay penalty for any month in which both apply.
Whether a failure to file or failure to pay is due to reasonable cause is based on a consideration of the facts and circumstances.
Reasonable cause relief is generally granted by the IRS when you demonstrate that you exercised ordinary business care and prudence in meeting your tax obligations but nevertheless failed to meet them.
In determining whether you exercised ordinary business care and prudence, the IRS will consider all available information, including:
1. The reasons given for not meeting your tax obligations;
2. Your compliance history;
3. The length of time between your failure to meet your tax obligations and your subsequent compliance; and
4. Circumstances beyond your control.
Reasonable Cause
Reasonable cause may be established if you show that you were not aware of specific obligations to file returns or pay taxes, depending on the facts and circumstances.
Among the facts and circumstances that will be considered are:
a. Your education;
b. Whether you have previously been subject to the tax;
c. Whether you have been penalized before;
d. Whether there were recent changes in the tax forms or law that you could not reasonably be expected to know; and
e.The level of complexity of a tax or compliance issue.
You may have reasonable cause for noncompliance due to ignorance of the law if a reasonable and good faith effort was made to comply with the law or you were unaware of the requirement and could not reasonably be expected to know of the requirement.
- 3. Possible additional penalties that may apply in particular cases
In addition to the failure to file and failure to pay penalties, in some situations, you could be subject to other civil penalties, including the accuracy-related penalty, fraud penalty, and certain information reporting penalties.
Help with Tax Issues for Dual Citizens & FBAR Filing – Attorneys, Lawyers, CPAs – Affordable Experts
by Fresh Start Tax | Mar 25, 2014 | Tax Help
If you have a problem with the Internal Revenue Service, have former IRS agents and managers who worked out of Florida’s IRS office settle and resolve your case and offer you your best possible tax defenses. We know the system!
We have over 60 years of direct working IRS experience in the local, district, and regional tax offices of Florida’s Internal Revenue Service.
Do not be bullied by the Internal Revenue Service.
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Call us today for a free initial tax consultation and speak directly to a true expert tax professional.
Tax Audits
If you have received an IRS audit letter or in the middle of a tax audit, contact us today and speak directly to a former IRS agent auditor ,IRS agent audit manager.
Let us review your documentation and let you know your best possible tax defense.
Should you wind up owing tax, we will work out a tax settlement with the IRS collection division. As a general rule we can help minimize your risk of IRS extending the audit to other years.
IRS levy releases – Bank and Wage
We can generally get a levy release within 24 hours after our clients provide us with an IRS financial statement, form 433-F which you can find on our website.
IRS will want the 433-F completely filled out along with copies of bank statements, monthly expenses, and a copy of your last pay stub.
IRS will make a determination on how to close your case off the IRS enforcement computer. IRS can usually do this within one hour after receiving your financial statement and they will fax the levy release to your bank or to your employer.
IRS settlements.
IRS accepts 38% of all offers in compromise filed with the United States government.
The average settlement on a dollars $.16. Before you contemplate the filing of an offer in compromise, make sure you are a suitable candidate for an offer in compromise.
We recommend that all taxpayers/clients walk through to the IRS pre-qualifiers for offer in compromise before spending any money to settle the case. You can find this on our website.
Back tax filings.
We can prepare all back tax returns and send them to IRS in a matter of days.
We pull all your tax transcripts along with your records will forward them to the Internal Revenue Service. If you do not have good tax records we can reconstruct your tax returns based on reconstructive methods that we were trained on at the Internal Revenue Service. Filing back tax returns without records is not a problem for us.
Alert.
Please be aware before IRS will work with you they will want to make sure all your tax returns are current and up-to-date.
Call us today for free initial tax consultation speak directly to a tax auditor.
IRS – Help with Audits, Levy’s, Settlements, Back Tax Filing – Affordable – Apalachicola, Lynn Haven, Callaway, Wright, Crestview
by Fresh Start Tax | Mar 25, 2014 | Tax Help
Health Care Law Considerations for 2014
For most people, the Affordable Care Act has no effect on the 2013 income tax return they are filing in 2014.
However, some people may need to make important decisions by the March 31, 2014 deadline for open enrollment.
Things about the health care law you may need to consider soon.
- Currently Insured – No Change: If you already insured, you do not need to do anything more than continue your insurance.
- Uninsured – Enroll by March 31: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 runs through March 31, 2014. When you get health insurance through the marketplace, you may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium. Learn more at HealthCare.gov.
- Premium Tax Credit To Lower Your Monthly Premium: If you get insurance through the Marketplace, you may be eligible to claim the premium tax credit. You can elect to have advance payments of the tax credit sent directly to your insurer during 2014 so that the monthly premium you pay is lower, or wait to claim the credit when you file your tax return in 2015. If you choose to have advance payments sent to your insurer, you will have to reconcile the payments on your 2014 tax return, which will be filed in 2015. If you’re already receiving advance payments of the credit, you need to do nothing at this time unless you have a change in circumstance like a change in income or family size. Learn More.
