New Procedures to Help Taxpayers Living Abroad

For citizens and dual citizens residing overseas, filing taxes can be a true headache. There are special laws to be aware of, new forms to fill out, and new hoops to jump through that you might not even be aware of until after you either lose money or accidentally shirk the law. The IRS is aware that there are many US expats who have failed, in all innocence, to properly file their tax returns or Reports of Foreign Bank and Financial Accounts, and is now trying to make it easier for such people to clean their records.

New procedures, effective as of September 1st, 2012, allow low compliance risk individuals to catch up on their tax returns with no threat of additional penalties or enforcement action. Such individuals will usually have simple tax returns and owe between $0 and $1,500 in back taxes for the past three years. Anyone taking advantage of these new procedures will be required to file a delinquent tax return in addition to related information returns for the appropriate years. Higher compliance risks may be subject to a more thorough review and possibly an audit, which may cover more than the past three years.

Additionally, the IRS announced that these new procedures will resolve tax issues related to certain foreign retirement plans. Tax treaties have often allowed for income deferral under US law only if an election is made on a timely basis, but the new, streamlined system will rectify this situation for low compliance risk situations.

If you are a citizen or a dual citizen who may be able to benefit from these new procedures, contact the Alisa Na CPA is Seattle today.

Tips for Avoiding Scams

As a Seattle small business accounting firm, we encounter a variety of tax advice, ranging from prudent to downright shady.  An example of the latter type is a recent scam wherein con artists contact people who would not normally need to file taxes–often seniors and low-income individuals–and claim to be able to help them obtain a tax refund.  (Other common variations include stimulus funds or college enrollment tax credits.)  The scammer will generally charge a hefty fee, ostensibly to obtain this nonexistent money, but drop out of touch before delivering anything.  The IRS’s official statement and your Seattle small business CPA can both provide further information on detecting tax refund scams.  As a general rule of thumb, if you do not need to file, you are probably not eligible for any refund/credit, regardless of what these too-good-to-be-true offers may claim.

Start Planning Now for Next Year’s Tax Return

The firm of Alisa Na, a trusted personal and small business CPA in Seattle, urges you to start preparing for your 2012 tax returns today. We suggest the following in order to make next year’s process as easy and efficient as possible:

  • Reduce your withholding to enjoy more savings now, rather than in another year
  • Keep this year’s documents secure and easily accessible
  • Begin and/or maintain an orderly filing system
  • Make sure your employer withholds the proper amounts from each paycheck
  • Find a Seattle small business CPA or personal tax expert sooner, rather than later
  • Learn which items are and are not valid tax deductions, and start planning accordingly
  • Ask your CPA how best to take advantage of tuition payment deductions
  • Use the IRS’s resources to keep informed of tax law changes

Read the latest IRS newsletter for more detailed information on how to save time and money with your next tax return, and we encourage you to contact Alisa Na, CPA to learn more.