USA CITIZENS AND INCOME TAXES

j600rr wrote:

mugtech wrote:

Rand Paul, one of many potential GOP presidential candidates, released his idea of replacing the current tax code with a 14.5% flat tax.  The only deductions would be for charitable giving and mortgage interest.  This would mean that every USA citizen with any income would have to file and probably pay some tax.  An expat living on 20,000 a ýear income, probably not getting any deductions,  would owe 2,900 in taxes.  Currently an expat earning 12,000 in SS and 8,000 in other income owes zero taxes.

What's your take on that mugs? Not necessarily Rand Paul, but the whole current tax code? Think there is really anyway much of anything will change? Other than it getting even more complicated? Don't personally  ever see the U.S. adopting a flat tax, or anything similar. Although I think there is now several states who have adopted a flat tax rate.

Too many vested interests to change much of anything other than an increase in the top rate.  Most changes involve some kind of deals, which makes it all that much more complicated for everyone, such as Obamacare.  Most simplified tax systems wind up collecting less taxes, as Rand Paul's would decrease taxes by a total of 2 trillion dollars over 10 years.  The idea of trying to get the people on the bottom to pay more or anything at all would probably cause more taxes for retirees, who have a lot of political clout, such as AARP.  It appears most are going for cutting spending, which is another political quagmire.

Not the first time Rand Paul, R-KY, has advocated this.

Any flat tax would provide huge tax cuts to the wealthy and raise taxes substantially on middle class citizens. (thinkprogress.org)

mugtech wrote:

In other tax protest news, a brothel owner in Salzburg claims he pays too much taxes, decided to protest by offering free entrance, drinks and sex the entire summer.  Hermann Mueller owns 4 other brothels in Austria and Germany, said he will continue to pay his prostitutes up to 10,000 euros a month in compensation.

More money than brains.

cccmedia wrote:

Not the first time Rand Paul, R-KY, has advocated this.

Any flat tax would provide huge tax cuts to the wealthy and raise taxes substantially on middle class citizens. (thinkprogress.org)

Flat Tax has been the crying call of the Republican Party for some time, or at least a decent amount of Republicans. Will have to take a look at that link a little later ccc. Flat Tax probably isn't the way to go, but it does seem like there has to be something to reform the system a bit. Perhaps nothing too drastic, but rather a few changes, and tweaks. Maybe it's just me, but the current tax codes just don't seem to be that effective, or efficient.

j600rr wrote:

cccmedia wrote:

Not the first time Rand Paul, R-KY, has advocated this.

Any flat tax would provide huge tax cuts to the wealthy and raise taxes substantially on middle class citizens. (thinkprogress.org)

Flat Tax has been the crying call of the Republican Party for some time, or at least a decent amount of Republicans. Will have to take a look at that link a little later ccc. Flat Tax probably isn't the way to go, but it does seem like there has to be something to reform the system a bit. Perhaps nothing too drastic, but rather a few changes, and tweaks. Maybe it's just me, but the current tax codes just don't seem to be that effective, or efficient.

You think 70,000+ pages of federal US tax code needs to be 'tweaked'? How many more pages might that add?

I think it's pretty obvious to anyone who is not a member of Congress that the entire encyclopedic comic book of tax law needs to be scrapped completely, and revisited.

Rest assured, this will never happen in your lifetime.

Carry on -

Rand Paul is back in the tax news again, purported to be a plaintiff in a law suit to be filed next week against FATCA.  Said lawyers claim that the formal treaty process including senate approval is required in the agreements with other countries to report foreign bank account info of US citizens. Supposedly banks in foreign countries are required to disclose confidential information without a warrant.  Part of the language includes "The existence of a bank account in a foreign country has nothing to do with what taxes are imposed".  Many claim it is more political than substantive, not unlike the 6-3 pro ACA decision the supremes rolled out yesterday.

Rand Paul has has long and publicly denounced FATCA. But I'm afraid that genie cannot be stuffed back in the bottle now.

Still I may register to vote next year. He's got his mojo going.

Sen. Rand Paul to sue IRS, U.S. Treasury
http://www.washingtontimes.com/news/201 … ign=buffer

gardener1 wrote:

Rand Paul has has long and publicly denounced FATCA. But I'm afraid that genie cannot be stuffed back in the bottle now.

Still I may register to vote next year. He's got his mojo going.

Sen. Rand Paul to sue IRS, U.S. Treasury
http://www.washingtontimes.com/news/201 … ign=buffer

He also seems to really p********  the older republican politicians who are all hell bent on keeping the status quo, and maintaining archaic policies. He p******** a lot of democrats also. Hell, I'd vote for him just because anyone that can manage to p** both parties off so much can't be all that bad.

Hello everyone,

I would like to point out that the topic is about Taxes here. We should stick to that topic and avoid straying off-topic here.

Thank you for your understanding 
Bhavna

Already a senator has introduced a bill to change the language in the tax code to disregard gender because of the recent Supreme Court ruling concerning same sex marriage.  Same sex couples have been filing joint returns federally while having to file separate tax returns on a state or local level in some states.  Expats should have no trouble filing same sex joint returns even if no laws change.

