by Fresh Start Tax | Sep 12, 2013 | Tax Returns
Let former IRS agents and managers completely resolve your situation for you and get you back in the system without worry.
Once we have your power of attorney you will never speak to the IRS.
We can file all your back tax returns and work out a tax settlement all at the same time.
We have over 206 years of 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 IRS.
We know the exact systems in the exact protocol to file back multiple tax years and get you back in the system worry free.
You may not have filed your federal income tax return for this year or previous years. Regardless of your reason for not filing a required return, file your tax return as soon as possible.
IRS as a general rule does not pursue criminal prosecution for all those who file their back tax returns as long as they filed a return before IRS contacts them so it is important to find IRS before they find you.
If you have lost or misplaced your records – No problem
If you have unfiled tax returns, this process Fresh Start Tax LLC uses to get current with the IRS and get you immediate and permanent tax relief:
1. We verbally review a year by year history of your income and expenses.
2. We review any records you may have.
3 We pull all IRS information that they have received from 3rd party sources that have been placed on the IRS computer system over the past 7 years.
4. If you have lost all your records we have easy and simple forms that can help you reconstruct your tax return.
5. We can prepare through years of experience a “reconstructed” tax return that the IRS will accept and process.
6. We review all returns for accuracy with the client and send them into the IRS.
7. We work out a settlement agreement with the IRS to permanent close your tax case.
If you are not sure you are required to file a return, refer to Publication 17, Your Federal Income Tax.
Get this years tax return filed on time
If your return was not filed by the due date including extensions of time to file, you may be subject to the failure to file penalty, unless you have reasonable cause for your failure to file timely.
If you did not pay your tax in full by the due date of the return (excluding extensions of time to file), you may also be subject to the failure to pay penalty, unless you have reasonable cause for your failure to pay timely, or the IRS has approved your application for extension of time for payment of the tax due to undue hardship (refer to Form 1127 (PDF), Application for Extension of Time for Payment of Tax Due to Undue Hardship). Additionally, interest is charged on taxes not paid by the due date, even if you have an extension of time to file.
Interest is also charged on penalties.
There is no penalty for failure to file if you are due a refund. But, if you wait to file a return or otherwise claim a refund, you risk losing a refund altogether.
An original return claiming a refund must be filed within 3 years of its due date for a refund to be allowed in most instances.
You want to file ASAP if you have had withholding taken out
After the expiration of the three-year window, the refund statute prevents the issuance of a refund check and the application of any credits, including over payments of estimated or withholding taxes, to other tax years that are underpaid.
However, the statute of limitations for the IRS to assess and collect any outstanding balances does not start until a return has been filed. In other words, there is no statute of limitations for assessments.
If you have not filed back Tax Returns for multiple years, call us and get started today and STOP the worry.
Facts about the IRS
The Internal Revenue Service collects $30.4 billion through enforced collections.
The Internal Revenue Service collects 10.2 billion through audits.
The Internal Revenue Service collects $5.2 billion on the document matching program.
The Internal Revenue Service has 5186 revenue officers to collect money.
The Internal Revenue Service has on staff 13,021 auditor agents.
The Internal Revenue Service has 2661 criminal fraud investigators.
Not Filed Tax Returns for Multiple Years – No problem – Call Former IRS Agents, Managers
by Fresh Start Tax | Sep 12, 2013 | Tax Help
Sales Tax Audit Help – Florida Department of Revenue Audit Representation – West Palm
Florida Sales & Use Tax – Manufacturing Industry
If you are going through a sales tax audit contact us today and speak to a tax attorney, CPA, or former state of Florida sales tax agent who could limit your exposure.
We are A+ rated by the Better Business Bureau and have been in practice in the state of Florida since 1982.
Florida passes record $74.5 billion spending budget for fiscal year 2013-2014
Florida passes record $74.5 billion spending budget for fiscal year 2013-2014 that will be more than $4 billion higher than the fiscal year 2012-2013 spending.
Gov. Rick Scott’s office announced plans to discuss cutting taxes and fees with Florida residents. Scott announced he proposes to cut taxes by $500 million for the next fiscal year, but early on in the budget cycle, hasn’t released details about his plans.
Dubbed the “it’s your money’s tour”, Gov. Scott will conduct meetings in West Palm Beach, Fort Lauderdale, Jacksonville, Tampa and Orlando.
With spending increases and cutting taxes there is only one way to balance the budget – Looking for Low Hanging Fruit through an Audit of Your Business.
