Posts Tagged ‘Energy’

Consequences For Not Filing US Income Taxes As An American Expat

October 17th, 2022

Living abroad for most of us is the adventure of a lifetime. We are exposed to so many new experiences and our senses are constantly invigorated by events that are interesting,Guest Posting delightful and unexpected. For most, it is the stuff of dreams. For some unfortunate individuals, though, the dream turns dark quickly when, seemingly from out of nowhere, they find they are ‘out of compliance’ with the Internal Revenue Service back in the United States because they have not remained current with the legally required filing of their US income taxes.
Why does the United States bother spending time and resources going after tax-delinquents? In short, because it’s worth it. Every year the US spends around $5 billion in enforcement activity, including discovery, auditing, collections and prosecutions that yields $55 billion in additional tax revenue. Clearly it is in their financial best interest to do so and it’s about to get a lot easier for the US government to find, assess and prosecute Americans living abroad who are behind on filing their US income taxes.
There are new laws, just enacted, that give the United States a crystal-clear picture of whom among Americans living abroad are not filing, what they’re worth and where they reside. The days of living ‘off the grid’ are waning and a new era of finely focused enforcement is upon us.
Through FBAR (Foreign Bank Account Report) and FATCA (Foreign Asset Tax Compliance Act) laws now in force you, and even more notably all foreign financial institutions who hold your accounts, are required to report to the United States government information about your foreign financial assets. The penalty for you or a foreign financial entity’s non-compliance is an automatic 30% withholding of all transactions that are routed through the United States (and the vast majority of all the world’s financial transactions go through the US).
The United States has also just entered into data sharing agreements, at the sovereign level – government to government, between five of the largest nations in Europe and the US – with a swarm of additional countries asking to join into the data sharing agreement as well.
So just what happens when you are ‘discovered’ and are determined to be non-compliant by the IRS? How does one, as an individual, find out?
For most, it comes as a shock and a horrible surprise. You might be at the ATM in the foreign country where you reside to withdraw funds and discover, inexplicably, that your accounts have been frozen. Another possibility is that it could be an unexpected letter from your bank, saying that your account is locked and your assets have been seized by the IRS. It could also be a letter from the IRS itself notifying you that you have been assessed for X number of dollars (and the sum is usually large to get your attention) and that you need to file X years’ back taxes in order to become compliant. They’ll give you a number you can call and a case number and thus the seemingly endless nightmare begins.
Following are the potential consequences for not filing US income taxes as an American expatriate-
o The loss of one’s passport which can be arbitrarily revoked or a renewal denied.
o The loss of tax refunds that were owed to you by the IRS but never claimed.
o Loss of the ability to claim the Foreign Earned Income Exclusion, currently at $95 thousand dollars per year or $190 thousand if married.

Tax Tools For 2009 – Free Calculators Reduce Taxes

March 26th, 2022

Who would not want to save money on their taxes?

You may be surprised that some people think it is more patriotic to pay more tax than others. Though most of us are now watching our finances very well and would appreciate a tax tool that will help us save a few bucks.

So the following are my picks for best calculators and tools to help you save money.

Quicken Tax Tools – Simply Google “Quicken Tax Tools” and you will find some very comprehensive tools to calculate what Uncle Sam is going to be expecting from you.
Google Docs – Even if you do not have any spreadsheet software on your computer you can now easily create some pretty good ones with Google Docs. Their spreadsheet has steadily improved to the point that it is quite a serious tool.
Google Search – You would be surprised how many professionals are using Google to begin and sometimes end their tax research. Though a word to the wise is that do not always consider that everything that is on the web has been fact checked and is current.

All the tax tools though will not help if you do not have some good information to work with. So make sure to document all your deductions during the year so that it will make tax time easier.

You may be surprised how many good choices there are for free software on the web to do your accounting. Though it will take time to download and install them it is very likely to save you money in the long run.

Lastly please remember that though we all like things that are free yet sometimes you get what you pay for. So it may very well be worthwhile to pay a CPA such as myself to prepare your taxes.