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IRS Tax Guidelines for Foreign Bank and Financial Accounts

What is FBAR?

According to the Bank Secrecy Act, one must declare and keep records of certain foreign financial accounts, such as bank accounts, brokerage accounts, and mutual funds, to the Treasury Department every year. The accounts are reported on a Financial Crimes Enforcement Network (FinCEN) Form 114 called a Report of Foreign Bank and Financial Accounts (FBAR). The annual due date for filing FBARs for foreign financial accounts is April 15th of every year.

Who must file FBAR?

A citizen, resident, corporation, partnership, limited liability company, trust, or estate in the United States must file an FBAR to report if they have a financial interest in or signature or other authority over at least one financial account located outside the United States and its aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

However, you are exempt from reporting foreign financial accounts if they are:

  • Correspondent/Nostro accounts
  • Owned by a governmental entity
  • Owned by an international financial institution
  • Maintained a U.S. military banking facility,
  • Held in an individual retirement account (IRA) of which you’re an owner or beneficiary,
  • Held in a retirement plan of which you’re a participant or beneficiary, or
  • Part of a trust of which you’re a beneficiary,  if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.

Further taxpayers don’t have to file an FBAR for the tax year 2022 if you meet the following criteria:

  • All your foreign financial accounts are reported on a consolidated FBAR, or
  • You jointly own all your foreign financial accounts with your spouse and:
    • You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly owned accounts on a timely-filed signed FBAR.

Note: Your eligibility for this exception is unaffected by your filing status, such as married-filing-jointly or married-filing-separately.

How to file the FBAR?

The FBAR must be filed online using FinCEN’s (Financial Crimes Enforcement Network) BSA E-Filing System. The FBAR is not filed with the federal tax return. You need to call FinCEN’s Resource Centre to request an exemption from e-filing if you want to file your FBAR on paper. If FinCEN authorises your request, you will get a printed FBAR form to fill out and mail to the IRS.

If you wish someone else to file your FBAR on your behalf, fill out FinCEN Report 114a, Record of Authorization to Electronically File FBARs, and provide it to them. FinCEN Report 114a is not submitted with the FBAR; instead, retain it for your records and make it available to FinCEN or the IRS upon request.

Deadline to file for the Tax year 2021

The FBAR is an annual report that is due on April 15 of the year reported. If taxpayers miss the FBAR annual due date of April 15, they will get an automatic extension until October 15. To file the FBAR, you do not need to request an extension.

More information related FBAR filing and other resources available on the IRS website here – https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar

IRS Audit Group are a team of Tax Professionals, CPAs, Enrolled Agents and Tax Attorneys, primarily specializing in Internal Revenue Services (IRS) Tax Audit Representation. We resolve your tax audit issues and represent on behalf of you to the IRS. Call us to get free consultation from our tax professional to understand our Tax audit concerns.

Toll-Free: (888) 300-6670

Emergency Number: (310) 498-7508

Email address: info@irs-audit-group.com

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IRS 2022

IRA Contribution for Tax Season 2022 – Things To Know About Tax Benefits On Your Retirement Account

 

 

IRA or the Individual Retirement Account will help lower your taxable income for the tax season 2022. IRA is easy to set up, and it allows to save for retirements with tax-free benefits. One can open a traditional IRA from a bank, brokerage, mutual fund, or insurance company. The money saved in this account can be used to invest in stocks, bonds, mutual funds, exchange-traded funds, and other approved investments.

 

As we know, IRA is an individual-owned account that provides more flexible benefits than the 401(K) plans.  The 401(K) plans are sponsored by employers.    The employer has the right to change the plan or limit the investment options.

 

Traditional IRA vs. Roth IRA

These are two common IRAs that an individual can set up to contribute to their retirement savings. The important difference between these two is traditional is tax-deferred and Roth is tax-free.

 

Traditional IRA: The contribution is deductible from your tax return. The earnings grow tax-deferred until you withdraw them upon retirement. But the withdrawals are taxable as income after age 59½. There is also a 10% IRS penalty tax in addition to current income tax if the withdrawal is made before 59½. Individuals with a low tax bracket at the time of retirement or taking withdrawals can use a traditional IRA.

