by Fresh Start Tax | Mar 21, 2014 | Tax Help
Children with Investment Income – What You Need to Know
You normally must pay income tax on your investment income.
That is also true for a child who must file a federal tax return.
If a child cannot file his or her own return, their parent or guardian is normally responsible for filing their tax return.
Special tax rules apply to certain children with investment income.
Those rules may affect the tax rate and the way you report the income.
Here are tax tips you should know about your child’s investment income:
- 1. Investment income normally includes interest, dividends and capital gains. It also includes other unearned income, such as from a trust.
- 2. Special rules apply if your child’s total investment income is more than $2,000. Your tax rate may apply to part of that income instead of your child’s tax rate.
- 3. If your child’s total interest and dividend income was less than $10,000 in 2013, you may be able to include the income on your tax return. If you make this choice, the child does not file a return. See Form 8814, Parents’ Election to Report Child’s Interest and Dividends.
- 4. Children whose investment income was $10,000 or more in 2013 must file their own tax return. File Form 8615, Tax for Certain Children Who Have Investment Income, along with the child’s federal tax return.
Starting in 2013, a child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax.
NIIT is a 3.8% tax on the lesser of either net investment income or the excess of the child’s modified adjusted gross income that is over a threshold amount.
Children with Investment Income, What You Need to Know, Former IRS Agents
by Fresh Start Tax | Mar 21, 2014 | Tax Help
Attorneys, Lawyers, CPA’s, Former IRS Agents, Managers, 206 years of professional tax experience, 60 years with IRS, since 1982. 1-866-700-1040 Free consult
Big Brother is watching everyone’s pocket books and they are going to great lengths to find out where in which financial institutions you have your money hidden.
Big brother is not only going after the little man but also any financial institution that is working with individuals and taxpayers trying to hide or deceive governments.
Congress is on a roll, trying to track down hidden offshore accounts, and the latest news is a report that shows which states have the most taxpayers disclosing such accounts (California is No. 1), and where they are located (Switzerland is tops).
Taxpayers in at least 45 states and the District of Columbia reported accounts in 68 countries and territories.
Failing to Report
The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law.
The Service is announcing a new procedure for current non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns to file their delinquent returns.
Important Note: of Change:
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.
Description of proposed new procedure:
While more details will be forthcoming, taxpayers utilizing the new procedure will be required to file delinquent tax returns, with appropriate related information returns, for the past three years and to file delinquent FBARs for the past six years.
All submissions will be reviewed, but, as discussed below, the intensity of review will vary according to the level of compliance risk presented by the submission.
Low Risk Compliance
For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions.
High Risk
Submissions that present higher compliance risk are not eligible for the procedure and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program.
Tax, Penalties, Interest
Tax, interest and penalties, if appropriate, will be imposed in accordance with U.S. federal tax laws based on a review of the submission.
Retroactive relief for failure to timely elect income deferral on certain retirement and savings plans where deferral is permitted by relevant treaty will be available through this process.
The proper deferral elections with respect to such arrangements must be made with the submission.
Compliance risk determination:
The IRS will determine the level of compliance risk presented by the submission based on certain information provided on the returns filed, and based on certain additional information that will be required as part of the submission.
Low risk will be predicated on simple returns with little or no U.S. tax due. Absent high risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk.
In general, the risk level will rise as the income and assets of the taxpayer rise, if there are indications of sophisticated tax planning or avoidance, or if there is material economic activity in the United States.
Risk factors include any additional history of noncompliance with United States tax law and the amount and type of United States source income.
Additional information regarding the specific factors the IRS will use to assess the level of compliance risk, and how information regarding those factors should be presented in the submission, will be released prior to the effective date of the new procedure.
How taxpayers will be able to take advantage of the new procedure:
Taxpayers wishing to use the new procedure will be required to submit:
1. delinquent tax returns, with appropriate related information returns, for the past three years,
2. delinquent FBARs for the past six years, and
3. any additional information regarding compliance risk factors required by future instructions.
Payment of any federal tax and interest due must accompany the submission.
More information about the application process including where submissions should be sent, will be provided prior to the effective date.
Removal of Penalties and Interest
Any taxpayer claiming reasonable cause for failure to file tax returns, information returns, or FBARs will be required to submit a dated statement, signed under penalties of perjury, explaining why there is reasonable cause for previous failures to file.
Any taxpayer seeking relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty will be required to submit:
- a statement requesting an extension of time to make an election to defer income tax and identifying the pertinent treaty position;
- for relevant Canadian plans, a Form 8891 for each tax year and description of the type of plan covered by the submission; and
1. the events that led to the failure to make the election,
2. the events that led to the discovery of the failure, and
3. if the taxpayer relied on a professional advisor, the nature of the advisor’s engagement and responsibilities.