- Change in Circumstances: If you’re receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report life changes, such as income, marital status or family size changes, to the Marketplace. Reporting changes will help to make sure you have the right coverage and are getting the proper amount of advance payments of the premium tax credit.
- Individual Shared Responsibility Payment: Starting January 2014, you and your family have been required to have health care coverage or have an exemption from coverage. Most people already have qualifying health care coverage. These individuals will not need to do anything more than maintain that coverage throughout 2014. If you can afford coverage but decide not to buy it and remain uninsured, you may have to make an individual shared responsibility payment when you file your 2014 tax return in 2015.
Health Care Law Considerations for 2014, What you Need to Know
by Fresh Start Tax | Mar 25, 2014 | Tax Help
Changes in Circumstances Can Affect your Premium Tax Credit
If you receive advance payment of the premium tax credit in 2014 it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace.
Most people already have insurance and they won’t have to do anything new. If you are looking for health insurance, you may be able to get it through the Health Insurance Marketplace and you may qualify for the premium tax credit.
You can “get it now” as an advance payment or you can “get it later” when you file your tax return.
Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace.
Having at least some of your credit paid in advance directly to your insurance company will reduce the out-of-pocket cost of the health insurance premiums you’ll pay each month.
If you decide to get the credit in advance, it’s important to report any changes in your income or family size to the Marketplace throughout the year.
Reporting these changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.
The government makes advance payments of the credit based on an estimate of the credit that you will claim on your tax return when you file in 2015.
If you report changes in your income or family size to the Marketplace when they happen in 2014, the advance payments will more closely match the credit amount on your 2014 federal tax return.
Note: This will help you avoid getting a smaller refund than you expected or even owing money that you did not expect to owe.
by Fresh Start Tax | Mar 24, 2014 | Tax Help
Have Former IRS Agents get you immediate tax relief for Tax Levies, IRS Tax Settlements, IRS Audits, Back Taxes Filings and Settlements. 1-866-700-1040
We are a Florida tax firm comprised of IRS agents and managers along with tax attorneys and certified public accountants that have been practicing in Florida since 1982.
Fresh Start Tax LLC is A+ rated by the Better Business Bureau and have over 206 years of professional tax experience.
Fresh Start Tax LLC is one of the most affordable and trustworthy firms in the state of Florida.
You can call us today for free initial tax consultation and speak directly to a true professional.
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Help with the IRS
When we are engaged by our clients all communication and contact goes through our firm. You will never speak with the Internal Revenue Service.
Whether you are dealing with the IRS audit division or the IRS collection division we have true tax experts in both fields.
Levy Releases
If you did not respond to the IRS final notice L-1058 IRS automatically sends out either a bank levy or a wage levy. If the IRS sent out a bank levy, you have 21 days to get the levy released before the bank send your funds to the Internal Revenue Service.
If the IRS sent to a wage levy, a great portion of your next paycheck will go to the Internal Revenue Service.
To get a IRS levy released you will have to complete an IRS financial statement which is on form 433-F. You can find that form on our website.
IRS will expect that form to be fully documented along with current bank statements, pay stubs, and a copy of all monthly expenses.
IRS will expect all tax returns to be current and up-to-date.
IRS tax audit
IRS tax audits can be very tricky.
Our staff is comprised of former IRS audit managers and audit agents.
When you contact us today will review your tax return and set up the best possible tax defense for an IRS tax audit.
If you owe back taxes
Should you owe back taxes to the Internal Revenue Service once again the Internal Revenue Service will want a current financial statement.
When IRS reviews the financial statement they will place you in one of three categories. Wither the Internal Revenue Service will put you into a:
- currently not collectible status, or
- they will ask you to set up a payment plan, or
- let you know you’re a suitable and acceptable candidate for an offer in compromise.
Need to file back income tax returns.
If you need to file back income tax returns we can pull all IRS transcripts and prepare your return with or without tax records. We are tax experts for IRS Reconstruction.
Make sure you filed because the IRS can prepare a substitute for return under 6020 B of the Internal Revenue Code.
IRS will do you no favors in filing, you will pay the most amount of tax allowed by law.
IRS tax settlements
IRS tax settlements are called an offer in compromise.
These can be very tricky. IRS accepts about 35% of all offers are tax settlements filed with them in the average settlement is $.16 on a dollar.
Call us today for free initial tax consultation.
We are a specialty firm that deals in IRS and state tax problems.
We are A+ rated by the Better Business Bureau.
Affordable Help with IRS – Levy Release, Tax Settlements, IRS Audits, Back Taxes – Lake Mary, Oviedo, Maitland, Longwood
