Non-Resident Alien Tax Help – Tax Attorneys, CPA's – Experts

by Fresh Start Tax | Aug 26, 2013 | Expatriate Tax, FBAR

We are a tax specialty firm that deals with Non-Residents Tax Issues
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 over withheld 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 (PDF) or,

• 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. Refer to When To File in Chapter 7 of Publication 519, U.S. Tax Guide for Aliens (PDF) for additional details.
Departing Alien.

Non-Resident Alien Tax Help – Tax Attorneys, CPA’s – Experts

Please Note ; Before leaving the United States, all aliens (with certain exceptions) must obtain a certificate of compliance.

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).
 

Non-Resident Alien Tax Help – Tax Attorneys, CPA’s – Experts

FATCA Registration System – Help with Foreign Tax Issues

by Fresh Start Tax | Aug 26, 2013 | Expatriate Tax, FBAR

IRS Opens Online FATCA Registration System
The Internal Revenue Service today has opening of a new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act (FATCA).
 

Financial institutions

Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information.
Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.
The registration system, designed to enable secure account management, is a web-based application with around-the-clock availability.
Within a secure environment, the new registration system enables financial institutions to:
1. establish online accounts;
2. customize home pages to manage accounts;
3. designate points of contact to handle registrations;
4. oversee member and/or branch information; and
5. receive automatic notifications of status changes.
Financial institutions are encouraged to become familiar with the system, create their online accounts and begin submitting their information.
 

Starting in January 2014

Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.
As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.
 

The IRS will electronically post the first IRS Foreign Financial Institution

The IRS will electronically post the first IRS Foreign Financial Institution (FFI) List in June 2014, and will update the list monthly.
To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.
 
If you need help with any foreign bank account issues are matters called professional staff today.
 

FATCA Registration System – Help with Foreign Tax Issues

Offshore Voluntary Disclosure Program Submission Requirements

by Fresh Start Tax | Aug 23, 2013 | Expatriate Tax, FBAR

Offshore Voluntary Disclosure Program Submission Requirements
If you need any help regarding offshore voluntary disclosure program submission requirements contact us today and speak to one of our expert tax professionals.
As a condition to being accepted into the Offshore Voluntary Disclosure Program (OVDP), applicants must provide the IRS the following for the eight year voluntary disclosure period. Yes, you read this right for 8 years.
1. All applicants.Copies of previously filed original (and, if applicable, previously filed amended) federal income tax returns for tax years covered by the voluntary disclosure.
2. All applicants.Complete and accurate amended federal income tax returns (for individuals, Form 1040X, or original Form 1040 if delinquent) for all tax years covered by the voluntary disclosure, with applicable schedules detailing the amount and type of previously unreported income from the account or entity (e.g., Schedule B for interest and dividends, Schedule D for capital gains and losses, Schedule E for income from partnerships, S corporations, estates or trusts, and, for years after 2010, Form 8938, Statement of Specified Foreign Financial Assets).
For taxpayers who began filing timely, original, compliant returns that fully reported previously undisclosed offshore accounts or assets before making the voluntary disclosure for certain years of the offshore disclosure period, copies of the previously filed returns for the corresponding years.
3. All applicants. Copy of your completed and signed Offshore Voluntary Disclosures letter and attachment.
4. All applicants. A check made out to the U.S. Treasury. The check must include the amount of tax, interest, and accuracy-related penalty under IRC § 6662(a), and, if applicable, the failure to file and failure to pay penalties under IRC § 6651(a) (the suspension of interest provisions of IRC § 6404(g) do not apply to interest due in this initiative).
If you cannot pay the total amount of tax, interest, and penalties as described above, submit your proposed payment arrangement and a completed Collection Information Statement ( Form 433-A, Collection Information Statement for Wage Earners and Self-employed Individuals, or Form 433-B, Collection Information Statement for Businesses, as appropriate).
5. All applicants. Completed Foreign Account or Asset Statement for each previously undisclosed foreign account or asset during the voluntary disclosure period if the information requested in that statement was not already provided in your initial Offshore Voluntary Disclosures Letter.
6. All applicants. Completed penalty computation worksheet showing the applicant’s determination of the aggregate highest account balance of his/her undisclosed offshore accounts, fair market value of foreign assets, and penalty computation signed by the applicant and the applicant’s representative if the applicant is represented.
7. All applicants: Properly completed and signed agreements to extend the period of time to assess tax (including tax penalties) and to assess FBAR penalties.
8. All applicants disclosing offshore financial accounts:
Copies of filed Forms TD F 90-22.1 (FBARs) for foreign accounts maintained during calendar years covered by the voluntary disclosure. (You should file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the OVDP.
Through June 30, 2013, you may file electronically or by sending paper forms to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621. After June 30, 2013, you must file electronically.) If you are unable to file electronically, you may contact the FinCEN Regulatory Helpline at 800-949-2732 to request an exemption.
NOTE: Taxpayers filing FBARs electronically do not currently have the technological ability to include a statement explaining why the FBARs are filed late. Until such time that they have the ability, it is sufficient to file the FBARs electronically, retain the statement, and submit the statement to the Service upon request.
9. All applicants disclosing offshore financial accounts: For those applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of $500,000 or more, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure.
Explain any differences between the amounts reported on the account statements and the tax returns. For those applicants disclosing offshore financial accounts with an aggregate highest account balance of less than $500,000, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure must be available upon request.
10. All applicants disclosing offshore entities: A statement identifying all offshore entities for the tax years covered by the voluntary disclosure, whether held directly or indirectly, and your ownership or control share of such entities.
11. All applicants disclosing offshore entities: When accounts or assets were held in the name of a foreign entity, complete and accurate amended (or original, if delinquent) information returns required to be filed, including, but not limited to, Forms 3520, 3520-A, 5471, 5472, 926 and 8865 for all tax years covered by the voluntary disclosure. If the applicant is requesting that the Service waive the information reporting requirement, the applicant should submit a completed and signed Statement on Dissolved Entities. (See FAQ 29.)
12. Estates and certain executors or advisors. If the applicant is a decedent’s estate, or is an individual who participated in the failure to report the foreign account, foreign asset, or foreign entity in a required gift or estate tax return, either as executor or advisor, provide complete and accurate amended estate or gift tax returns (original estate or gift tax returns, if not previously filed) for tax years covered by the voluntary disclosure necessary to correct the under reporting of assets held in or transferred through undisclosed foreign accounts or foreign entities.
13. Returns involving Passive Foreign Investment Company (PFIC) issues. A statement whether the amended returns involve PFIC issues during the tax years covered by the OVDP period, and if so, whether the applicant chooses to elect the alternative to the statutory PFIC computation that resolves PFIC issues on a basis that is consistent with the mark to market (MTM) methodology authorized in IRC § 1296 but does not require complete reconstruction of historical data. A description of this alternative method is included in FAQ 10.
14. Applicants with Canadian registered retirement savings plans (RRSP) or registered retirement income funds (RRIF) who wish to make late elections to defer U.S. tax on RRSP or RRIF earnings:

