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Washington DC Tax Law Blog

Do you need to report that foreign asset?

The Internal Revenue Service (IRS) expects United States citizens and resident aliens to report certain foreign assets. Individuals with foreign assets generally fit one of two categories: either they live and work abroad or live stateside but have foreign financial interests.

Tax obligations for those who live and work abroad

SCOTUS declines case questioning constitutionality of FATCA

The Supreme Court of the United States (SCOTUS) declined to hear a case that questions the constitutionality of the Foreign Account Tax Compliance Act (FATCA).

A group of American expatriates brought the case against the government based on the contention that it violated their Fourth Amendment protections and the law has resulted financial loss.

Tax crimes and prison time: 4 examples from 2017

The Internal Revenue Service (IRS) audited approximately 934,000 tax returns in 2017. The IRS conducted 70.8 percent of these audits via a mailed correspondence and 29.2 through a full field investigation.

The IRS uses these investigations to determine if tax payers are correctly reporting income and expenses. In some cases the evidence gathered during an initial investigation can result in a criminal investigation. Criminal investigations by the IRS are not uncommon. The agency conducted 3,019 criminal investigations just last year.

Biggest tax tip for 2017 filings? You may be surprised.

The biggest tax tip for 2017 tax filings may come as a surprise. This is because it does not have to do with 2017 taxes. The tax reform passed for 2018 overhauls the system. As a result, the reform could translate to a change in your tax obligations in 2018. 

Thus, arguably the biggest benefit while completing 2017 tax filings is to look towards the future. Review tax obligations for 2017 to help determine if you need to make adjustments in 2018.

Morocco signs on to the Foreign Account Tax Compliance Act

The United States has taken a hard line approach on tax compliance for assets held in foreign countries. Those who hold these assets and fail to comply with tax laws face serious penalties. Penalties that can include jail time.

Part of this effort involves the Foreign Account Tax Compliance Act (FATCA).

Tax reform in the U.S. could trigger big changes in Europe

One of the goals of recent tax reform in the United States was to encourage businesses to bring revenue currently kept in foreign countries back into the United States.

Not everyone was thrilled with this change — including a number of European countries.

As FBAR deadline looms, IRS and Treasury threaten penalties

American taxpayers with overseas accounts are required to report these accounts through the use of the Report of Foreign Bank and Financial Accounts form (FBAR). Failures to file this report with the Treasury’s Financial Crimes Enforcement Network (FinCEN) are not uncommon. Failures can stem from a lack of awareness of the requirement or simple confusion. The tax law responsible for this requirement is complex and some level of confusion is understandable.

A basic understanding of these requirements can help to ease some of the confusion that comes with required compliance.

Home equity loans and the new tax law: Clarification from the IRS

The Internal Revenue Service (IRS) recently published clarification on how the new tax law impacts deductions for interest paid on home equity loans. The agency notes that there are restrictions, but many homeowners can still qualify for these deductions.

What types of home equity loans will qualify? Deductions will remain for home mortgages, home equity loans and second mortgages or home equity lines of credit (HELOC). Homeowners can generally still qualify for this deduction as long as the loan or line of credit was used to “buy, build or substantially improve the taxpayer’s home that secures the loan.”

The impact of the corporate repatriation tax

The corporate repatriation tax is one part of the new tax law. This tax specifically addresses those who have earnings abroad.

How is this different than the previous repatriation tax? The concept of a repatriation tax is not a novel one. A repatriation task was already present. However, the previous repatriation tax was set at 35 percent, a relatively high rate. Many taxpayers stated that this discouraged them from bringing their earnings back into the United States.

Two new tax laws impact Olympic Medalists

Victory at the Olympics comes with more than just a medal and prestige, it also comes with a big bonus paycheck. The amount awarded varies depending on the medal. Gold winners will win $37,500 at the Winter Olympics this year, Silver medalists earn $22,500 while a Bronze wins $15,000.

The Internal Revenue Service (IRS) taxed these winnings in a manner similar to lottery winnings or work bonuses. That has recently changed.

Every Tax Problem Has A Solution

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