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Reporting Requirements for Foreign Assets (FBAR)

The “offshore accounts” is usually referred to those account holders who are trying to dodge tax responsibilities. Especially after the Panama Papers, many observers are quick to assume the worst when someone holds assets outside of the United States.

Clearing the FBAR
For a U.S. citizen or resident having a financial interest in a non-U.S. bank or securities account, he or she must report it on FinCEN Form 114, also known as the FBAR. The only exception is for that account where the aggregate value of their foreign accounts doesn’t exceed $10,000 during one year. This rule also applies to U.S. entities, partnerships, corporations, estates, limited liability companies and trusts. If someone maintained foreign financial accounts, which are than $10,000 at any time in the calendar year, he must mention this fact on Form 1040, Schedule B of his income tax return.

Failing to file a Foreign Bank Account Report (FBAR) can carry a civil penalty of $10,000 for each non-willful violation. If violation is found to be willful, the penalty is the greater of $100,000 or 50 percent of the amount in the account.

There are precise terms that must be fulfilled to file FBAR’s.

General
Any U.S. person, whether citizen or resident foreigner, should file an FBAR if:
1. The U.S. taxpayer has a financial interest over at least one foreign account.
2. This foreign account is more than $10,000 at any time during the calendar year.

1. Delinquent FBAR Submission.
U.S. taxpayers who:
(i) Have not been communicated by the IRS about non-submission,
(ii) Are not under criminal analysis by the IRS.
(iii) Have not consulted the IRS about their inability of submission.

2. Streamlined Offshore Procedure
This Procedure contains two subcategories domestic and foreign.
To be eligible the taxpayer:
(i) Must be a citizen or permanent resident of the United States.
(ii) Must meet the non-residence requirement.

3. Offshore Voluntary Disclosure Program.
The program is planned to assist taxpayers resolve penalty obligations and defend them from criminal charge. If a taxpayer joins this program, the IRS will recommend that the taxpayer not be subjected to criminal trial. Taxpayers must voluntarily disclose the most recent 8 years period of delinquent filing.

Specified Foreign Assets
U.S. citizens and residents who hold specified foreign assets must mention them to the IRS on Form 8938. Nonresident aliens must also file Form 8938 if they hold specified foreign assets.

Transfers and Transactions
If a U.S. person or entity transfers property to a foreign corporation, the transferor must file Form 926, “Return by a U.S. Transferor of Property to a Foreign Corporation.”

If the transaction is with a foreign trust, one must report any transfers, whether he is donor or recipient. In this case, he will use Form 3520, “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.”

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Online Security: Seven Steps for Safety

*Originally published on irs.gov as part of their National Tax Security Awareness Week.

During the online holiday shopping season, the IRS, state tax agencies and the tax industry remind people to be vigilant with their personal information. While shopping for gifts, criminals are shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file a fraudulent tax return.

 

Anyone who has an online presence should take a few simple steps that could go a long way to protecting their identity and personal information.

 

The Internal Revenue Service, state tax agencies and the tax community, partners in the Security Summit, are marking “National Tax Security Awareness Week”, Nov. 27-Dec. 1, with a series of reminders to taxpayers and tax professionals. In part one, the topic is online security.

 

Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.

 

Here are seven steps to help with online safety and protecting tax returns and refunds in 2018:

  • Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.
  • Avoid unprotected Wi-Fi. Beware purchases at unfamiliar sites or clicks on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
  • Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes.
  • Keep a clean machine. This applies to all devices – computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
  • Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.
  • Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.
  • Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.

 

There are also a few additional steps people can take a few times a year to make sure they have not become an identity theft victim.

 

Receive a free credit report from each of the three major credit bureaus once a year. Check it to make sure there are no unfamiliar credit changes. Create a “My Social Security” account online with the Social Security Administration. There users can see how much income is attributed to their SSN. This can help determine if someone else is using the SSN for employment purposes.

 

The IRS, state tax agencies and the tax industry are committed to working together to fight against tax-related identity theft and to protect taxpayers. But the Security Summit needs help. People can take steps to protect themselves online. Visit the “Taxes. Security. Together.” awareness campaign or review IRS Publication 4524, Security Awareness for Taxpayers, to see what can be done.

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Get Tax Help Today!

Dear taxpayers,

Are you stressed, confused or frustrated with the IRS?

During each phone call with an IRS representative you probably think you can handle it on your own, but a few hours go by and you still can’t find a solution.

With every letter you get more and more overwhelmed.