 

Roth IRA: Savings for Roth IRA is contributed after the tax is paid. But the withdrawal is penalty-free and tax-free after the age of 59½. Still, one needs to wait at least five years to withdraw the savings from Roth IRA.

 

What has been changed for the tax year 2022?

The contribution limit for tax season 2022 is not changed from the previous year for the IRA, but the adjusted gross income (AGI) has been increased like every year. One can contribute a maximum of $6,000 in the tax year 2022 if you are below the age of 50. An additional contribution of $10,00 is allowed for individuals older than 50. But the contributions for the 401(k)s and 403(b)s plans that are provided by employers for the tax season 2022 have been increased. For the retirement savers younger than 50, the maximum contribution limit has been set as $20,500 in 2022, an increase of $1,000 from 2021. Those 50 and older can add an extra $6,500 (same as 2021) — for a maximum contribution of $27,000 in 2022.

 

The AGI limits for the tax year 2022 on Traditional IRA tax deduction are summarized below

 

Filing status Traditional IRA AGI limits Comments
Single taxpayers $68,000 to $78,000 covered by a workplace retirement plan
Married couples filing jointly $109,000 to $129,000 spouse making the IRA contribution is covered by a workplace retirement plan.
Married couples filing jointly $204,000 to $214,000 not covered by a workplace retirement plan married to someone who is covered
Married filing a separate return $0 to $10,000 taxpayers covered by a workplace retirement plan

 

The AGI limits for the tax year 2022 on Roth IRA tax contribution are summarized below

 

Filing status Traditional IRA AGI limits Comments
Single taxpayers $129,000 to $144,000 covered by a workplace retirement plan
Married couples filing jointly $204,000 to $214,000 spouse making the IRA contribution is covered by a workplace retirement plan.
Married filing a separate return $0 to $10,000 taxpayers covered by a workplace retirement plan

 

The savings on an IRA can help build sizable retirement savings. It gives more investment options and choices while having benefits like tax-deductible and tax deferral. Take advantage of this terrific opportunity and jump-start your IRA account. Taxpayers can contribute to an IRA for the 2021 Tax Year until the tax deadline (April 18, 2022).

 

Call our consultants with IRS Audit Group, Los Angeles at (888) 300-6670 for more information and to find out if you are eligible to contribute. Let us help you establish your retirement funding plan today.

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IRS Tax Filing 2021 – 2022 – Three Tax Changes we need to Know in Tax Filing – Highlights about the Changes in Tax Filing 2021

As the Tax season for 2021 is nearing, it is good to have a basic understanding of the recent adjustments in tax structure, exemptions, and credits.  Such info will help taxpayers to plan and file tax returns in time.  Every year, the Internal Revenue Service (IRS) updates tax rates, rebates and thresholds that are adjusted with the annual inflation. On Nov. 10, 2021, the IRS announced inflation adjustments for 2022 affecting standard deductions, tax brackets, and more.

 

Thus, the Tax Filing Year 2022 got many updates that are listed in detail by IRS in this document. It is important to discuss a few such changes that need spotlight among every taxpayers which are listed below.

 

  1. Child Credit on Monthly Basis

Child Tax Credit provides financial benefits to those with qualifying kids. For those Tax Years before 2021, the IRS allowed claim up to $2,000 per child under the age of 17 in Tax Filing.  However, during the Tax Year 2021, the following changes were done.

  • Child tax credit amount has increased up to $3,600 per child under 6
  • Child tax credit amount has increased up to $3,000 per child ages 6 to 17
  • Child tax credit is now fully refundable.
  • Child tax credit has been converted to monthly payment

As the COVID-19 has negatively impacted the country’s economy and the taxpayers, the IRS provided 50% of the child tax credit as advance monthly payments during the period July to December 2021. Tax filers may need to repay if they received more than the eligible pay.  Similarly, those who received lesser credit can file and claim back. Thus, the expanded child tax credit payments could impact many families’ tax refunds. For more specific details, please be guided by the IRS government portal

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

 

  1. Recovery Rebate Tax Credit

Recovery Rebate Tax Credit or Stimulus Payment is another benefit in case you haven’t received the third economic impact payment while preparing Tax Filing. Those who lost jobs or whose income drastically decreased in 2021 can now claim the Recovery Rebate Tax Credit. Here are the eligibility criteria to receive the economic impact payment.