• A statement requesting an extension of time to make an election

• Forms 8891 for all tax years and type of plan covered under the voluntary disclosure

• A dated statement signed by the taxpayer under penalties of perjury describing:

• Events that led to the failure to make the election

• Events that led to the discovery of the failure

• If the taxpayer relied on a professional advisor, the nature of the advisor’s engagement and responsibilities.

Our firm is staffed with tax attorneys, tax lawyers, certified public accountants, and former IRS agents and managers.

 
Contact us today for a free initial tax consultation and we will be able to help you on any offshore matters you may have.

Offshore Voluntary Disclosure Program Submission Requirements

IRS Offshore Tax News – Warning for those who are hiding their money, IRS is coming

by Fresh Start Tax | Jul 15, 2013 | Expatriate Tax, FBAR

 
If you are having any issues or potential issues with the Internal Revenue Service contact us today. We are IRS experts for all offshore tax matters and tax problems.
The Treasury Department said it would delay for six months the implementation of a global regulatory system that aims to make it harder for Americans to hide money offshore.
In the first three years of the Internal Revenue Service and the Department of Justice Offshore Programs  the feds raked in $5.5 billion.
IRS is going to slam the door shut on those taxpayers or businesses not paying their tax  debt relating to their offshore bank accounts.
The best advice we can give you is to find IRS before they find you.
 
The Treasury delayed implementation of the new law for six months.
Effective Date now July 2014
The change means that central provisions of the Foreign Account Tax Compliance Act will go into effect in July 2014.
FATCA requires financial institutions in other countries to provide information to the U.S. government about accounts held by U.S. citizens.
Financial institutions in many countries are arranging to share the information through their own governments to avoid violating local privacy laws.
80 countries now getting involved
Treasury officials said they have signed nine agreements with other countries to implement the new law, and currently are negotiating with about 80 countries.
“Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe,” said Robert B. Stack, the Treasury Deputy Assistant Secretary for international tax affairs.
Weekend Investor
The anti-evasion net being cast by the U.S. is inspiring similar efforts by other big countries.
Finance ministers from the Group of 20 large economies in April endorsed a global system similar to the U.S. measure that would help other countries combat tax evasion. But such a system is expected to take years to complete.
In the meantime, Treasury officials faced a tricky and difficult task in working out all the pending country-by-country agreements.
While the basic terms of the pacts are the same, crucial details vary—for instance, which low-risk financial accounts can be exempted from FATCA’s main requirements.
International banks and financial institutions also said the U.S. law would force them to cope with significant new complexity and absorb big compliance costs.
They’ve been urging more modifications to the planned system and longer lead times.
“While we had asked for an extension until Jan. 1, 2015, we greatly appreciate Treasury recognizing that financial institutions globally need more time to comply with this important law that our members continue to support,” said Payson Peabody, tax counsel at the Securities Industry and Financial Markets Association, a trade group. “We look forward to continuing our dialogue with Treasury in order to ensure that FATCA is implemented in accordance with the intent of Congress with the least possible disruption to financial markets.”
“FATCA is a tremendous undertaking for both the IRS and the financial services industry, and we think the extension is warranted and helpful,” said Sally Miller, CEO of the Institute of International Bankers.
Manal Corwin, a former top Treasury official who’s now an international tax practitioner at KPMG LLP, said she expects a significant number of agreements to be between the U.S. and other countries by the new deadline.
“Just because an agreement is not publicly signed doesn’t mean it’s not far along,” she said. “I’m confident that [Treasury officials] will” conclude a substantial number of agreements by mid-2014.
contributed to this article, tks John Mc Kinnon
IRS Offshore Tax News – Warning for those who are hiding their money, IRS is coming