You are not alone. Thousands of Americans face this issue.

We’re here to tell you that there is a way out.

Get help … from a professional! Stop asking friends and family for advice. What worked for them may not work for you.

We highly encourage investing in your financial security. How? By hiring a tax lawyer.

It doesn’t have to be expensive. IRS Audit Group offers free consultations for struggling taxpayers.

After one meeting, we will learn about your tax situation, develop a plan and begin communicating with the IRS for you.

Trust us and our countless clients who are now debt, stress and worry-free.

Your tax problems won’t go away on their own. Quite the opposite, they will get worse the more you try ignore them.

Like we always say: Don’t panic, but don’t delay!

Browse our website to see our services

irs-audit-group.com

Then give us a call to get started!

1(888) 300-6670

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How IRS Audit Group Can Resolve Your Tax Issues

You may feel stuck and overwhelmed when dealing with the Internal Revenue Service, but it doesn’t have to be so hard. With a tax professional, like those at IRS Audit Group, you can put your trust in their hands to represent you.

 

Our CPAs and enrolled agents specialize in tax audit representation, but our services don’t stop there … If you have questions about the process or would like to obtain an IRS payment plan, we’re here to help!

 

It’s time to take care of IRS debt, tax liens, wage garnishment and offer in compromise. IRS Audit Group has over 15 years of experience and we continue to provide high quality service at a great value. We offer 100% customer satisfaction and a money back guarantee.

 

Still debating on taking the plunge and hiring a pro? Financial Buzz knows how you feel. Their advice: “As life gets more complicated, so do taxes. Marriage, kids, mortgages and assets make each tax return more and more involved … Hiring an experienced professional to do your taxes is the best decision in the long run. Even though they come at a cost, you may find yourself saving thousands of dollars over time.”

 

Regardless of the type of tax help you need, IRS Audit Group has the answers to all of your questions. Avoid future complications and get help from REAL people, not robots or someone behind a screen. Contact us today for a free consultation.

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Online Security: Seven Steps for Safety

*Originally published on irs.gov as part of their National Tax Security Awareness Week.

During the online holiday shopping season, the IRS, state tax agencies and the tax industry remind people to be vigilant with their personal information. While shopping for gifts, criminals are shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file a fraudulent tax return.

 

Anyone who has an online presence should take a few simple steps that could go a long way to protecting their identity and personal information.

 

The Internal Revenue Service, state tax agencies and the tax community, partners in the Security Summit, are marking “National Tax Security Awareness Week”, Nov. 27-Dec. 1, with a series of reminders to taxpayers and tax professionals. In part one, the topic is online security.

 

Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund.

 

Here are seven steps to help with online safety and protecting tax returns and refunds in 2018:

  • Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.
  • Avoid unprotected Wi-Fi. Beware purchases at unfamiliar sites or clicks on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
  • Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords. An attachment may download malware that tracks keystrokes.
  • Keep a clean machine. This applies to all devices – computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
  • Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. Use a password manager, if necessary.
  • Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.
  • Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. And, when disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before trashing.

 

There are also a few additional steps people can take a few times a year to make sure they have not become an identity theft victim.

 

Receive a free credit report from each of the three major credit bureaus once a year. Check it to make sure there are no unfamiliar credit changes. Create a “My Social Security” account online with the Social Security Administration. There users can see how much income is attributed to their SSN. This can help determine if someone else is using the SSN for employment purposes.

 

The IRS, state tax agencies and the tax industry are committed to working together to fight against tax-related identity theft and to protect taxpayers. But the Security Summit needs help. People can take steps to protect themselves online. Visit the “Taxes. Security. Together.” awareness campaign or review IRS Publication 4524, Security Awareness for Taxpayers, to see what can be done.

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Getting Ready for Tax Season

Below are steps taxpayers can take now to ensure smooth processing of their 2017 tax return and avoid a delay in getting their refund next year. The Internal Revenue Service (IRS) advises taxpayers to get ready for the upcoming tax filing season by gathering documents, renewing expiring ITINs, and get prepared for refunds.

 

For additional help, hire a tax expert, like our team at IRS Audit Group to guide you through the process. It is better to get a head start to prevent missteps later. As we enter the tax season, contact us to book an appointment and we can review everything together so you don’t deal with another year of tax stresses on your own.

 

Start by gathering documents. File a complete and accurate tax return by making sure the IRS has all the documents before filing your return, including 2016. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. Doing so will help avoid refund delays and the need to file an amended return later. Confirm that each employer, bank or other payer has a current mailing address.

