FBAR filing deadline is rapidly approaching

EXPATRIATE TAX – U.S. residents with $10,000 or more in foreign bank accounts must file a Report of Foreign Bank and Financial Accounts by the end of the month or risk substantial fines.

The FBAR (Report of Foreign Bank and Financial Accounts) is due the year after the year that the $10,000 threshold in met. The FBAR due date cannot be extended and failure to file an FBAR may result in civil and/or criminal penalties. Considering a Tax Professional? For no obligation free consultation contact us today!
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Published in: on June 26, 2013 at 12:50 pm  Comments (1)  
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Tips for Taxpayers with Foreign Income

Tips for Taxpayers with Foreign Income
If you are living or working outside the United States, you generally must file and pay your tax in the same way as people living in the U.S. This includes people with dual citizenship.

Here are some tips taxpayers with foreign income should know:
1. Report Worldwide Income. The law requires U.S. citizens and resident aliens to report any worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.
2. File Required Tax Forms. In most cases, affected taxpayers need to file Schedule B, Interest and Ordinary Dividends, with their tax returns. Some taxpayers may need to file additional forms. For example, some may need to file Form 8938, Statement of Specified Foreign Financial Assets, while others may need to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, with the Treasury Department.
3. Consider the Automatic Extension. U.S. citizens and resident aliens living abroad on April 15, 2013, may qualify for an automatic two-month extension to file their 2012 federal income tax returns. The extension of time to file until June 17, 2013, also applies to those serving in the military outside the U.S. Taxpayers must attach a statement to their returns explaining why they qualify for the extension.
4. Review the Foreign Earned Income Exclusion. Many Americans who live and work abroad qualify for the foreign earned income exclusion. This means taxpayers who qualify will not pay taxes on up to $95,100 of their wages and other foreign earned income they received in 2012.
5. Don’t Overlook Credits and Deductions. Taxpayers may be able to take either a credit or a deduction for income taxes paid to a foreign country. This benefit reduces the taxes these taxpayers pay in situations where both the U.S. and another country tax the same income.
For no obligation free consultation contact us today!
Aba Tax Accounting
Amare Berhie, Enrolled Agent
Amare@Abataxaccounting.Com
612-282-3200 Toll Free866-936-0430
http://www.abataxaccounting.com
Www.abatax81.blogspot.com
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Published in: on March 27, 2013 at 2:44 pm  Comments (1)  
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How to maximize the Child and Dependent Care Tax Credit

Federal, State, Local and International Taxes – The Child and Dependent Care Credit can help offset some of the costs you pay for the care of your child, a dependent or a spouse. Here are some facts the IRS wants you to know about the tax credit for child and dependent care expenses:
1. If you paid someone to care for your child, dependent or spouse last year, you may qualify for the child and dependent care credit. You claim the credit when you file your federal income tax return.
2. You can claim the Child and Dependent Care Credit for “qualifying individuals.” A qualifying individual includes your child under age 13. It also includes your spouse or dependent that lived with you for more than half the year that was physically or mentally incapable of self-care.
3. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
4. You, and your spouse if you file jointly, must have earned income, such as income from a job. A special rule applies for a spouse who is a student or not able to care for himself or herself.
5. Payments for care cannot go to your spouse, the parent of your qualifying person or to someone you can claim as a dependent on your return. Payments can also not go to your child who is under age 19, even if the child is not your dependent.
6. This credit can be worth up to 35 percent of your qualifying costs for care, depending upon your income. When figuring the amount of your credit, you can claim up to $3,000 of your total costs if you have one qualifying individual. If you have two or more qualifying individuals you can claim up to $6,000 of your costs.
7. If your employer provides dependent care benefits, special rules apply
8. You must include the Social Security number on your tax return for each qualifying individual.
9. You must also include on your tax return the name, address and Social Security number (individuals) or Employer Identification Number (businesses) of your care provider.

For more information or no obligation free consultations if your cancelled debt is taxable contact us today!
Aba Tax Accounting
Amare Berhie, Enrolled Agent
Amare@Abataxaccounting.Com
612-282-3200 Toll Free866-936-0430
http://www.abataxaccounting.com
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com

Published in: on March 15, 2013 at 4:54 pm  Comments (1)  
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IRS Has $917 Million for People Who Have Not Filed a 2009 Income Tax Return

Haven’t Filed a Tax Return in Years?

Federal, State, Local and International Taxes – Refunds totaling just over $917 million may be waiting for an estimated 984,400 taxpayers who did not file a federal income tax return for 2009, the Internal Revenue Service announced today. However, to collect the money, a return for 2009 must be filed with the IRS no later than Monday, April 15, 2013.

