Wednesday, September 12, 2012

Tax information for contractors working Overseas from Taxes for Expats

 
 

New Program for Overseas American Delinquent Tax Filers
By Taxes For Expats
Sunday, September 9, 2012

 

FYI for contractors working overseas:

A new IRS program for delinquent expats and dual citizens is coming into effect on September 1st, 2012. To become compliant, expats will now be required to file three years of tax returns and six years of FBARs.

Why is This Big News?
The new IRS program provides welcome relief for American expatriates who've fallen behind on their US tax filing. Unlike past programs, this program makes it clear that by filing now they will not be subject to fines or penalties. Given that most expatriates do not owe any tax and simply did not realize they still have to file US tax returns - this is really welcome news.

Who is Eligible for the New Program? The new program is aimed at Americans or dual citizens living abroad who have not been filing their US tax returns. But - it is best suited for those who IRS considers low-risk.
The IRS views returns with minimal ($1,500) tax due or no tax due to be low risk. After the taxpayer submits their documents, the IRS representative will assess whether the taxpayer can be considered low, moderate, or high risk for compliance.
Low Risk participants will be free of penalties. The less tax liability, income, assets, and complexity of the return the lower the risk it poses to the IRS. Conversely, the higher the tax liability and the more complex the return will generally lead to a higher assessment of risk.

What About Foreign Retirement Plans? The new program also will help those with certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). Existing tax treaties allow such income to be deferred with respect to US tax - but only if such election is made on a timely basis. The new program will allow taxpayers do so even if the election was not made in time.

Is the New Program Better than Previous OVDI & OVDP? The previous IRS programs had more stringent requirements - filing 8 years of tax returns and 8 years of FBARS. Those entering it also faced the prospect of paying a 27.5% penalty on highest foreign account balance. In contrast, the new program requires only 3 years of tax returns and 6 years of FBARs. Most importantly - its participants may not face any penalties.

Is THIS the time to come clean? This is a welcome development in what had been a very grey area for US expat tax filers, many of whom wished to be compliant, but had no clear guidance from the IRS itself. IRS Commissioner Doug Shulman said so much himself.
"Today we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues. The IRS is aware that some US taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law.
The program is really good news for Americans abroad who realize that they should become compliant but fear doing so because of potential penalties and fines. Now there is a clear and simple way to achieve compliance endorsed by the IRS itself - without worry about unexpected results.

Should You Go Alone or Hire a Professional? Even though the new program is really a good news, the taxpayer should tread carefully when dealing with the IRS. One must bear in mind that the primary goal of the IRS is maximization of revenue generated for the US government.
That is why Taxes for Expats recommends that expats contact qualified expat tax professionals to discuss their situation.
If you have any questions regarding the new IRS program or need assistance joining it, Taxes for Expats have a special program. They can help you file last 3 years of tax returns and 6 years of FBARs for a flat fee of $1,200 - that's 27% less than the list price if services were purchased separately. For more information please visit http://www.taxesforexpats.com

About Taxes for Expats Taxes for Expats specializes in preparation of US expatriate taxes for Americans and dual citizens living abroad. They offer flat-fee pricing, a simple and hassle-free process, and have over 20 years of experience in the field of expat tax preparation. With clients in over 75 countries around the world, Taxes for Expats have helped hundreds of expats file their back taxes and become compliant with the IRS.         

(Danger Zone Jobs)

Basic Overview of US Expats tax requirements


6 comments :

  1. The information in "Working For Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants" by Attorney Stephen Fishman was helpful for assisting my clients at my law firm, and for my other businesses. NOLO books are exceptional at making legal issues understandable for the lay person.

    UK Contractor

    ReplyDelete
  2. Thanks for sharing useful information. Indeed IRS Settlement was a big pain and it almost screwed my future, poor credit score and all worse that can happen. Still i was lucky to find few experts that helped in my irs debt settlement, irsmedic.com were experts and help me in IRS settlement quickly. I was helped, hope you will too.

    ReplyDelete
  3. I lately came beyond your web-site and accepted vast posts of yours~~~ I’d add a quick animadversion and let you apperceive that you’ve got a actively nice weblog. I’ll watch out for updates from you!

    ReplyDelete
  4. Thanks! Keep stopping by, you never know what I will post next lol

    ReplyDelete
  5. Tax amnesty is a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability (including interest and penalties) relating to a previous tax period or periods and without fear of criminal prosecution. Often tax amnesty programs allow taxpayers with outstanding tax liabilities to satisfy the balance due by paying the originally assessed balance without penalties, and sometimes without penalties and interest.

    ReplyDelete
  6. While the IRS offers amnesty programs for criminal tax evasion, the state tax amnesty programs are more likely to be applicable to the average taxpayer. State governments often run tax amnesty programs to boost revenue. The programs are available periodically, and usually allow taxpayers with past due balances to pay their balances off without paying the penalties and sometimes without interest as well.

    ReplyDelete

Comments are welcome! Personal attacks are not. Thanks!