 

Renew Expiring ITINs before the end of the year. Doing so promptly will avoid a refund delay and possible loss of key tax benefits. Any ITIN not used on a tax return in the past three years will expire on Dec. 31, 2017. Similarly, any ITIN with middle digits 70, 71, 72 or 80 will also expire at the end of the year. Anyone with an expiring ITIN who plans to file a return in 2018 will need to renew it using Form W-7.

 

Refunds Held for Those Claiming EITC or ACTC Until Mid-Feb: By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC.

 

The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards starting on Feb. 27, 2018, if direct deposit was used and there are no other issues with the tax return.

 

For a faster refund you can choose to e-file or use direct deposit. Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Nearly 90 percent of all returns are electronically filed. There are several e-file options:

 

Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account. There’s no reason to worry about a lost, stolen or undeliverable refund check.

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What to Expect During the 2018 Tax Season

The best reason to hire a tax expert is because the regulations are constantly changing and you can’t be expected to know and remember all of them. The U.S. Treasury Department is currently working on their plan to pull “burdensome tax rules” in hopes of simplifying the tax filing process. At IRS Audit Group, we make sure to follow along with the latest edits to any and all of the requirements so we can best serve you during tax season.

 

One thing to remember is that the official filing deadline is April 17, 2018 (as the 15th is a Sunday and the 16th is Emancipation Day in Washington, D.C.) While many people don’t look forward to the process, countless others – who earn wages and get taxed on them – are excited for a generous tax return.

 

The IRS starts processing tax returns for income earned in 2017 on January 22, 2018. Returns with refunds are typically processed and payments issued within 21 days. For paper filers, this can take much longer.

 

Taxpayers can use “Where’s My Refund?”  to check the status of their return within 24 hours after IRS has received an e-filed return or four weeks after receipt of a mailed paper return. “Where’s My Refund?” has a tracker that displays progress through three stages.

  1. Return Received
  2. Refund Approved
  3. Refund Sent

 

How quickly a taxpayer receives a refund also depends on when they file and whether they have requested a direct deposit of their refund, or a paper check. The sooner you file, the sooner you’ll get your return. The week before the deadline is usually the busiest so it’s good to plan ahead. Contact us today to begin planning!

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Key Tax Tips for Small Business Owners

Although JPMorgan Chase does not provide tax services, they do offer great insight on how small business owners can maintain taxes. Contact IRS Audit Group with questions and we’d be glad to help!

Small businesses are often so focused on generating revenue and keeping operations running smoothly throughout the year that tax-related concerns are procrastinated until tax day comes. Tax mistakes carry some pretty costly expenses, including penalties, a hefty tax bill, or even leaving money on the table in the form of untaken tax deductions.

Here are key tips from business tax experts:

1. Pay the correct amount of estimated taxes

Especially true for new solopreneurs and independent contractors in gig economy positions, just underestimating taxes and creating tax debt can cause significant issues later.

Justine Lackey, founder of Good Cents Bookkeeping Inc. says, “When people make their first foray into entrepreneurship, they do so rather blindly, and they fail to discuss the tax implications with their CPAs or bookkeepers. If it’s someone first rodeo, they may not pay estimated taxes at all, and they end up with a huge, and often unmanageable tax bill when they file their return.”

“A great way to make sure you can pay your taxes, is to squirrel away money,” Lackey advises. “A good ballpark is to save 25 percent all money earned in a separate tax account. Then, once each quarter, remit the money to federal and local tax agencies.”

2. Stay ahead of retirement account contributions

Crystal Stranger, EA, President of 1st Tax and the author of “The Small Business Tax Guide,” says that the limit to contributions in a Simplified Employee Pension Plan (SEP), is generally 25 percent of net income or up to $53,000 for the 2015 tax year, depending on your plan. She cautions that not being mindful of this and not staying on top of net income tallies “can easily lead to making excess contributions, subjecting the taxpayer to an excess contribution penalty in addition to the amounts not being deductible.” Furthermore, “if that excess contribution is not removed, you can be penalized for this every year until the amount is withdrawn.”

3. Document amounts paid to independent contractors

Businesses that outsource specific jobs to contractors are required to file 1099-MISC form with the IRS when payments of $600 or more have been made to the contractor throughout the year. Dave Du Val, VP of Customer Advocacy at TaxAudit.com warns that “without proof of payment these amounts are unlikely to be allowed in an audit.” In addition, “if the required 1099-MISC forms are not issued, penalties are likely.”

