大西雅圖台灣婦女會
• Foreign Bank Accounts Reporting
• 2013 Tax Updates
• Open Questions
Underreporting = 84% $376 billion
Underpayment = 10% $46 billion
Non-Filing = 6% $28 billion
Background: The Tax Gap
Foreign Account and Asset Reporting
FBAR
FATCA
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
Foreign Bank Accounting Reporting
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
Form TD F 90.22-1 (FBAR)
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
Who is required to file an FBAR
(TD F 90.22-1)
Bank account
Security and stock account
Reportable Financial Account?
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
Penalties for Non-Compliance
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%
Increasing Rates of FBAR
The Foreign Account Tax Compliance Act
( 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
What is FATCA?
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
Requirements
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.
FORM 8938 requirement
Foreign bank accounts Foreign mutual funds Foreign hedge funds Foreign private equity funds Certain foreign insurance products
What is Specified Foreign Financial
Assets?
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
Continued (SFFA)
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
Reporting Thresholds
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.
Rules for 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
Penalties for non-Filing of form 8938
2013 Tax UpdateAmerican Taxpayer Relief Act of 2012
Filing Status
Married Individuals Filing Joint Returns and Surviving Spouses
$20,000
Heads of Households $16,770
Unmarried Individuals/ Single
$10,000
Married Individuals Filing Separate Returns
$10,000
65 years older or BlindAdditional $1,200 –MFJ$1,500 - Single
Filing Requirement
Tax Rate Married Filing Joint
10% up to $17850
15% $17,851- $72,500
25% $72,501 - $146,400
28% $146,401- $223,050
33% $223,051 - $398,350
35% $398,351 -$450,000
39.60% over $450,000
**Single =39.6% over $225,000
Tax Brackets
Long term capital gain and qualified dividend = 15% tax rate
Capital loss deduction = $3000
Capital Gains and Dividends
American Opportunity Tax Credit – max $2500
Tuition and Fee Deduction - $4000
Extended for five years to 2017
Education Tax Credit
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
Affordable Care Act