by Donya Curry | Nov 11, 2018 | Business, Individuals
Foreign Reporting
Requirements
By law, U.S. citizens and residents must report their
worldwide income. This includes income from foreign trusts and foreign bank and
securities accounts.
You must file required tax forms. You may need to file
Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may
also need to file Form 8938, Statement
of Specified Foreign Financial Assets. Certain domestic corporations,
partnerships, and trusts that are considered formed or availed of for the
purpose of holding, directly or indirectly, specified foreign financial assets
(specified domestic entities) must file Form 8938 if the total value of those
assets exceeds $50,000 on the last day of the tax year or $75,000 at any time
during the tax year.
There is a foreign earned income exclusion. If you qualify,
you won’t pay tax on up to $100,800 of your wages and other foreign earned
income.
Unmarried taxpayers. If you are not married, you satisfy the
reporting threshold only if the total value of your specified foreign financial
assets is more than $50,000 on the last day of the tax year or more than
$75,000 at any time during the tax year.
Married taxpayers filing a joint income tax return. If you
are married and you and your spouse file a joint income tax return, you satisfy
the reporting threshold only if the total value of your specified foreign
financial assets is more than $100,000 on the last day of the tax year or more
than $150,000 at any time during the tax year.
Specified foreign financial assets include the following
assets.
1. Financial accounts maintained by a foreign financial
institution.
2. The following
foreign financial assets if they are held for investment and not held in an
account maintained by a financial institution:
a. Stock or securities issued by
someone that is not a U.S. person (including stock or securities issued by a
person organized under the laws of a U.S. possession),
b. Any interest in a foreign
entity, and c. Any financial instrument or contract that has an issuer or
counterparty that is not a U.S. person (including a financial contract issued
by, or with a counterparty that is, a person organized under the laws of a U.S.
possession).
Exceptions: If you do not have to file an income tax return
for the tax year, you do not have to file Form 8938, even if the value of your
specified foreign financial assets is more than the appropriate reporting
threshold.
Duplicative reporting. You do not have to report any asset
on Form 8938 if you report it on one or more of the following forms that you
timely file with the IRS for the same tax year.
Form 3520, Annual Return To Report Transactions With Foreign
Trusts and Receipt of Certain Foreign Gifts.
Form 5471, Information Return of U.S. Persons With Respect
To Certain Foreign Corporations.
Form 8621, Information Return by a Shareholder of a Passive
Foreign Investment Company or Qualified Electing Fund.
Form 8865, Return of U.S. Persons With Respect to Certain
Foreign Partnerships. Instead, you must identify on Form 8938 the form(s) on
which you report the specified foreign financial asset and how many of these
forms you file.
In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts.
Visit IRS.gov for more information. The FBAR is not filed with a federal tax
return. When the IRS grants a filing extension for a taxpayer’s income tax
return, it does not extend the time to file an FBAR. It should be filed at https://bsaefiling.fincen.treas.gov/main.html.
- the US person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- the aggregate value of all foreign financial accounts exceeded $10,000 at anytime during the calendar year reported.
The new annual due date for filing Reports of Foreign Bank
and Financial Accounts (FBAR) for foreign financial accounts is April 15. Schedule
an appointment today so IATC Inc can help you.
by Donya Curry | Oct 8, 2017 | Business
Bookkeeping is one of the most outsourced functions of today’s accounting firms and businesses. A fairly large amount of accountants would gladly tell you it’s not worth their time to do your bookkeeping. Accountants at International Accounting & Tax Consultants feel just the opposite. Bookkeeping and accounting are really not the same thing. Bookkeeping is just one of the many functions of accounting. Accounting encompasses many different functions involved in managing the financial affairs of a business. Accountants do prepare reports based largely on the work of the bookkeepers.
Bookkeeping is a crucial record-keeping task. Bookkeeping is considered entry level work, but it actually forms the foundation of information your accountant uses. When transactions are not properly recorded it’s costly to have to go back through your books and find the error. Preparing source documents for all the operations of a business. The transactions recorded cover buying, selling, transferring, paying and collecting activities. The source documents include papers such as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports. Bookkeeping involves the ability to determine and enter in the source documents the financial effects of the transactions and other business events. Those include paying the employees, making sales, borrowing money or buying products or raw materials for production.
