IRS Becoming Aggressive About Offshore Tax Evasion

Posted on February 8, 2015 by Kursti Nakagawa

IRS/ Offshore Bank Accounts

IRS Becoming Aggressive About Offshore Tax Evasion One problem the IRS has to tackle is that of United States taxpayers who dodge paying taxes by placing their funds in offshore accounts and then failing to report them. In the last several years, the IRS has made it clear that this is breaking the law and that taxpayer’s who are caught hiding foreign assets may face penalties, fines and even criminal prosecution. “It’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.”

The IRS has recently become more aggressive in finding taxpayers who are hiding their money in offshore accounts. In 2009, they started the Offshore Voluntary Disclosure Program. This program allows United States citizens who have foreign bank accounts to voluntarily disclose the accounts to the IRS and, in return, be assessed lowered penalties and avoid criminal prosecution. Since the inception of this program, the IRS has collected over seven billion dollars in back taxes and penalties from offshore accounts. They have also issued rules under the Foreign Account Tax Compliance Act mandating foreign financial institutions to inform them of any accounts held by United States citizens.

As part of their ongoing attempt to combat offshore tax evasion, the IRS has set aside a page on its website devoted to this issue. The page, entitled “Abusive Offshore Tax Avoidance Schemes” explains the laws governing the reporting of foreign income as well as outlining some of the legitimate offshore activities. It also highlights some of the institutions and activities that are in the IRS radar as far as avoiding foreign taxes are concerned.Some of those include:

Private banking (U.S. and offshore)
Personal investment companies
Captive insurance companies
International Business Companies (IBCs)
Foreign (offshore) partnerships, LLCs and LLPs
Foreign trusts
Foreign corporations
Offshore private annuities
Captive insurance companies
Offshore bank accounts and credit cards
Related-party loans

In summary, the IRS is constantly on the lookout for schemes designed to avoid paying taxes on income from assets held in offshore accounts. They claim that, to date, they have audited thousands of offshore back accounts. In the process, they have collected billions of dollars in restitution and initiated numerous criminal investigations. The long and short of this issue is that failing to report income and assets held in foreign accounts is not a wise move in light of the recent IRS crackdown! If you have questions about the reporting of assets held in foreign accounts or about a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your situation free of charge. (https://allproshadeconcepts.com/) For more information about our services, call us today at 877.889.6527 or visit us at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax problems, we have a thorough understanding of both domestic and foreign tax law tax together with the experience to know how to apply that knowledge to your specific financial situation.[/tab] [/tabcontent] [/tabs]

Are You Prepared for Tax Season 2015?

Posted on January 22, 2015 by Kursti Nakagawa

Are You Prepared for Tax Season 2015?

Are You Prepared for Tax Season 2015? While no one looks forward to tax season, there are a few simple ways get prepared and make the whole experience a little less painful. While it is best if some of these steps are taken before tax season starts, timing is not crucial. It is better to get organized now that Tax Season 2015 is underway rather than not get organized at all! The good thing is that each passing tax season presents a chance for the development of a new and better system of organization based on what has worked in the current year.

We offer the following suggestions to get Tax season 2015 off to a good start: First, set aside a large folder or envelope appropriately labeled Tax Documents. Keep the folder in safe spot and at easy reach for the filing of W-2s, 1099s and other tax related statements as soon as they arrive in the mail. This eliminates the possibility of misplacing an important tax document, the omission of which could flag your tax return for an IRS audit.

Next, gather all pertinent receipts and place them in an envelope in the Tax Documents folder. Although there is an advantage to gathering receipts all year long, it is better to start collecting them at the beginning of tax season rather than waiting until the tax filing deadline approaches if that has not been the case. Make a list of all possible tax deductions – no matter how large or how small. Even if you have not itemized in the past, it is important that you make a list of everything, from charitable contributions to business expenses, which might reduce the taxes you owe. If you keep this up, you will learn what items save you tax dollars and will become more tax savvy with each passing year. The following link contains some helpful information on tax breaks you won’t want to miss: https://professionaltaxresolution.com/blog/tax-breaks-dont-want-miss/.

Following this, consider major changes that might have occurred during the previous tax year. Got married /divorced? Perhaps had a baby? Did one of your children leave the house? These are all things to keep in mind, as they can and will affect your tax filing status. Outside of this, consider major changes to your financial situation that might have an impact on your tax return. If you would benefit by opening or contributing to a traditional IRA or Roth IRA, you can contribute and have those contributions included for the previous tax year up until April 15th of the following year.