The IRS estimates that half the potential refunds for 2009 are more than $500.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2009 returns, the window closes on April 15, 2013. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2009 refund that their checks may be held if they have not filed tax returns for 2010 and 2011. In addition, the refund will be applied to any amounts still owed to the IRS or their state tax agency, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refund of taxes withheld or paid during 2009. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2009, the credit is worth as much as $5,657. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2009 were:

$43,279 ($48,279 if married filing jointly) for those with three or more qualifying children,

$40,295 ($45,295 if married filing jointly) for people with two qualifying children,

$35,463 ($40,463 if married filing jointly) for those with one qualifying child, and

$13,440 ($18,440 if married filing jointly) for people without qualifying children.

For no obligation free consultations if your cancelled debt is taxable contact us today!
Aba Tax Accounting
Amare Berhie, Enrolled Agent
Amare@Abataxaccounting.Com
612-282-3200 Toll Free866-936-0430
http://www.abataxaccounting.com
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com

Published in: on March 15, 2013 at 4:33 am  Leave a Comment  
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What expenses are deductible as moving expenses?

What expenses are deductible as moving expenses?

You may be able to deduct moving expenses whether you are self-employed or an employee. Your expenses generally must be related to starting work at your new job location. However, certain retirees and survivors may qualify to claim the deduction even though they are not starting work at a new job location

Only two categories of direct moving costs paid or incurred that are attributable to the taxpayer and the members of his household are deductible:

• costs of moving goods and personal effects; and

• traveling costs (including lodging but not meals) for the taxpayer’s household.

 

For 2012, the standard mileage rate for using your vehicle to move to a new home is 23 cents per mile. Considering a Tax Professional? For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200 Toll Free866-936-0430

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on February 9, 2013 at 6:20 pm  Leave a Comment  
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Year- End Tax Planning – Income From Foreign Sources

Year- End Tax Planning Income From Foreign Sources

Income From Foreign Sources – Many U.S. citizens earn money from foreign sources. But unless it is exempt under federal law, taxpayers sometimes forget that they have to report all such income on their tax return. 

As such, 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 requirements and want to comply with the law. 

Effective September 1, 2012, taxpayers who are low compliance risks are able to get current with their tax requirements without facing penalties or additional enforcement action. These taxpayers generally have simple tax returns and owe $1,500 or less in tax for any of the covered years. 

U.S. citizens are taxed on their income regardless of whether they live inside or outside the United States. The foreign income rule also applies regardless of whether the person receives a Form W-2, Wage and Tax Statement, or Form 1099. 

Foreign source income includes earned and unearned income, such as:

  • Wages and tips
  • Interest
  • Dividends
  • Capital gains
  • Pensions
  • Rents
  • Royalties

But there is some good news. Citizens living outside the United States may be able to exclude up to $95,100 of their 2012 foreign source income if they meet certain requirements. This will increase to $97,600 in 2013.

If you’re married and you and your spouse both work abroad and meet either the bona fide residence test or the physical presence test, each of you can choose the foreign earned income exclusion. Together, you can exclude as much as $190,200 for the 2012 tax year.

Caution: The exclusion does not apply to payments made to U.S. government employees or folks in the military living outside the United States.

If you earn income from outside the country, please be sure to meet with us about it. We can advise you on how to address all of the tax implications of this situation. For no obligation free consultation contact us today!

ABA Tax Accounting

info@abataxaccounting.com

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abataxaccounting.wordpress.com

Published in: on November 13, 2012 at 2:43 pm  Leave a Comment  
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IRS delays certain FATCA deadlines

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IRS delays certain FATCA deadlines
International Tax Strategy – The Internal Revenue Service on Wednesday announced it is delaying various deadlines relating to the Foreign Account Tax Compliance Act. Since issuing proposed regulations in February, the IRS has received numerous comments from affected parties saying the original deadlines do not give them enough time to comply with FATCA’s due diligence, withholding and documentation rules. Read the full story at Journal of Accountancy (10/2012). Considering a Tax Professional? For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on October 25, 2012 at 5:13 pm  Leave a Comment  
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IRS to Tighten Controls over Refundable Tax Credits

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Federal, State, Local and International Taxes – Millions of dollars in refundable tax credits that were determined to be erroneous after taxpayers received them may never be recovered by the Internal Revenue Service, but the IRS plans to clamp down on erroneous and fraudulent claims for tax breaks such as the Earned Income Tax Credit. To read more click here. Considering a Tax Professional? For no obligation free consultation contact us today!

ABA Tax Accounting

Amare Berhie, Senior Tax Accountant

amare@abataxaccounting.com

612-282-3200

866-936-0430 Toll Free

http://www.abataxaccounting.com

www.abatax81.blogspot.com

Published in: on October 23, 2012 at 1:59 pm  Leave a Comment  
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