In the latest USA tracing hidden foreign accounts, two more Swiss Banks have agreed to pay a total of $8.3 million, bringing the total to 17 Swiss banks paying $276 million.  There are more Swiss Banks on the radar.  Most overseas investors got out of Switzerland a few years ago, even though the lure of using dummy companies remains.

The US Senate passed a bipartisan bill that extends 50 tax breaks for 2 years, earlier than last year.  Hopefully the house will pass the bill soon, so US taxpayers can do the proper year end tax planning.  In other Tax Code news, Rand Paul can be seen burning, chain sawing and wood chipping the 70,000 pages of the code on his website.

mugtech wrote:

, Rand Paul can be seen burning, chain sawing and wood chipping the 70,000 pages of the code on his website.

What if he does get elected????????Think how that would play as a campaign promise

New tax law today concerning when partnership and C-Corp tax returns are due and how long an extension they can obtain.  Expats are affected by the changes for the FinCEN form 114 effective for the 2016 tax year.  The form will be due 4/15/17, but an extension is available of 6 months, the extended due date being 10/15/17.  For the 2015 tax year the form will be due 6/30/16 will no extensions available.

mugtech wrote:

New tax law today concerning when partnership and C-Corp tax returns are due and how long an extension they can obtain.  Expats are affected by the changes for the FinCEN form 114 effective for the 2016 tax year.  The form will be due 4/15/17, but an extension is available of 6 months, the extended due date being 10/15/17.  For the 2015 tax year the form will be due 6/30/16 will no extensions available.

Just read an update on the FINCEN form 114 due date changes.  The new due date, according to Accounting Today, is for 2015, so the FBAR form will be due on 4/15/16, with an extension available until 10/15/16. So the last line above is incorrect.

The IRS says the cyber-attack on the agency last May (2015) was actually far worse than was feared.

Originally, the agency said criminals stole personal information from over 100,000 taxpayers.

Now, the IRS says data on 338,000 taxpayers may have been compromised.

The IRS believes the cyber-thieves will attempt to use the information to file phony tax returns next year.  It is sending letters to taxpayers whose accounts may have been accessed, offering each a new identification number to verify next year's return.

reported by:  NBC News

IRS is finally getting around to writing rules about a tax law passed in 2008.  Previously if a former USA citizen gifted or willed items to a USA citizen there were no tax consequences, but it appears the new regs will include taxes to the recipient of said gift or inheritance.  Normal estate taxes are paid by the estate, not the beneficiary.  Don't know how many expats in Ecuador have renounced USA citizenship and are intending to have beneficiaries that are USA citizens, but look out for more information.

The IRS made an important announcement today concerning the size of checks that they will receive and cash.  Starting January 1, 2016, checks greater than $99,999,999 will be returned to sender.  So if you must pay in $100,000,000 or more, two checks are required.  There were 16 such checks last year, IRS claiming the size requires depositing them manually and increases the chances of mistake or fraud.  It did not appear that any of the checks were sent by an expat.

This sounds about right for the IRS, why am I not surprised that 16 checks - SIXTEEN - presents too much possibility of fraud or a mistake!  What a heavy work load, busy busy busy, it's so easy to absent-mindedly go for a coffee break or something and forget about that check on your desk for $102,234,335.89...I know exactly what they're saying.

Looking for unreported foreign income, the IRS has selected Belize as the next target.  Belize Bank LTD and Belize Bank International LTD are the first two to receive John Doesn't warrants, with 23 already known previously unreported accounts.  IRS claims in the last 5 years they have collected  $7 billion from taxpayers in taxes and $4 billion from institutions in fines and penalties using the 2010 FATCA rules.
     In Worcester, MASS, a pastor who used to prepare income tax returns was convicted on 4 counts of filing false tax returns,  using over inflated medical expenses, false employee expenses and false gifts to charity.  He got 2 years probation, 100 hours community service, and forbidden to file tax returns ever again.

Another Swiss banker, the 7th, was sentenced to $150,000 fine and 5 years probation for his part in helping USA taxpayers hide taxable income.  UBS AG executive Hangruedi Schumacher was rewarded for his bravery for testifying against his boss, Raoul Weil, who was found innocent.  Only one of the seven convicted got jail time.  The message is, help us get tax evaders and we will go easy on you.  $150,000 is chump change for international bank execs.

41 Swiss banks have been given IRS amnesty by giving additional names and information concerning how USA citizens set up and moved money to avoid taxes and reporting.  The research turned up 18 institutions in Liechtenstein, 15 in Panama, 11 in British Virgin Islands and 4 in Hong Kong.  In addition, the IRS said other hot spots are Singapore and Israel.