The manufacturing industry, a major source of audit assessments will see an increase in audit activity to generate funds to cover the increased spending budget and the reduced taxes and fees.
We are a Florida tax firm comprised of tax attorneys, CPAs and a former Florida sales tax auditor that deals with Florida Sales Tax Audits and can help your company during a Sales tax audit.
Being a former State Sales Tax Agent I will explain to you below some of the sales tax audit techniques used by the state of Florida Department of revenue
Florida Sales Tax Audit Manufacturing Industry
Manufacturers Methods of Operation and Accounting Systems
The auditor will focus attention to the method of operation and accounting systems used by a manufacturing concern.
Manufacturing activities are performed for various purposes including, but not limited to:
• the manufacturer of a product for resale, either as a finished product or as a product that is incorporated into a final product
• the manufacture of a product for the manufacturers will use in the manufacturing process
• the fabrication of a product for use by the manufacturer perform a contract to prove real property
• the manufacture of a product for research and development purposes; either for the design of a new product or for new uses of an existing product.
- The auditor will become familiar with your accounting system and an experienced auditor will know that there’s nothing simple about the accounting system within a manufacturing company.
- The auditor knows that they will have to determine whether the accounting system is reliable when evaluating internal controls.
The various parts of the manufacturing process that affect the accounting system are discussed as follows:
• raw materials, also called direct materials
• labor
• indirect costs
• overhead
• inventories
• other sales and purchases
Sales for Resale
Manufactures may produce products for resale that includes finished products ready for sale by a purchaser, either a wholesaler or retailer to the end consumer or they may produce products that are purchased by other manufacturers for the incorporation into a final product sales of tangible personal property by a manufacturer for purposes of resale are exempt from sales tax, provided the transactions are conducted in strict compliance with section212.07 and Section 212.18, F.S. and Rule 12A-1.039, F.A.C. if a manufacturer fails to conduct such transactions in compliance with the referenced authorities he or she will be liable for payment of the tax that was erroneously exempted as well as the applicable penalties and interest.
Sales to Contractors
Sales of tangible personal property by a manufacturer to a real property contract are generally subject to state tax. While the sale of real property is not subject to sales or use tax, tangible personal property purchased by a contractor for conversion into real property is subject to tax.
Taxation is appropriate where the contractor is considered the end-user of the tangible personal property purchased for performance of such contracts. Rule 12A-1.051, F.A.C., discusses in detail sales to or by contractors as well as the types of contracts that they may use.
Sales to Not-For-Profit, Governmental and Other Exempt Entities
Occasionally, a manufacturer will sell tangible personal property to a customer claiming tax exemption as a not for profit organization or governmental entity.
The most common not-for-profit entities are those that fall under Section 501(c) (3), IRC, which include religious, educational and charitable tensions.
Section 212.08(7)(p), F.S. provides a general tax exemption for 501(c)(3) organizations, while Sections 212.08(7)(k),(1),(m)(n)(o) and (p), F.S. provide specific tax exemption for religious, educational and charitable institutions.
Occasional and Isolated Sales
A manufacturer may occasionally sell or transfer tangible personal property that is not within its normal course of business.
An isolated sale or transaction occurs when the manufacture distributes or transfers such tangible personal property in exchange for the surrender of a proportionate interest in an entity or conversely for purposes of obtaining a proportionate interest in an entity.
Provided such transactions meet the requirements of Rule 12A-1.037, F.A.C., they are exempt from tax as isolated or occasional sales or transaction.
In order for manufacturer’s sale to qualify as an exempt occasional sale, the tangible personal property being sold cannot be an item manufactured by the manufacturer for sale or purchased for resale.
Additionally, any applicable tax must have been paid and such sales cannot have occurred more than two times within a 12 month period
Purchases
Fixed Assets
For purposes of day to day operations, manufacturers invest heavily in fixed assets by either leasing or purchasing these assets. Regardless of the method, tax is due on the transactions for the fixed assets unless a specific exemption applies (See Section 212.05, F.S.),.
Items Fabricated for a Manufacturer’s Own Use
A manufacturer may fabricate tangible personal property for its own use in the manufacturing process, including tools, dies, molds, patterns or other items use to produce the final product. Pursuant to Section 212.06(1)(b), F.S., the manufacturer is responsible for paying tax on the cost price of these items which are not sold to consumers.
If the manufacturer sells these items, as required by Section 212.05, F.S., sales tax must be collected on the selling price.
