IRS will soon examine U.S. taxpayers with undeclared Indian bank accounts.

Posted by Sanket Shah | General | Friday 19 May 2017 2:38 pm

Reporting on a California State Bar Tax Section Meeting, Tax Notes reports that the IRS will soon (as early as the week of 11/11/13) ) begin examining U.S. taxpayers suspected of holding undeclared accounts in Indian banks, according to Nicholas Connors, a supervisory revenue agent with SEP.

Read the full Tax Notes here.

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New standard mileage rates beginning January 1, 2015

Posted by Sanket Shah | General | Friday 19 May 2017 2:36 pm

The Internal Revenue Service on December 10, 2014 issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

57.5 cents per mile for business miles driven, up from 56 cents in 2014

23 cents per mile driven for medical or moving purposes, down half a cent from 2014

14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously).

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Surrendering Green Card – New Form I­-407

Posted by Sanket Shah | General | Friday 19 May 2017 12:57 pm

In February 2015, the Department of Homeland Security, U.S. Citizenship and Immigration Services issued a new Form I­-407 for the abandonment of an individual’s United States green card (technically, “lawful permanent resident” status).

The new Form I­-407 now provides a separate section to obtain the consent of parents of minors who relinquish the green card. As in the old form, the new form asks for reasons for abandonment of the green card, but this question now appears to be more formally presented and appears to require a more detailed statement.

Giving It Up: No Fee — Yet!

Green card holders are taxed in the same manner as US citizens: they are both subject to US income tax on their worldwide income regardless of the source of that income and regardless of where the green card holder or citizen is living at the time it is earned. However, they are not treated exactly the same when it comes to relinquishing their US status. The US citizen who renounces his US citizenship, must now pay a fee of $2,350 for the privilege of doing so. On the other hand, there is still no fee for relinquishing one’s green card.

Internal Revenue Service is Notified When You Give Up the Green Card

Interestingly, the instructions to the new Form I-­407 specifically advise applicants that: “The Department of Homeland Security is required to provide the Internal Revenue Service (IRS) with the names of individuals who choose to abandon their LPR status. If you file this form with us, we will provide only your name and the filing date to the IRS. (Internal Revenue Code section 6039G(d)(3))”.

Dire consequences can result if an individual does not properly relinquish his green card and file all required paperwork with the IRS.

Please note, that simply because the green card has expired for immigration law purposes, it does not likewise “expired” for US income tax purposes thereby relieving them of the duty to pay US taxes.

Your Name May Appear On the “Name and Shame” List

Code Section 6039G implements the so­-called “Name and Shame” list. This is a quarterly publication in the Federal Register by the IRS listing the names of individuals about whom the IRS has received information of a loss of citizenship during the preceding quarter. This list is required to include the names not only of former U.S. citizens but of certain former green card holders. Under 26 U.S.C. § 6039G(d) (3), “the Federal agency primarily responsible for administering the immigration laws shall provide to the Secretary the name of each lawful permanent resident of the United States (within the meaning of section 7701 (b)(6)) whose status as such has been revoked or has been administratively or judicially determined to have been abandoned.”

The Federal Register provides that “for purposes of this listing, long­term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship”. So, if you’ve held your green card for at least 8 of the preceding 15 tax years, your name will appear on the “Name and Shame” list when you return the card.

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Imputed interest rules on interest free loans in US

Posted by Sanket Shah | Newsletters | Thursday 9 May 2013 1:35 pm
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Real Property received by US Person from their Indian parents.

Posted by Sanket Shah | Newsletters | Wednesday 6 February 2013 12:07 pm
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Who Should File a 2012 Tax Return?

Posted by Sanket Shah | International Tax | Tuesday 29 January 2013 5:04 pm

If you received income during 2012, you may need to file a tax return in 2013. The amount of your income, your filing status, your age and the type of income you received will determine whether you’re required to file. Even if you are not required to file a tax return, you may still want to file. You may get a refund if you’ve had too much federal income tax withheld from your pay or qualify for certain tax credits.

Even if you’ve determined that you don’t need to file a tax return this year, you may still want to file. Here are five reasons why:

1. Federal Income Tax Withheld.  If your employer withheld federal income tax from your pay, if you made estimated tax payments, or if you had a prior year overpayment applied to this year’s tax, you could be due a refund.

2. Earned Income Tax Credit.  If you worked but earned less than $50,270 last year, you may qualify for EITC. EITC is a refundable tax credit; which means if you qualify you could receive EITC as a tax refund. Families with qualifying children may qualify to get up to $5,891 dollars.

3. Additional Child Tax Credit.  If you have at least one qualifying child and you don’t get the full amount of the Child Tax Credit, you may qualify for this additional refundable credit. You must file and use new Schedule 8812, Child Tax Credit, to claim the credit.

4. American Opportunity Credit.  If you or someone you support is a student, you might be eligible for this credit. Students in their first four years of postsecondary education may qualify for as much as $2,500 through this partially refundable credit. Even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student. You must file Form 8863, Education Credits, and submit it with your tax return to claim the credit.

5. Health Coverage Tax Credit.  If you’re receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, you may be eligible for a 2012 Health Coverage Tax Credit. Spouses and dependents may also be eligible. If you’re eligible, you can receive a 72.5 percent tax credit on payments you made for qualified health insurance premiums.

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US Persons investments in Indian Mutual Funds are treated as PFICs

Posted by Sanket Shah | Newsletters | Thursday 1 November 2012 8:47 pm
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US Person liable for Self-employment tax if they are self-employed abroad.

Posted by Sanket Shah | Newsletters | Friday 7 September 2012 4:15 pm
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A new streamlined filing compliance procedures for non-resident U.S. taxpayers went into effect on September 1, 2012

Posted by Sanket Shah | General | Tuesday 4 September 2012 4:33 pm

Description of the New Streamlined Procedure

This streamlined procedure is designed for taxpayers that present a low compliance risk. All submissions will be reviewed by the IRS, but, the intensity of review will vary according to the level of compliance risk presented by the submission. For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions. Submissions that present higher compliance risk are not eligible for the streamlined processing procedures and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program (OVDP).

Taxpayers utilizing this procedure will be required to file delinquent tax returns, with appropriate related information returns (e.g. Form 3520 or 5471), for the past three years and to file delinquent FBARs (Form TD F 90-22.1) for the past six years. Payment for the tax and interest, if applicable, must be remitted along with delinquent tax returns.

Eligibility

The eligibility requirement is on the questionnaire that a taxpayer must submit (see attached questionnaire by clicking on http://slidesha.re/OjdYpH)

The taxpayer qualifies only if each of the following questions answered No.

1. Have you resided in the U.S. for any period of time since January 1, 2009?
2. Have you filed a U.S. tax return for tax year 2009 or later?
3. Do you owe more than $1,500 in U.S. tax on any of the tax returns you are submitting through this program?
4. If you are submitting an amended return (Form 1040X) solely for the purpose of requesting a retroactive deferral of income on Form 8891, are there any adjustments reported on the amended return to income, deductions, credits or tax?

You can read further about the program and its instructions at http://1.usa.gov/PFp8VJ

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Tax implications in India and US on sale of property held by US person in India

Posted by Sanket Shah | Newsletters | Tuesday 7 August 2012 10:52 am

NEWSLETTER SYNOPSIS:
Do you own, plan to purchase
or anticipate to receive an
immovable property in India.
What are the tax implications in
India and US on sale of property
held by US person in India.

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