  • You’re not dependent of a taxpayer
  • Your adjusted gross income (AGI) can’t exceed:
  • $150,000 for married filing jointly
  • $112,500 for heads of household
  • $75,000 for single filers

One must file 2021 Tax Return to receive the Recovery Rebate Tax Credit even if not done Tax Filing or any tax return in the past. You can use any one of IRS’ Free File Providers from the list given.

Note: You must have AGI of less than $73,000 to use the IRS’ free file program.

Learn more from IRS official website below

https://www.irs.gov/coronavirus/economic-impact-payment-information-center

 

  1. Claim Charitable Donations

For the Tax Year 2021 Tax filing, the claims on Charitable Donations are changed with the increase in tax deductions. Taxpayers both individuals who itemized and those who do not itemize can avail such benefits of these deductions while filing the return.  Now, the tax filers can deduct up to $300 for cash donations to qualifying charities (up to $600 combined for married filers) whether you itemize or take the standard deduction for 2021.

Those who claim charitable contributions as itemized deductions can claim cash contributions made to qualifying organizations up to 100% of their adjusted gross income (AGI) for the 2021 tax year only. Such deductions used to be limited to 60% of the taxpayer’s AGI. More specific info can be found at https://www.irs.gov/about-irs/the-irs-encourages-taxpayers-to-consider-charitable-contributions

 

IRS Audit Group continues to monitor the tax provision updates every year and highlights important changes that benefit the taxpayers in Tax Filing. We are certified tax lawyers having immense experience in state and federal tax laws. Get a free consultation with us to understand your tax problems and help you deal with IRS on this upcoming Tax season 2022. Contact us (888) 300-6670 (or) info@irs-audit-group.com

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New Tax Changes In 2018 You Should Know About

There are a few tax changes that you might want to make yourself aware of in 2018. Many of these new changes are updates from the IRS and a major tax reform that was passed by Congress. These changes have the potential to alter your situation drastically in the 2018 tax year and future years to come.

The IRS usually unveils its new changes to taxes every year. This includes any cost-of-living adjustments for retirement savings, as well as inflation changes on specific tax provisions. All of these changes, along with the bill that was recently passed by Congress, have the potential to result in major changes to the amount you owe on your taxes. Let’s take a look at some of the most prevalent ways these new changes can affect you.

Top income tax rate

If you’re an individual with an annual income of over $500,000, you’re in the new top income tax rate. The new 37 percent top rate will also apply to any married taxpayers that file jointly at $600,000 and higher.

Increased child tax credit

The existing child tax credit has been increased to $2,000 per each qualifying child, as long as they are under the age of 17 years. This figure is up from the previous amount of $1,000. For those that do not qualify for the new $2,000 credit, a $500 credit will be available.

Changes to standard deductions

As far as standard deductions go, anyone that is married and planning on filing jointly will notice an increased standard of deduction of $24,000. This is a decent leap up from the previous amount of $13,000.

There is now a $12,000 standard deduction for all single taxpayers and those that are married, but wish to file separately. This amount has increased almost double its original amount of $6,500. If you identify as the head of your household, you will see the amount increase from $9,550 to $18,000.

Limit increase for retirement savings

If you’re an employee that participates in a retirement plan, you may be able to now contribute up to $18,500 this year for your retirement plan. This amount is a $500 increase from the $18,000 limit of 2017. Some of the participating plans include: 401k, 403b and most of the 457 plans, along with the Thrift Savings Plan.

If you contribute to an individual retirement account or IRA, you’ll notice higher income ranges following the cost-of-living adjustments. For single taxpayers, the new limit becomes $63,000 to $73,000.

Deductions that have been done away with

A large majority of the deductions remain unchanged under the new tax law. However, there are a few to mention that are being removed. The following deductions are no longer available under the new 2018 tax laws.

  • Moving expenses
  • Unreimbursed employee expenses
  • Tax preparation expenses
  • Employer-subsidized parking and transportation reimbursement
  • Casualty and theft losses (except those that are attributable to a federally declared disaster)
  • Other miscellaneous deductions that were previously subject to the 2% AGI cap

It’s important to be aware of each of the changes made for the 2018 tax season, as well as any new tax laws for the future. Being up-to-date on all the latest laws and regulations will help to avoid any headaches when it comes to making sure your taxes are done properly. Each year the IRS makes changes to how our taxes are done, like adding or removing deductions and making changes to tax rates.

