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大西雅圖台灣婦女會

大西雅圖台灣婦女會. Foreign Bank Accounts Reporting 2013 Tax Updates Open Questions . Background: The Tax Gap . Underreporting = 84% $376 billion Underpayment = 10% $46 billion Non-Filing = 6% $28 billion. Foreign Account and Asset Reporting. FBAR FATCA. Foreign Bank Accounting Reporting.

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大西雅圖台灣婦女會

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  1. 大西雅圖台灣婦女會 Foreign Bank Accounts Reporting 2013 Tax Updates Open Questions

  2. Background: The Tax Gap Underreporting = 84% $376 billion Underpayment = 10% $46 billion Non-Filing = 6% $28 billion

  3. Foreign Account and Asset Reporting FBAR FATCA

  4. Foreign Bank Accounting Reporting Required as part of Bank Act Since 1970s US taxpayer with foreign accounts have two obligations: 1. answer “ Yes” on Form 1040, Schedule B 2. File Form TD F 90-22.1

  5. Form TD F 90.22-1 (FBAR) Required to be filed annually by 6/30 Mail to Detroit Service Center or drop off to IRS office No extensions Mailbox rule does not apply

  6. Who is required to file an FBAR (TD F 90.22-1) U.S. taxpayer U.S. person has a financial account in a foreign country U.S. person has as financial interest in, or signature of other authority over the financial account The aggregate account balance > $10,000 (USD) at any time during the calendar year

  7. Reportable Financial Account? Bank account Security and stock account

  8. Penalties for Non-Compliance Criminal penalties for willful violation: -- up to 5 years imprisonment and $250K fine Civil penalties --non-willful violation : up to $10,000 for each violation --Willful violation: greater of $100K or 50% of the balance in the account at the time of violation Both Civil and criminal penalties can be imposed

  9. Increasing Rates of FBAR Form 2004 and 2009, increased to 145% FBAR related examinations increased 96% FBAR penalty assessments increased from $4.2 million 2010 – increased to 173% 2011 - increased to 184%

  10. The Foreign Account Tax Compliance Act ( FATCA)

  11. What is FATCA? “The FATCA is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.” FATCA was enacted in 2010

  12. Requirements U.S. taxpayer with specified foreign financial assets that exceed thresholds must reports those assets to IRS. Beginning in 2013, foreign financial institutions will be requires to report directly to the U.S. government information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayer hold a substantial ownership interest

  13. FORM 8938 requirement File with U.S. income tax return You have an interest in specific foreign financil assets The aggregate value of your specific foreign financial assets in more than the reporting threshold that applies to you.

  14. What is Specified Foreign Financial Assets? Foreign bank accounts Foreign mutual funds Foreign hedge funds Foreign private equity funds Certain foreign insurance products

  15. Continued (SFFA) Stock or securities issued by someone other than U.S. person Any interest in a foreign entity Any Financial instrument or contract that has an issuer that is other than a U.S. person Foreign pensions and deferred compensation plans Foreign trust and estates

  16. Reporting Thresholds Unmarried taxpayer living in the U.S. - $50,000 on the last day of year or $75,000 at any time during the year Married taxpayers-MFJ -$100,000 or $150,000 Married taxpayers- MFS -$50,000 or $75,000

  17. Rules for Form 8938 File with income tax return – Form 1040 If you do not have to file an income tax for the tax year, you do no need to file form 8938, even if the value of your specified foreign assets is more than the appropriate reporting threshold.

  18. Penalties for non-Filing of form 8938 May result $10,000 civil penalty + $10,000 continuation penalty for each 30 days period after the taxpayer is notified by IRS (max $50K) Exception if failure is due to reasonable cause and not willful neglect Criminal penalties may apply

  19. 2013 Tax Update American Taxpayer Relief Act of 2012

  20. Filing Requirement

  21. Tax Brackets

  22. Capital Gains and Dividends Long term capital gain and qualified dividend = 15% tax rate Capital loss deduction = $3000

  23. Education Tax Credit American Opportunity Tax Credit – max $2500 Tuition and Fee Deduction - $4000 Extended for five years to 2017

  24. Affordable Care Act • 1/1/2014 all American must have health insurance • Penalty • 2014 is greater of $95 or 1% of household income • 2015 is greater of $325 or 2% of household income • 2016 is the greater of $695 or 2.5% of household income • Children = 50% of normal penalty up to $2250 for all children

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