Finally, come up with a plan for preparing your tax return. If you are planning to prepare the return yourself using a tax software program, be sure to review the programs available. Once that process is complete, secure and install the program you have selected so you are ready to start preparing your tax return as soon as you have received all of the necessary tax documents. If you are going to enlist the services of a CPA or another certified tax preparer, be sure you review that individual’s qualifications carefully. Read the following link to ensure that you know what to look for in the selection process: https://professionaltaxresolution.com/resources/select-tax-professional/ to ensure you have chosen the right tax preparer.

If all else fails, remember you can always file a tax extension if necessary. Although interest will accrue on any tax amounts due, there will be no other late filing consequences. This makes the tax extension a valuable safety net for taxpayers who are caught unprepared, have extenuating circumstances or are simply overwhelmed by their tax issues.

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to your tax resolution options free of charge. For more information about our services, visit us today at https://professionaltaxresolution.com/ or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

Happy Tax Filing 2015!

2015 Tax Filing Date Announced

Posted on December 31, 2014 by Kursti Nakagawa

2015 Tax Filing Date Announced

2015 Tax Filing Date Announced

2015 Tax Filing Date Announced – The tax filing date for the New Year has recently been announced by the IRS. Tax filing will begin on Tuesday, January 20th, 2015. In addition, as part of the tax extenders package which President Obama signed into effect on December 19, 2014, all taxpayers can file at the same time.

Although the tax extenders package was approved just weeks ago, the Internal Revenue Service has announced that the 2015 tax season will be begin in a timely fashion. The opening date is actually 10 to 11 days earlier than it was in previous tax seasons. In addition, rather that having a tiered tax season opening, the new legislation allows all taxpayers to begin filing at the same time.

In IRS Commissioner Koskinen’s remarks about the new tax extenders package, he said that, “[w]e have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems.” He went on to say that IRS employees would continue an aggressive schedule of testing over the next month in order to complete the final stages of preparation of their tax systems for the timely opening of the 2015 tax season.

Although the tax extenders legislation was passed by both houses of Congress and signed into effect by President Obama just weeks before the end of the year, it reinstates many valuable tax breaks that had expired at the end of 2013. Its tax saving provisions will allow both individual taxpayers and businesses owners to save valuable 2014 tax dollars. The bill, aptly named the Tax Increase Prevention Act of 2014, is certainly a welcome holiday treat for many!

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

Happy New Year to All!

Tax Extenders Bill Passed

Posted on December 19, 2014 by Kursti Nakagawa

Tax Bill Passed By Congress

Tax Extenders Bill Passed – With time running out, Congress has passed the long awaited tax extenders bill. Although President Obama has not yet signed the legislation into effect, his signature is expected. The bill, officially identified as the Tax Increase Prevention Act of 2014 (HR 5771), extends some very significant tax breaks through the end of 2014 and makes them retroactive to January 1, 3013 when they originally expired. It important to note, however, that the new legislation only covers items that are put into effect before December 31, 2014. At his point, there are no plans to extend the bill’s tax benefits into 2015 and beyond.

Some of the tax saving provisions of HR 5771 are summarized below:

Mortgage Debt

The tax extenders bill allows homeowners to continue to take advantage of the provisions of the Mortgage Debt Relief Act of 2007 through end of the year. Prior to 2007, if a lender wrote off a mortgage debt, or any portion of it, the forgiven amount had to be reported to the IRS as income. With the passage of the Mortgage Debt Relief Act, qualifying homeowners were allowed an exclusion for forgiven mortgage debt, a tax benefit that has now been extended through the end of 2014.

Mortgage Insurance

The passage of the tax extenders bill will extend, through the end of 2014, the deduction for premiums paid for private mortgage insurance (PMI). This tax deduction, which is lumped with mortgage interest on the tax return, was established in 2007 and had been in effect though the end of 2013 when it expired. The tax extenders bill will reinstate this tax break by allowing a deduction for mortgage insurance premiums on a homeowner’s 2014 tax return.

Sales Tax

For taxpayers who itemize deductions, the ability to deduct state and local sales taxes paid in lieu of state and local income taxes has been extended through the end of 2014. This provision could potentially amount to a significant tax savings, especially for residents of certain states who have made large purchases during 2014. Like other provisions of the tax extenders bill, this tax break had expired on December 31, 2013.