Other considerations: Criminal Risk
Taxpayers who are in a situation where they are concerned about the risk of criminal prosecution should be advised that this new procedure does not provide protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution.
Taxpayers concerned about criminal prosecution because of their particular circumstances should be aware of and consult their legal advisers about the Offshore Voluntary Disclosure Program (OVDP), announced on January 9, 2012, which offers another means by which taxpayers with undisclosed offshore accounts may become compliant.
It should be noted, however, that once a taxpayer makes a submission under the new procedure described in this document, OVDP is no longer available. It should also be noted that taxpayers who are ineligible to participate in OVDP are also ineligible to participate in this procedure.
Anyone interested in using this procedure should be aware that all tax returns must have a valid Taxpayer Identification Number (TIN). For U.S. citizens, a TIN is a Social Security Number (SSN). For individuals that are not eligible for an SSN, an Individual Taxpayer Identification Number (ITIN) is a valid TIN. Tax returns filed without a valid SSN or ITIN will not be processed.
FACTA/FBAR * Defense * Representation * Compliance + Attorneys, Lawyers – Los Angeles, San Fransisco – California
by Fresh Start Tax | Mar 21, 2014 | Tax Help
We are a team of Tax Attorneys, Tax Lawyers,Certified Public Accountants and former IRS agents, managers and tax instructors. 1-866-700-1040
Fresh Start Tax L.L.C . has over 206 years a professional tax experience and over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the Internal Revenue Service.
We have been in private practice since 1982.
What is the BUZZ about SCHEMA
It is the new New Intergovernmental Program that will rock the financial institutions.
The IRS has finalized the format for automatically exchanging FATCA data with IGA jurisdictions.
The Intergovernmental FATCA XML Schema (version 1.1):
- Is a standard format developed in close cooperation with the OECD
- Captures required information for reporting of FATCA data from both Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs)
- Will be used for automatic exchange with all FATCA jurisdictions
- Uses elements from existing reporting schemas used by the OECD and the European Union to reduce burden on reporting entities
- Uses XML to allow for easier modifications down the road in the event of legislative or regulatory changes in reporting rules
- Will facilitate safe and secure electronic data transmission using the International Data Exchange Service
Alert, Please Note:
The .xsd files that comprise the Intergovernmental FATCA XML Schema can be viewed using a web browser such as Internet Explorer or Chrome.
The file is also viewable using a text editor such as Microsoft Notepad, or an XML tool such as XMLSpy or XML Notepad.
International Data Exchange Service:
The IRS is finalizing requirements for a Data Exchange service to allow for Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs) to automatically exchange FATCA data with the United States.
The Service will also allow the United States to make reciprocal exchanges where called for by an IGA that is in force.
The International Data Exchange Service:
1. Is based on business requirements collected by a multilateral working group
2. Serves as a single point of FATCA information delivery for both FIs and HCTAs
3. May be used for automatic exchange with all FATCA jurisdictions
4. Is based on readily-available mature technology
5. Requires both the file being sent (in the Intergovernmental FATCA XML Schema) and the transmission pathway to be encrypted, ensuring the security of tax data
6. Can be accessed either through a Browser-Based or a Scheduled Bulk Data Transfer environment.
OTHER NEWS
The Internal Revenue Service today announced that its offshore voluntary disclosure programs have exceeded the $5 billion mark and released new details regarding the voluntary disclosure program announced in January, including tightening the eligibility requirements.
IRS offshore voluntary disclosure programs have so far resulted in the collection of more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programs.
In addition, another 1,500 disclosures have been made under the new program announced in January.
The voluntary disclosure programs are part of a wider effort by the IRS to stop offshore tax evasion and ensure tax compliance. This includes beefed up enforcement, criminal prosecution and implementation of third-party reporting through the Foreign Account Tax Compliance Act ( FATCA).
The IRS also closed a loophole that’s been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the U.S. Justice Department of the appeal.
The IRS said that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program ( OVDP).
The IRS also put taxpayers on notice that their eligibility for OVDP could be terminated once the U.S. government has taken action in connection with their specific financial institution.
Need help, call us or Skype us today.
by Fresh Start Tax | Mar 21, 2014 | Tax Help
We are a team of FATCA ATTORNEYS, LAWYERS who have a International Tax practice. 1-866-700-1040
We have over 206 years of professional tax experience and over 60 years of working directly for the IRS.
On staff are and tax attorneys, tax lawyers, certified public accountants, and former IRS agents and managers.
While employed by the Internal Revenue Service we taught tax law.
