Larry's 2011 Tax Guide for U.S. Expats & Green Card Holders....in User-Friendly English!. Laurence E. 'Larry'

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СКАЧАТЬ speech and criticize because criticism is due but while I mumble away at times, I will still file and reveal things that I personally believe the IRS has no business knowing about because I am not going to put myself in violation of the law. And while the choice of what you tell your tax preparer is solely yours and while it is not legally the responsibility of that tax preparer to ask you any more than you provide, if you are omitting relevant data, your tax preparer will most assuredly know and ask you about it.

      Bear in mind one other thing: The IRS code, regulations, procedures, etc are, cumulatively, 10,000 percent larger than the narrative in this book - this is a real executive summary.... and while I pride myself in thinking that this is a good one, it is still only a summary and you should never, ever put full reliance upon this - in other words, read it, try to learn from it...but don't even think of suing me under the pretence of considering this to be the authoritative source upon which you rely to make your important tax decisions!

      Who does not have to file?

      For 2010, if you are single, you get a standard deduction of $US5,700. Likewise, you are entitled to a single exemption of $US3,650. $US5,700 + 3,650 = $US9,350. If your income was under that amount, then, technically, you are not legally obligated to file a tax return for that year in which your income is lower than this amount. BUT...... Let us say, you are the recipient of a 1099 from someone in the U.S. for whom you performed services that the IRS deems subject to social security tax - then you've got to file that annual return, because even though you have earned under the taxable income exclusion, you have social security/medicare tax. Yes folks, unless your income is so low that you do not fall under the obligation of having to file because of social security, then you have to file, annually, even though you do not or will not owe any taxes - you are still liable to file an annual tax return. This is the law, a law that many of you are quickly discovering that you are in violation of.

      The new, information gathering Form 8938

      This book is a continuing work in process. It is Lunar New Year’s Eve, 2011 as I reread and change things to keep the editors and publishers happy. For those of you not attuned to the Chinese new year, that means I am rereading this portion on February 2, 2011! There’ll be changes made by the IRS well into March or April that will be retroactive to January 1, 2011 and the IRS, well into the new year, will still be issuing forms retroactive to 1 January 2011. It won't be finished with the passage of the new, December 2010 tax act. Then the old Congress simply passed the buck to the next Congress to rectify the financial pickle in which the U.S. finds itself. So.....go to www.lifeilao.com. That’s my website and there’ll be periodic updates not only about U.S. tax matters but about taxation in 9 Asian jurisdictions.....and my ever-cynical blog, too.

      Yet we can portend what lies in store and will likely apply, retroactively, towards all of 2010 just by looking at a very new government form that will not be finalized until sometime early in 2011: Form 8938.

      This form was, apparently, completed by the IRS in July, 2010 but not issued for public input until late in November 2010. I received my copy from American Citizens Abroad on Sunday morning 21 November 2010. We knew that this form was coming but the manner in which it came is worthy of comment:

      •FATCA, the new U.S. tax law, was passed by both houses of Congress and signed into law by President Obama on 18 March 2010. This law specifically stated that the IRS would now be asking for the information required on this form. Why did it come out so late? Who knows? There are still practitioners who believe that the IRS will back down and make this form mandatory for 2011 tax returns, not 2010 tax returns…..only time will tell.

      * The IRS has indicated that it will hold 'open forum' through 3 January 2011, prior to its proceeding. The IRS, on its webpage, is saught public input regarding this form. That IRS website ( www.irs.gov) indicated that it anticipated receiving 350,000 comments regarding the form. All of this leads me to ask:

      •How many comments have they actually received?

      •Will people really post their comments? After running its Voluntary Disclosure Program in conjunction with the Criminal Investigation Division of the IRS for reporting prior years’ data regarding overseas bank and brokerage account, many who used this program found that they were being singled out and penalized solely because they used this program, people are now going to be leery - is public comment going to be like 'Let 100 Flowers Bloom' in China, where simply commenting might put you on the 'wrong sort of list'?

      Take a close look at this form, first.....then I'll make some comments regarding why you might just also have to file a tax return even though you are under the minimum income filing requirements…..

      O.K. now let’s look at and let me comment on each of the four sections of the form.

      Presumably, this form will have to be attached to every form 1040 filed, if that filer has banking or brokerage accounts outside of the U.S. and the accounts come to more than $US50,000:

      PART A - Foreign bank accounts with over $US50,000 at any one time during 2010. This question is also asked on the form TDF90.22-1 which must be filed by 30 June 2011 for 2010 tax returns…..only the amount under which you are required to report goes down to $US10,000, for all accounts in any one country. We’ll get to that form, specifically, later on in this book. You are only required to attach form 8938 to your individual income tax return, filling in Part A, if your total is $US50,000 or more.

      PART B – SCHEDULE OF STOCKS – Oh boy – is this more draconian than before! On the TDF90.22-1, you have to list brokerage accounts if they total over $US10,000. Here, though, if you have over $US50,000 in stocks, you have to list company by company by company held – with maximum amount per company at any one given time during 2010…..ain’t this a nightmare! What if you just happen to be a retiree, living in Thailand, falling under the scope of income reporting requirements, but having as stocks, your assets that enable you to maintain your retirement residency visa in Thailand – well now, guys, if you’ve already filed your tax return prior to the IRS formally issuing this form and providing guidelines for 2010 filing, it is more than likely that you are going to have to file, again, that U.S. tax return – just when you thought you finally got out of that requirement as part of getting to be that old. Tough luck, guys!

      PART C – OTHER INSTRUMENTS, CONTRACTS OR INTERESTS - Hey, my friends, I honestly do not know what to tell you, here – it would appear that mortgages and bank loans fall under this area – what else does? How are we to know if the IRS has not provided instructions (to determine the scope of what keeps us legal and where we might be a law violator???) – and when will these instructions come???

      PART D – INTEREST IN A FOREIGN ENTITY – Do you own your own business outside of the United States? Are you reporting it to Uncle Sam? Not only are you required to file an annual Form 5471, an information set of documents letting the IRS know about your overseas business activities (you didn’t know that? Welcome to the club – most expats have been unaware of this – only now that the IRS is enforcing $US10,000 penalties, it is time to become aware!), but now, in case you were unaware of it, you have it staring you in the face for Part D. Of course I expect that the IRS computer system will start correlating information filed on Form 8938 with the information you filed - or should have filed - on Form TDF90.22-1....and likely with the other forms mentioned in this book. There’ll be more about Form 5471 later on in this book.

      Take a look at the last column of Part D – how did this go through the IRS СКАЧАТЬ