Fabricated cost includes:
• direct materials and related freight and handling
• direct labor costs including payroll burden
• production service costs
Rule 12A-1.043, F.A.C. discusses in detail fabrication costs and other costs related to the manufacturing process.
Items Consumed in the Manufacturing Process
In the course of manufacturing products for sale, manufacturers can sue other items of tangible personal property that may or may not become and ingredient or component of the final product.
Consumption of these items by the manufacturer will generally result in the manufacturer being liable for use tax as the end user of the tangible personal property consumed.
Rule 12A-1.063, F.A.C., discusses the tax consequences of items consumed in a manufacturing process and provides examples of tangible personal property often consumed in a manufacturing process that may or may not be subject to a manufacturer’s use tax.
Sales Tax Audit Help Florida – Manufacturing Industry – Florida – Jacksonville, Tampa, Orlando, Miami
by Fresh Start Tax | Sep 12, 2013 | Expatriate Tax, FBAR, Tax Help
We are a full service tax from the deals in International tax affairs including nonresident alien tax help.
You can speak to one of our attorneys, certified public accountants, or former IRS agents and managers who have a combined 206 years of professional tax experience.
You can contact us today for free initial tax consultation.
We are A+ rated and have been in practice since 1982. We are one of the more trusted names in tax.
Taxation of Nonresident Aliens
Definition
An alien is any individual who is not a U.S. citizen or U.S. national.
A nonresident alien is an alien who has not passed the green card test or the substantial presence test.
Who Must File
If you are any of the following, you must file a return:
- A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year. You must file even if:
- Your income did not come from a trade or business conducted in the United States,
- You have no income from U.S. sources, or
- Your income is exempt from income tax.
However, if your only U.S. source income is wages in an amount less than the personal exemption amount (see Publication 501), you are not required to file.
A nonresident alien individual not engaged in a trade or business in the United States with U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
A representative or agent responsible for filing the return of an individual described in (1) or (2),
A fiduciary for a nonresident alien estate or trust, or
A resident or domestic fiduciary, or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax (Refer to Treas. Reg. 1.6012-3(b)).
NOTE:
If you were a nonresident alien student, teacher, or trainee who was temporarily present in the United States on an “F,””J,””M,” or “Q” visa, you are considered engaged in a trade or business in the United States. You must file Form 1040NR (or Form 1040NR-EZ) only if you have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc.
Refer to Foreign Students and Scholars for more information.
Claiming a Refund or Benefit
You must also file an income tax return if you want to:
- Claim a refund of overwithheld or overpaid tax, or
- Claim the benefit of any deductions or credits. For example, if you have no U.S. business activities but have income from real property that you choose to treat as effectively connected income, you must timely file a true and accurate return to take any allowable deductions against that income.
Which Income to Report
A nonresident alien’s income that is subject to U.S. income tax must generally be divided into two categories:
Income that is Effectively Connected with a trade or business in the United States
U.S. source income that is Fixed, Determinable, Annual, or Periodical (FDAP)
Effectively Connected Income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents.
FDAP income generally consists of passive investment income; however, in theory, it could consist of almost any sort of income. FDAP income is taxed at a flat 30 percent (or lower treaty rate) and no deductions are allowed against such income.
Effectively Connected Income should be reported on page one of Form 1040NR. FDAP income should be reported on page four of Form 1040NR.
Which Form to File
Nonresident aliens who are required to file an income tax return must use:
- Form 1040NR-EZ (PDF) if qualified. Refer to the Instructions for Form 1040NR-EZ to determine if you qualify.
- Find more information at Which Form to File.
When and Where To File
If you are an employee or self-employed person and you receive wages or non-employee compensation subject to U.S. income tax withholding, or you have an office or place of business in the United States, you must generally file by the 15th day of the 4th month after your tax year ends.
For a person filing using a calendar year this is generally April 15.
If you are not an employee or self-employed person who receives wages or non-employee compensation subject to U.S. income tax withholding, or if you do not have an office or place of business in the United States, you must file by the 15th day of the 6th month after your tax year ends. For a person filing using a calendar year this is generally June 15.
File Form 1040NR-EZ and Form 1040NR at the address shown in the instructions for Form 1040NR-EZ and 1040NR.
Extension of time to file
If you cannot file your return by the due date, you should file Form 4868 (PDF) to request an automatic extension of time to file. You must file Form 4868 by the regular due date of the return.