Changing income rages, as well as changes on corporate levels can make the ever-evolving tax laws seem like a chore to keep up with. The good thing is that for some people, these changes can be beneficial to them and their entire family. Prepare yourself for the current tax season and all upcoming seasons, so that you can avoid any costly mistakes on your taxes.

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RELEVANE OF ACCOUNT AUDIT AND MULTIPLE TYPES OF AUDITS

audit

There are multiple purposes for auditing of any enterprise.  It is mandatory for all publicly listed companies to audit their financial statements, and subsequently make it available to the public.   Audited financial statements can be used for improving internal controls or for assessing the financial position or performance of an entity.  The elements of financial transparency which results out of audit help in establishing a good relationship with investors and the company.

While preparing for an audit, it’s important to set internal controls and policies that are monitored and reviewed by the internal audit team.  The auditing group which performs such audit collects substantial information relevant to the enterprise, and issues statement or opinion about the quality and integrity of the company’s operations and financial status.  During the statutory audit, the auditor has to review the processes and procedures by which the financial information was prepared.  That is, the auditor has to check if the preparation of the company’s financial reports is aligned with GAAP or other applicable reporting frameworks.  Statutory audits underscore the importance of financial reporting in corporate transparency.

There are multiple types of audit as elaborated below;

Financial – Financial audits typically look into the accounting controls present in the general ledger or sub-ledger systems.  Financial statement auditing is the focus of our external auditors.

Operational – Operational audits focus on the review and assessment of a business process.  The activities of the business process may result in a direct or indirect financial impact on the organization.  Internal Audit primarily focuses on operational audits but can extend the scope to include accounting procedures that can impact financial reporting.

Compliance – Compliance audits review the level of compliance with internal policies or external regulatory requirements.

Information Systems – Audits of Information Systems look at the overall infrastructure and network controls that relate to the security of the network and the systems.  Such audit includes technical operations, data center operations, project management procedures, and application controls.

Integrated Audits – Integrated audits look at controls that address financial, operational, compliance and information systems risks.  These audits are typically centered on a business cycle or a specific part of a process.

Auditors protect the public from investing in companies that use corrupt business practices or that attempt to defraud investors with false financial statements.  They also provide assurance to investors and creditors that company funds are handled appropriately.  By reviewing financial statements and digging into accounting records, auditors can determine if the financial statements and records accurately depict the company’s true financial profile.

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Havne't filed taxes in years_Blog

Haven’t Filed Taxes For Years? The IRS May File On Your Behalf

Have you ever wondered what would happen if you didn’t file your tax return? Well … You basically lose your refund (if you pass the three year tax deadline date) which for some people can be a significant loss. Also, you put yourself at risk of having the Internal Revenue Service (IRS) file for you.

Don’t wait on the IRS to file your taxes on your behalf. Let IRS Audit Group file your taxes in full compliance with the IRS. We will collect all the information from tax authorities, review it with you and file your tax return.

According to the IRS, substitute for return (SFR) and delinquent return procedures were developed to deal with taxpayers who do not file required tax returns. They use this to assess the correct tax liability by either:

  1. Securing a valid voluntary tax return from the taxpayer (delinquent return), or
  2. If securing a return is not possible, computing tax, interest, and penalties based upon information submitted by payers, or based on other available information (SFR).

If the IRS files a return, it will be based on the information they have available through existing records and it is usually done automatically. The downfall to this is that whether you were married filing jointly, had dependents you could claim for that year or whether you had any deductions are not taken into consideration. You’d sacrifice any of the credits that could lower your taxes and may end up owing substantially more taxes based on the SFR than if you filed your own tax return.

This triggers the snowball effect: If you fail to pay the taxes the IRS has assessed against you, the IRS will begin collection proceedings to collect the taxes. Which could include issuing levies against your bank account or wages and filing liens against your property.

Don’t face the risk of increasing your tax liability – contact IRS Audit Group today to file your returns or for help on other tax issues. You still have options in cases like this and our team of tax professionals would be happy to guide you through them!

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IRS Audit Group

Tax attorney in Beverly Hills, California

468 N Camden Dr #200,
Beverly Hills, CA 90210, USA

Call: +1 888-300-6670

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