The flipside to this is worker misclassification. While classifying an employee as 1099 can have advantages to the business owner, they should be classified as a W-2 employee if the worker is an actual employee with set hours. Failure to classify workers correctly can leave the business liable for past taxes and penalties.

4. Keep great documentation

“Many small businesses, particularly small sole proprietors, keep poor records that end up costing them money in the long run. If good records aren’t kept, the IRS may disallow some deductions and credits, or worse, decide that the company isn’t a business, but actually a hobby. In that case, you end up with all of the tax with none of the deductions!” says Christopher Jarvis of Lone Wolf Financial Services.

Part of poor recordkeeping is often a result of commingling personal and business bank accounts. Jarvis advises, “The IRS is going to want to know how you differentiate between personal funds and business funds, and how you can separate business and personal expenses when it is all in the same account. Ideally, the company should have its own bank account, and all income resulting from work that business does gets deposited into the business bank account. Then the company writes a paycheck to the owner, who deposits it into his personal account.”

His suggestion to small businesses? “Invest in some inexpensive software or apps to help track your records, or pay a professional. And look to get items like bank statements sent to you or access them online instead of relying on a paper statement. The cost of a professional bookkeeper or accountant is often the best investment a company can make.”

Originally published here.

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How to Settle Your IRS Tax Debt

Do you have tax debt, but don’t know what to do about it? You definitely shouldn’t let the letters and notices pile up – especially if they’re coming from collection agencies who are after money owed to the Internal Revenue Service. You also don’t have to face the IRS alone. When it comes to settling tax debt, it helps to have someone by your side.

 

According to Publication 594 of the IRS, “The collection process is a series of actions that the IRS can take to collect the taxes you owe if you don’t voluntarily pay them. The collection process will begin if you don’t make your required payments in full and on time, after receiving your bill.”

 

Sometimes it’s not as easy as paying off what you owe. In most cases, you’ll need the help of a tax professional to negotiate with the IRS. Our enrolled agents have seen countless cases, varying in amount owed and levels of difficulty, but each time they have been successful in relieving taxpayers of monetary burdens.

 

Learn about the several ways to pay or reduce costs and let us know how we can help:

  • Installment Agreement/Payment Plan – Similar to a monthly credit card payment. The IRS payment plan would allow you to pay off your unpaid back taxes in installments instead of all at once.
  • Offer in Compromise – Settle your tax debts for less than what you owe. This could save you thousands of dollars in taxes, penalties and interest if you are given the opportunity to pay that small amount as a full and final payment.
  • Not Currently Collectible – This means that a taxpayer has no ability to pay their debts. The IRS can declares them “currently not collectible” only after the receiving evidence that there is no ability to pay.
  • Bankruptcy – You should consider bankruptcy only if you meet the requirements for discharging your taxes. Income tax debts may be eligible for discharge under Chapter 7 or Chapter 13 of the Bankruptcy Code.
  • Fresh Start Initiative – Under the new and more flexible rules issued by the IRS, taxpayers do not have to disclose extensive financial details to the IRS to judge their paying ability. This initiative offers several advantages.

 

If you are familiar with our services then you know IRS Audit Group can help you with any of the options listed above. With our advice, you’ll be one step closer to achieving financial stability and getting back on your feet. We are experts in tax debt resolution and are ready to work on your case. Call us today to get started!

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Beware of IRS Scammers

As always, scammers who impersonate Internal Revenue Service officers are still a threat to taxpayers. They have been tricking innocent people and robbing them of money and peace of mind. We’ve compiled a list to help you determine real IRS representatives from fake ones so you can protect yourself:

 

  • The IRS is NOT aggressive in their approach. Scammers are typically rude over the phone and easily agitated.
  • The IRS does NOT initiate contact with taxpayers by email, text messages or social media channels.
  • The IRS does NOT mention law enforcement efforts such as: local police or immigration officers.
  • The IRS mails notification letters to taxpayers if they owe any taxes and do NOT request immediate payment via wire transfers. (Payments must only be sent to United States Treasury)
  • Taxpayers can request credentials for the representative to prove they are there for an IRS visit.

 

Following these tips will keep you safe, but if you find yourself in a sticky situation you can always give IRS Audit Group a call. We’ll help you avoid this in the future and verify that your information is in good hands. Also, share this blog so your family and friends can steer clear of scammers as well.

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