You Could Lose Your Deductions and Credits
To get the benefit of any allowable deductions or credits, you must timely file a true and accurate income tax return.
For this purpose, a return is timely if it is filed within 16 months of the due date just discussed.
The Internal Revenue Service has the right to deny deductions and credits on tax returns filed more than 16 months after the due dates of the returns.
Before leaving the United States, all aliens (with certain exceptions) must obtain a certificate of compliance.
Sailing permit or departure permit
This document, also popularly known as the sailing permit or departure permit, must be secured from the IRS before leaving the U.S.
You will receive a sailing or departure permit after filing a Form 1040-C (PDF) or Form 2063 (PDF).
Even if you have left the United States and filed a Form 1040-C, U.S. Departing Alien Income Tax Return (PDF), on departure, you still must file an annual U.S. income tax return.
If you are married and both you and your spouse are required to file, you must each file a separate return, unless one of the spouses is a U.S. citizen or a resident alien, in which case the departing alien could file a joint return with his or her spouse (Refer to Nonresident Spouse Treated as a Resident).
Contact us today for an initial tax consultation and you can speak directly a tax professional.
We are comprised of tax attorneys, tax lawyers, certified public accountants, former IRS and nonresident alien tax consultants.
You can Skype us today at password fresh start tax.
by Fresh Start Tax | Sep 12, 2013 | Expatriate Tax, Tax Help
Expatriation Tax Rules and Tax Help
Our firm is comprised of tax attorneys, CPAs and former IRS agents. we have over 206 years of professional tax experience in over 60 years of working for the Internal Revenue Service and the local, district, and regional tax offices of the Internal Revenue Service.
If you need EXPAT tax help and need to speak to international attorneys, CPAs or former IRS agents.
Contact us today for free initial tax consultation
The expatriation tax provisions under Internal Revenue Code (IRC) sections 877 and 877A apply to US citizens who have renounced their citizenship and long-term residents (as defined in IRC 877(e)) who have ended their US resident status for federal tax purposes.
Different rules apply according to the date upon which you expatriated.
- Expatriation on or after June 16, 2008
- Expatriation after June 3, 2004 and before June 16, 2008
- Expatriation on or before June 3, 2004
- Expatriation on or after June 16, 2008
If you expatriated after June 16, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.
Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($147,000 for 2011, $151,000 for 2012, and $155,000 for 2013).
Net Worth
Your net worth is $2 million or more on the date of your expatriation or termination of residency.
You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.
If any of these rules apply, you are a “covered expatriate.”
Citizenship
A citizen will be treated as relinquishing his or her U.S. citizenship on the earliest of four possible dates:
(1) the date the individual renounces his or her U.S. nationality before a diplomatic or consular officer of the United States, provided the renunciation is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the U.S. Department of State;
(2) the date the individual furnishes to the U.S. Department of State a signed statement of voluntary relinquishment of U.S. nationality confirming the performance of an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1)-(4)), provided the voluntary relinquishment is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the U.S. Department of State;
(3) the date the U.S. Department of State issues to the individual a certificate of loss of nationality; or
(4) the date a U.S. court cancels a naturalized citizen’s certificate of naturalization.
Long-term residents
For long-term residents, as defined in IRC 7701(b)(6), a long-term resident ceases to be a lawful permanent resident if
(A) the individual’s status of having been lawfully accorded the privilege of residing permanently in the United States as an immigrant in accordance with immigration laws has been revoked or has been administratively or judicially determined to have been abandoned, or if
(B) the individual (1) commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country, (2) does not waive the benefits of the treaty applicable to residents of the foreign country, and (3) notifies the IRS of such treatment on Forms 8833 and 8854.
IRC 877A imposes a mark-to-market regime, which generally means that all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date.
Any gain arising from the deemed sale is taken into account for the tax year of the deemed sale notwithstanding any other provisions of the Code. Any loss from the deemed sale is taken into account for the tax year of the deemed sale to the extent otherwise provided in the Code, except that the wash sale rules of IRC 1091 do not apply.
The amount that would otherwise be includable in gross income by reason of the deemed sale rule is reduced (but not to below zero) by $600,000, which amount is to be adjusted for inflation for calendar years after 2008 (the “exclusion amount”).
For calendar year 2013, the exclusion amount is $663,000. For other years, refer to the Instructions for Form 8854.