Bookkeepers also make entries of the financial transactions into journals and accounts. A journal is the record of transactions in chronological order. An accounts is a separate record, or page for each asset and each liability. One transaction can affect several accounts.
Bookkeeping involves preparing reports at the end of specific periods of time, such as daily, weekly, monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory records must be updated and the reports checked and double-checked to ensure that they’re as error-free as possible. A bookkeeper also compiles the adjusted trial balance. While a small business may have a hundred or so accounts, very large businesses can have thousands of accounts. You have probably heard once or twice before about closing the books, which means bringing all the bookkeeping for a fiscal year to a close and summarized. Bookkeeping is still an important task for any company. Give your company the best foundation you can by using knowledgeable professionals like those at IATC.
by Donya Curry | May 15, 2017 | Business
Ever since our incorporation IATC Inc. has been assisting
entrepreneurs with their business accounting. In the past few years the US and
Canada has seen a large demand from businesses who are into producing and
selling Cannabis. They have run into various roadblocks that have limited their
potential to grow and succeed. They have legal road blocks because of Sec.
280E. This code takes away deductions or credits for businesses that carrying
on a trade or business if such trade or business which consists of the
trafficking in controlled substances. Marijuana is being slowly allowed on the
state level, but is still a Schedule I controlled substance affected by such
regulations. The businesses are being
provided generic accounting services which are exposing these companies to
unnecessary liabilities. The tax rate of 70% being paid by Cannabis companies
are the highest in the US from the state and federal level.
Cannabis businesses have found it difficult to be properly
serviced in these critical areas such as banking, accounting, and legal. We
took our time to learn about this industry and create specific accounting
systems and procedures that help cannabis companies stay compliant throughout
the US. Due to the specialized knowledge required we created our own green
division within IATC that assist businesses within the cannabis arena. If you
have a cannabis company and need expert help IATC Inc. is the company for you. Call
us today at (202) 780-4494.
by Donya Curry | Aug 5, 2016 | Business, Individuals, Non Profits
If you watch the news you will probably feel like there are major unexpected disasters happening every week. Unfortunately, you would still be underestimating the number of serious disasters in this country. FEMA actually tracks this data, and so far in 2016 there have been at least 69 declared disasters this year.
If you are not going to consult with a professional please review the IRS Pub 547 as it covers disasters, casualties, and thefts in-depth. A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. It includes a major disaster or emergency declaration under the Act. It is true that you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return. There are always important distinctions and rules to follow. One issue that clients struggle with is not being able to deduct casualty and theft losses covered by insurance. You have to actually own the property to deduct the loss. You can be the person paying for the property, but if you are not the property owner the IRS will disallow all deductions.
What’s the difference between these losses? A casualty loss comes from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration. This definition is a determining factor for clients on if you can qualify for casualty losses.
A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. You might be thinking now you can deduct some stolen items like a cellphone, laptop, or jewelry. I wouldn’t get my hopes up high just yet. The amount of your theft loss is normally your adjusted basis of the property, because the fair market value of your property after the theft is considered to be zero.
Time to Deduct
Casualty losses are deductible in the year the casualty occurred. Casualty losses from a federally declared disaster that occurred in an area warranting public or individual assistance have the option to treat the casualty loss as having occurred in the previous year immediately preceding the tax year in which the disaster happened, or you can deduct the loss on your return for the preceding tax year.
Theft losses are normally deductible in the year you discover your property was stolen unless you have a chance of recovery through a claim for reimbursement. No deduction is available until the taxable year in which you can determine with reasonable certainty whether or not you will receive a reimbursement.
Casualty Property Type
Personal-use property or property that is not completely destroyed. Casualty losses are the smaller of:
- The adjusted basis of your property, or
- The decrease in fair market value of your property as a result of the casualty
Business or income-producing property that are completely destroyed losses is the adjusted basis.
