tax obligations of us persons residing abroad
TRANSCRIPT
1Randy Hensley, CPA 2016
OBLIGATIONS OF US PERSONS LIVING IN GREECE
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WHAT WE’LL COVER
• Definition of US Persons• Obligations of US Persons• The impact of non-compliance• Benefits of compliance• IRS Procedure to become compliant• Where do I go from here?
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DEFINITION OF US PERSONS
US Persons include:• All US citizens:
• Born in the US• Naturalized as an adult or child by US parent
• All US residents, including Green card holders*
* Individuals holding a green card have resident status unless it is taken away from them or is administratively or judicially determined to be abandoned.
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OBLIGATIONS OF US PERSONS
US Persons are required to annually:1. file a US tax and information returns
including their world-wide income, even if they do not have US-sourced income, if their total income is above certain levels (e.g. $10,300 for single filing status)
2. file a Foreign Bank Account Report (FBAR) providing information on all financial accounts held outside the US (where the aggregate value of all accounts exceeds $10,000 during the year)
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THE IMPACT OF NON-COMPLIANCE
• The IRS is taking measures to identify all US persons (e.g. with FATCA foreign financial institutions are preparing to report to the IRS the financial accounts held by US persons)
• There is no statute of limitation on an unfiled tax return. If caught you will be required to become compliant and pay all penalties:
• Penalties for not filing tax return by June 15th:• Failure to file (5%/mo., max 25% - imposed on tax due),• Failure to pay (0.5%/mo., max 25% - imposed on tax due),• Information return penalties (e.g. F8938: $10,000-50,000)• Accuracy related penalties.
• Penalties for not filing FBARs by June 30th:• Willful: $100,000 or 50% of account balance• Non-willful: $10,000 per account
• Tax compliance is a prerequisite for those willing to renounce citizenship / hand in green card.
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BENEFITS OF COMPLIANCE
• Settle your tax position now*, taking advantage of the procedure, and:• avoid late filing penalties• 3 year statute of limitation on a filed tax return (6 yrs in limited
situations) • avoid dealings with the IRS on such grounds
• Obtain peace of mind during all future dealings with the US
• Once compliant, remaining compliant is easy
* Having to file isn’t the same as having to pay:• Income taxes paid to Greece offset taxes due the US on that same income, and• Foreign earned income of up to $100,800 can be excluded for foreign residents
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IRS PROCEDURE TO BECOME COMPLIANT
• Streamlined Foreign Offshore Procedure (SFOP):• Available to those who have non-willful conduct• Process requires filing of:
• 3 prior years tax returns (calendar years 2013, 2014 and 2015),
• 6 prior years FBARs (2010-2015)• A personalized “reasonable cause” statement of the taxpayer
explaining their non-willful conduct
• A different program is in place for those with willful conduct
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WHERE DO I GO FROM HERE?
1. Select a professional US tax return preparer (e.g. CPA or tax attorney):
• experienced in complex tax rules applicable to US citizens living abroad and• holding an active Preparer tax identification number (PTIN) issued by the IRS
2. Discuss with and provide profiling information 3. Gather all financial information, such as from:
• Prior year tax returns (π.χ. ΕΕΣΦΠ 2013-2015) • Prior year statements (2010 – 2015)• Other supporting documentation based on
profiling4. Preparer completes returns and reports5. Review and sign 6. File by paper and electronically