The amount of any gain or loss subsequently realized (i.e., pursuant to the disposition of the property) will be adjusted for gain and loss taken into account under the IRC 877A mark-to-market regime, without regard to the exclusion amount. A taxpayer may elect to defer payment of tax attributable to property deemed sold.
Form 8854, Initial and Annual Expatriation Information Statement, and its Instructions have been revised to permit individuals to meet the new notification and information reporting requirements.
The revised Form 8854 and its instructions also address how individuals should certify (in accordance with the new law) that they have met their federal tax obligations for the five preceding taxable years and what constitutes notification to the Department of State or the Department of Homeland Security.
Please Note. If you expatriated before June 17, 2008, the expatriation rules in effect at that time continue to apply. See chapter 4 in Publication 519, U.S. Tax Guide for Aliens, for more information.
Expatriation after June 3, 2004 and before June 16, 2008
The American Jobs Creation Act
The American Jobs Creation Act (AJCA) of 2004 amends IRC section 877, which provides for an alternative tax regime for certain, expatriated individuals. Amended IRC 877 creates objective criteria to impose the tax on individuals with an average income tax liability for the 5 prior years of $124,000 for tax year 2004, $127,000 for tax year 2005, $131,000 for 2006, $136,000 for 2007, or $139,000 for 2008, or a net worth of $2,000,000 on the date of expatriation.
In addition, it requires individuals to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation and requires annual information reporting for each taxable year during which an individual is subject to the rules of IRC 877.
Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
Finally, even if they do not meet the monetary thresholds for imposition of the IRC 877 expatriation tax, IRC 7701(n) provides that individuals will continue to be treated as U.S. citizens or long-term residents for U.S. tax purposes until they have notified both the Internal Revenue Service (via Form 8854) and the Secretary of the Department of State (for former U.S. citizens) or the Department of Homeland Security (for long-term permanent residents) of their expatriation or termination of residency.
Also, for individuals who expatriated after June 3, 2004, and before June 16, 2008, IRC 6039G requires annual information reporting for each taxable year during which such an individual is subject to the rules of IRC 877. Form 8854 is due on the date that the individual’s U.S. income tax return for the taxable year is due or would be due if such a return were required to be filed.
Form 8854, Initial and Annual Expatriation Information Statement, and its Instructions have been revised to permit individuals who expatriated after June 3, 2004, and before June 16, 2008, to meet the new notification and information reporting requirements under IRC 6039G.
Notice 2005-36, Form 8854 and Expatriation Reporting Rules
Press Release IR-2005-49 (issued 4/22/05), IRS, Treasury Release Guidance on Expatriation Reporting Requirements
Expatriation on or before June 3, 2004
The expatriation tax provisions (prior to the AJCA amendments) apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their US residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes. You are presumed to have tax avoidance as a principle purpose if:
Your average annual net income tax for the last 5 tax years ending before the date of the expatriation act is more than $124,000, or
Your net worth on the date of the expatriation act is $622,000 or more.
If you meet either of the tests shown above, you may be eligible to request a ruling from the IRS that you did not expatriate to avoid U.S. taxes. You must request this ruling within one year from the date of expatriation. For information that must be included in your ruling request, see Section IV of Notice 97-19. If you receive this ruling, the expatriation tax provisions do not apply.
The expatriation tax applies to the 10-year period following the date of the expatriation action. It is figured in the same way as for those individuals expatriating after June 3, 2004, and before June 17, 2008. Individuals who renounced their US citizenship, or long-term residents that terminated their US residency, for tax purposes on or before June 3, 2004, must file an initial Form 8854, Initial and Annual Expatriation Information Statement. For more detailed information refer to Expatriation Tax in Publication 519, U.S. Tax Guide for Aliens.
Individuals who renounced their U.S. citizenship or terminated their long-term resident status for tax purposes on or before June 3, 2004, must file a Form 8854, Initial and Annual Expatriation Information Statement (PDF), to comply with the notification requirements under IRC 877. For more detailed information refer to Expatriation Tax in Publication 519, U.S. Tax Guide for Aliens.
What to do if you haven’t filed a Form 8854
For more detailed information on how, when and where to file Form 8854, refer to the Instructions for Form 8854.
What to do if you haven’t filed an Income Tax Return
Among the various requirements contained in IRC 877 and 877A, individuals who renounced their US citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation.
If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, the individual will be subject to the IRC 877 and 877A expatriation tax provisions even if the individual does not meet the monetary thresholds in IRC 877 or 877A.