Insurance or Other Reimbursements
You must reduce the loss first, whether it is a casualty or a theft loss by the salvage value and by any insurance or other reimbursements you receive or expect to receive. The adjusted basis of your property is the cost including any improvements or depreciation.
How to Claim Your Loss
Individuals have to claim their casualty and theft losses as an itemized deduction on Schedule A. You should have subtracted any salvage value, and any insurance or other reimbursement of Personal use property already. You must now subtract $100 from each casualty or theft event that occurred during the year and add them all up. 10% of your adjusted gross income is subtracted from the total to calculate your allowable casualty and theft losses for the year. Casualty and theft losses should be reported on Form 4684.
If your loss deduction is more than your income, you may have a net operating loss (NOL). The NOL is for individuals as well as business to have an NOL from a casualty the treatment is identical. Any unused portion of a casualty loss deduction can be carried back for three years, and then carried forward for 20 years until it’s used up. In a tax year you don’t have any income you can take advantage of the deduction in the future.
by Donya Curry | Jun 17, 2016 | Business, Individuals, Non Profits
It is summer already and half of the year has already passed by. Life changes like getting married or a new job can be exciting events. This is the perfect time to see your accountant for a quick tax checkup. I normally recommend clients send in their most recent paystub. I use the stubs to check if the amount of taxes being withheld is accurate. I use this time to remind clients of the recommended strategies for tax minimization given to them previously.
The summer is provides a little more free time than during the busy season. If the strategies suggested are no longer viable we can formulate a plan tailored to your liking. A checkup is a great way to avoid any unexpected surprises at the tax desk. It still gives you time to prepare for changes you might have not been aware of. If you’re a do it yourself small business problems with your books are easier to find with less transactions. The details of events are easier to be remembered now rather than a year later.
I know it can be stressful when the tax bill is larger than originally planned. Having that knowledge know can empower you to make necessary changes for your business. You can enjoy your vacation knowing your accounting is in order. If you need bookkeeping services or an individual tax review you should Contact Us today at International Accountants and Tax Consultants.
by Donya Curry | Nov 16, 2015 | Business
Do you have an employee or contractor working for you? Workers can be either an employee or independent contractors. It would be a good idea to get this issue squared away at the beginning of a business relationship. Confusion on the part of the employee or employer can be a costly mistake. Employees are treated as taxable workers subject to payroll taxes. Independent contractors are self-employed individuals who are responsible for paying their own taxes. Contractors payments are reported on a form 1099. The reporting requirements are also different for both groups. A 1099 is required to be sent to the contractor if you made payments to them that totaled $600 or more in a tax year. Employees earnings are required to be reported on W-2.
The facts surrounding the relationship will provide evidence toward the degree of control and independence. The facts are broken down into three categories.
- Behavioral Facts: Surrounds the issue of if the company controls or have the right to control what the worker does and how the worker does the job?
- Financial Facts: This area focuses on the the business aspects of the worker’s job controlled by the payer. Does the payer pay all of the expenses, supplies all of the tools or supplies, how does the company actually pay the worker?
- Type of Relationship: Do you have any written contracts? Do you provide any employee type benefits for the worker like a pension plan, health insurance, etc.? Will the relationship continue and is the work performed as a key aspect of the business?
An independent contractor is a self-employed person. In this business relationship the entity paying you have the right to control or direct only the results of the work. The independent contractor should be controlling what will be done and how it will be done. The earnings of a self-employed person working as an independent contractor are subject to Self-Employment Tax. They are responsible for their own FICA and income tax withholdings as an employer and employee.
A person is not considered an independent contractor if the services they perform services that are controlled by an employer. When the entity paying you is controlling what will be done and how it will be done. This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. If have an employer employee relationship the person hired is not an independent contractor and their earnings should not be subject to Self-Employment Tax. The employer is responsible for withholding taxes.
If after reviewing all of the facts your employee or contractor relationship is still not clear it might be a good idea to file form SS-8 with the IRS. Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The form SS-8 can be filed by the business or the worker. The IRS will review all of the facts and circumstances and provide you with an official determination of your worker’s status. This determination is not quick it will take months before getting the response. This is a good idea if you plan or hiring workers for similar roles in the future.
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