Retirement Plan Distributions

The passage of the tax extender legislation will allow taxpayers who are 70 ½ and older to exclude from gross income up to $100,000 in IRA withdrawals, provided that the funds are transferred directly to an approved public charity. Without this extension, IRA withdrawals would be taxed as ordinary income even if they were contributed directly to charity. This income exclusion for IRA withdrawals is available even for those taxpayers who do not itemize their deductions.

Education

The passage of the new tax extenders legislation will reinstate the above-the-line deduction for tuition and related educational expenses that expired at the end of 2013. Any qualifying amounts that are paid before the end of the year, for an educational term that starts no later than March 31, 2015, are allowed. The maximum allowable deduction of $4000 has an income phase out, with no deduction allowed for individuals with incomes in excess of $80,000 ($160,000 for married couples).

Bonus Depreciation

The new tax extender bill allows businesses of any size to claim a 50% bonus depreciation allowance on property that is placed in service before the end of the year. In order to qualify, the newly acquired property must satisfy certain requirements and be placed in original use by the business claiming the tax deduction before December 31, 2014.

Expensing

One of the biggest benefits of the tax extenders legislation for business owners is the extension of the Section 179 expensing and investment ceiling limits that had originally expired at the end of 2103. The bill reinstates the $500,000 expensing limit and the $2.5 million investment ceiling limit that were in effect until the beginning of the year, replacing the much lower $25,000 limit and $200,000 ceiling which would otherwise have applied to 2014 purchases of qualified property.

Although it is coming in just under the wire, the tax extenders legislation recently passed by both houses of Congress reinstates many valuable tax breaks that had expired at the end of 2013. Once it is signed into law by President Obama, it will allow both individual taxpayers and businesses owners to save valuable 2014 tax dollars. (vallartainfo.com) The bill, aptly named the Tax Increase Prevention Act of 2014, is certainly a welcome holiday treat for many!

Year End Tax Considerations

Posted on December 2, 2014 by Kursti Nakagawa

Year End Tax Considerations

Important Year End Tax Considerations

Important Year End Tax Considerations – Although tax planning is important all year long, it is especially important at the end of the year. End of the year tax moves such as accelerating or postponing income, balancing capital gains and losses and placing funds in tax deferred accounts have the potential to produce significant tax savings. On the other hand, failing to consider such tax planning options could very well result in paying taxes in excess of what would otherwise be owed.

Consider deferring income into 2015. This tax planning strategy provides a tax advantage if you expect to have an equivalent or lower income in 2105 and the deferred amount will not push you into a higher tax bracket for that year. Self-employed individuals may have the option of deferring income by sending out billing statements late in 2014 so they are not paid until after the first of the year. Although employees have less flexibility, they may be able to defer the receipt of year-end bonuses.
Consider realizing capital losses. This tax planning strategy can be used to balance either capital gains or ordinary income. Capital losses can be used, dollar for dollar, to offset income up to a maximum of $3000 or to cancel capital gains that have been realized during the year, If not used, the losses can be carried forward to future tax years with no time limit.
Pay attention to the Alternative Minimum Tax. Pay attention to the income threshold for the Alternative Minimum Tax so that you do not cross it unnecessarily by accelerating deductions or deferring income. In addition, make sure that any tax planning strategies take into account the fact that certain deductions such as property taxes and local and state income taxes are not allowed under the Alternative Minimum Tax.
Consider increasing IRA and 401(k) contributions. One potentially significant year-end tax planning move is to reduce taxable income by increasing contributions to IRA and 401(k) plans. The maximum amounts allowed for 2014 are $17,500 for 401(k) plans and $5,500 for IRAs ($23,000 and $6,500 respectively for taxpayers over 60). IRA contributions for 2014 can be made through April 15, 2015.
Check the balances in flex spending accounts. Checking the balances in flex spending accounts is an important year-end tax planning task because the balances are often forfeited if not used before December 31^st. Because funds contributed to flex spending accounts are not taxed but are lost if they are not used, it is important to budget the amounts that will be placed in these accounts for 2015.
Take any required Regular Minimum Distributions. The IRS requires that taxpayers who are 70 ½ years old take required Regular Minimum Distributions from their IRAs beginning on April 1^st the year after they arrive at that age. Avoid the 50% excise tax penalty the will be imposed by taking required Regular Minimum Distributions before the December 31^st