Individuals who have expatriated should file all tax returns that are due, regardless of whether or not full payment can be made with the return.
Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.
For more detailed information on what to do if you have not filed your required federal income tax returns, refer to Filing Past Due Tax Returns.
Significant penalty imposed for not filing expatriation form
The Internal Revenue Service reminds practitioners that anyone who has expatriated or terminated his U.S. residency status must file Form 8854, Initial and Annual Expatriation Information Statement (PDF).
Form 8854 must also be filed to comply with the annual information reporting requirements of IRC 6039G, if the person is subject to the alternative expatriation tax under IRC 877 or IRC 877A. A $10,000 penalty may be imposed for failure to file Form 8854 when required.
IRS is sending notices to expatriates who have not complied with the Form 8854 requirements, including the imposition of the $10,000 penalty where appropriate.
The Instructions for Form 8854 provide details about the filing requirements, related definitions and line-by-line instructions for completing the form.
Failure to file or not including all the information required by the form or including incorrect information could lead to a penalty.
You may Skype us today for free initial tax consultation to learn more
Expatriate Tax Help – International Attorneys, CPA’s, Former IRS, Accountants
by Fresh Start Tax | Sep 11, 2013 | Tax Help
Some Nonresidents with U.S. Assets Must File Estate Tax Returns
Everyone has to pay the fiddler and everybody has to pay the IRS
Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.- situated assets.
U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies.
A nonresident’s stock holdings in American companies are subject to estate taxation even though the nonresident held the certificates abroad or registered the certificates in the name of a nominee.
Exceptions:
Assets that are exempt from U.S. estate tax include securities that generate portfolio interest, bank accounts not used in connection with a trade or business in the U.S., and insurance proceeds.
Estate tax treaties between the U.S. and other countries often provide more favorable tax treatment to nonresidents by limiting the type of asset considered situated in the U.S. and subject to U.S. estate taxation.
Executors for nonresident estates should consult such treaties where applicable.
Executors for nonresidents must file an estate tax return, Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States, if the fair market value at death of the decedent’s U.S.-situated assets exceeds $60,000.
However, if the decedent made substantial lifetime gifts of U.S. property, and used the applicable $13,000 “unified credit exemption” amount to eliminate or reduce any gift tax on the lifetime gifts, a U.S. estate tax return may still be required even if the value of the decedent’s U.S. situated assets is less than $60,000 at the date of death (due to the decrease in the “unified credit exemption” for the lifetime gifts).
See Unified Credit (Applicable Credit Amount) Section in Publication 950, Introduction to Estate and Gift Taxes, and the Form 706NA Instructions for more information.
American citizens are subject to U.S. estate taxation with respect to their worldwide assets. An estate tax return, Form 706, United States Estate (and Generation-Skipping) Tax Return, Estate of a citizen or resident of the United States, is required for a deceased American citizen, if the fair market value at death of the decedent’s worldwide assets exceeds the “unified credit exemption” amount in effect on the date of death.
However, if the U.S. citizen made substantial lifetime gifts, and used the applicable “unified credit exemption” amount to eliminate or reduce any gift tax on the lifetime gifts, a U.S. estate tax return may still be required even if the value of the decedent’s worldwide assets is less than the “unified credit exemption” amount at the date of death (due to the decrease in the “unified credit exemption” for the lifetime gifts).
To determine the “unified credit exemption” amount for American citizens for any particular year, refer to the Instructions to Form 706 or to Publication 950, Introduction to Estate and Gift Taxes.
The Internal Revenue Service may collect any unpaid estate tax from any person receiving a distribution of the decedent’s property under transferee liability provisions of the tax code.
Special Rules Applicable to Gifts or Bequests from Covered Expatriates
U.S. citizens and long-term residents who relinquished their U.S. citizenship or ceased to be U.S. lawful permanent residents (green card holders) on or after June 17, 2008, and who meet specific average tax or net worth thresholds on the day prior to their expatriation are considered “covered expatriates” – subject to IRC section 877A.
U.S. citizens and residents who receive gifts or bequests from covered expatriates under IRC 877A may be subject to tax under new IRC section 2801, which imposes a transfer tax on U.S. persons who receive gifts or bequests on or after June 17, 2008, from such former U.S. citizens or former U.S. lawful permanent residents.
In addition, covered expatriates under IRC 877A are not considered U.S. expatriates for purposes of Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States.
Non-Resident Alien US Tax Help – Estate Tax Returns