If you are having any issues that need professional tax representation regarding FATCA OR FBAR contact us today for free initial tax consultation. Any conversations with our attorneys or lawyers are regarded privileged information.
Reporting by U.S. Taxpayers Holding Foreign Financial Assets
FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return.
Reporting applies for assets held in taxable years beginning after March 18, 2010. For most taxpayers this will be the 2011 tax return they file during the 2012 tax filing season.
Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification).
Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.
Reporting by Foreign Financial Institutions
FATCA will also require foreign financial institutions (“FFIs”) to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
To properly comply with these new reporting requirements, an FFI will have to enter into a special agreement with the IRS by June 30, 2013.
Under this agreement a “participating” FFI will be obligated to:
(1) undertake certain identification and due diligence procedures with respect to its account holders;
(2) report annually to the IRS on its account holders who are U.S. persons or foreign entities with substantial U.S. ownership; and
(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual account holders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity account holders failing to provide sufficient information about the identity of its substantial U.S. owners.
Notice 2011-53 provides the phased-in timeline of key FATCA implementation dates for FFIs. It is important to note that many details of the new reporting and withholding requirements pertaining to FFIs must be developed through Treasury regulations. Proposed regulations were issued on Feb. 8, 2012.
Have Questions, call or SKYPE us today.
FATCA ATTORNEYS, LAWYERS – INTERNATIONAL REPRESENTATION
by Fresh Start Tax | Mar 20, 2014 | Tax Help
We are a seasoned and experienced professional tax firm that has a specialty in FATCA, FBAR Compliance and Representation.
Since 1982. 1-866-700-1040
We have over 206 years professional tax experience and we are comprised of tax attorneys, tax lawyers, certified public accountants, former IRS agents and managers.
IRS and the Department of Justice have taken FATCA/FBAR to a whole new level.
In the last three years the Internal Revenue Service have collected over $6 billion and over 35,000 people have come forward to report income and assets they’ve had an international bank accounts.
The Federal Government has increase their size and scope of their investigations and have now expanded their treaties all over the world.
IRS is making sure both the individual and and financial institution are in full compliance.
IRS is making a point to start criminal investigation with bank officers and principles who are in non compliance. There are very serious.
It will use the New International Data Exchange to capture information. Please Read Below.
The New International Data Exchange
The New Intergovernmental FATCA XML Schema:
The IRS has finalized the format for automatically exchanging FATCA data with IGA jurisdictions. The Intergovernmental FATCA XML Schema (version 1.1):
- Is a standard format developed in close cooperation with the OECD
- Captures required information for reporting of FATCA data from both Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs)
- Will be used for automatic exchange with all FATCA jurisdictions
- Uses elements from existing reporting schemas used by the OECD and the European Union to reduce burden on reporting entities
- Uses XML to allow for easier modifications down the road in the event of legislative or regulatory changes in reporting rules
- Will facilitate safe and secure electronic data transmission using the International Data Exchange Service
Alert, Please Note:
The .xsd files that comprise the Intergovernmental FATCA XML Schema can be viewed using a web browser such as Internet Explorer or Chrome. The file is also viewable using a text editor such as Microsoft Notepad, or an XML tool such as XMLSpy or XML Notepad.
The Intergovernmental FATCA XML Schema (version 1.1)
NEW: Intergovernmental FATCA Schema Version 1.1 User Guide: Pub. 5124 – User Guide (pdf)
International Data Exchange Service:
The IRS is finalizing requirements for a Data Exchange service to allow for Financial Institutions (FIs) and Host Country Tax Administrations (HCTAs) to automatically exchange FATCA data with the United States.
The Service will also allow the United States to make reciprocal exchanges where called for by an IGA that is in force.
The International Data Exchange Service:
1. Is based on business requirements collected by a multilateral working group
2. Serves as a single point of FATCA information delivery for both FIs and HCTAs
3. May be used for automatic exchange with all FATCA jurisdictions
4. Is based on readily-available mature technology
5. Requires both the file being sent (in the Intergovernmental FATCA XML Schema) and the transmission pathway to be encrypted, ensuring the security of tax data
6. Can be accessed either through a Browser-Based or a Scheduled Bulk Data Transfer environment.
Have questions ?
Contact us today and speak directly to a tax attorney or tax lawyer who is an expert in these matters.
You have the option to having all discussions under attorney-client privilege.
When calling our office ask to speak directly to a tax attorney or tax lawyer or have the option to Skype is at mutual conveniences.
FATCA, FBAR Compliance, Representation Tax Attorneys, Tax Lawyers, CPA’s – * New York * Chicago * Los Angeles – Experienced Experts