IRS announced that they have  collected over $8 billion in taxes from 54,000 USA citizens with overseas accounts and earnings.  Even a bigger deficit will result if any of the current Republican candidates for president would actually put their tax plans into service.  All bring the top rate down to at the most 28%, plus many bring the top tax rates for businesses down to 25% or less.  Joe Santorum,  who has no chance at getting the nomination, has proposed a flat rate of  20% for everyone with a credit of $2,700 per person but eliminating most all other deductions.  Right now a couple earning $38,000 and putting over $3,000 into retirement accounts pays no income tax, but under Santorum's plan they would owe $2,200 in taxes.  Currently most expats are more concerned with congress getting around to passing tax breaks and  deductions for 2015 which expired 12/31/14.  Probably another last minute December move, causing confusion and delays in the IRS being prepared to receive 2015 returns.  Just a reminder, it is best to file tax returns ASAP as a way to avoid identity theft, not like Mr Trump, who had pictures taken of his filing on the last date, 10/15/15.  On the other hand, I doubt he has had identity theft problems.

The IRS just announced about 50 inflation adjusted tax amounts for 2016.  The foreign income exclusion is increased from $100,800 in 2015 to $101,300 in 2016.

Found out today that in the future owing $50,000 or more in federal taxes could cause the revoking of a USA citizen's passport.  The senate version of the unreconciled highway bill contains such a provision, so at this point no one knows if it will be in the bill the president will sign.  Stay tuned.

Good morning thanks for the info.  It will all be helpful in the future for me after making Cuenca my home.  Hope you enjoy this wonderful weather.

Hope you've paid your taxes and/or have some way to make sure mail from the IRS reaches you. This just in from the Wall Street Journal:

"Congress is poised to enact a law denying or revoking passports for U.S. citizens who haven't paid their taxes.

Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.

The rule has been passed in similar versions by both the House of Representatives and the Senate. It is part of a highway-funding bill, H.R. 22, that is now before a conference committee. Congress is expected to pass it in early December.

In most cases, the passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn't apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court, said David Kautter, a partner at the accounting firm RSM in Washington.

However, the State Department could issue a passport in an emergency or for “humanitarian reasons.” Neither the State Department or Treasury Department would comment while the legislation is pending.

If enacted in current form, the law would take effect on Jan. 1 and would apply to existing tax debts. According to estimates by the Joint Committee on Taxation, the measure is expected to raise $398 million over 10 years.

“If this bill becomes law, it will be imperative for Americans traveling abroad or living abroad to pay attention to IRS notices—assuming they receive them,” said Mr. Kautter.

It's unclear how many people would be affected. The provision's most vocal critics are advocates for the some 7 million U.S. citizens living overseas, who need their passports for many purposes, including for work visas or residency permits, and who may not be receiving mail from the IRS.

“Americans abroad need their passports for many routine activities of daily life, such as banking, registering in a hotel, or registering a child for school, and mistakes could be disastrous,” said Charles Bruce, an American lawyer with Bonnard Lawson in Lausanne, Switzerland, who advises American Citizens Abroad, an expatriate group.

Mr. Bruce noted that a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, “IRS data systems aren't designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.”

The Tigta report said that “current IRS processes for addressing international mail issues are ineffective or nonexistent.” In response, the IRS said that Tigta's recommendations wouldn't overcome the agency's “budgetary, statutory, and operational constraints.”

DorothyPeck wrote:

Hope you've paid your taxes and/or have some way to make sure mail from the IRS reaches you. This just in from the Wall Street Journal: [img align=Pay Taxes or Lose Passport]http://www.wsj.com/articles/americans-pay-your-taxes-or-lose-your-passport-1447971424?mod=trending_now_2[/url]

"Congress is poised to enact a law denying or revoking passports for U.S. citizens who haven't paid their taxes.

Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.

The rule has been passed in similar versions by both the House of Representatives and the Senate. It is part of a highway-funding bill, H.R. 22, that is now before a conference committee. Congress is expected to pass it in early December.

In most cases, the passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn't apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court, said David Kautter, a partner at the accounting firm RSM in Washington.

However, the State Department could issue a passport in an emergency or for “humanitarian reasons.” Neither the State Department or Treasury Department would comment while the legislation is pending.

If enacted in current form, the law would take effect on Jan. 1 and would apply to existing tax debts. According to estimates by the Joint Committee on Taxation, the measure is expected to raise $398 million over 10 years.

“If this bill becomes law, it will be imperative for Americans traveling abroad or living abroad to pay attention to IRS notices—assuming they receive them,” said Mr. Kautter.

It's unclear how many people would be affected. The provision's most vocal critics are advocates for the some 7 million U.S. citizens living overseas, who need their passports for many purposes, including for work visas or residency permits, and who may not be receiving mail from the IRS.

“Americans abroad need their passports for many routine activities of daily life, such as banking, registering in a hotel, or registering a child for school, and mistakes could be disastrous,” said Charles Bruce, an American lawyer with Bonnard Lawson in Lausanne, Switzerland, who advises American Citizens Abroad, an expatriate group.

Mr. Bruce noted that a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, “IRS data systems aren't designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.”

The Tigta report said that “current IRS processes for addressing international mail issues are ineffective or nonexistent.” In response, the IRS said that Tigta's recommendations wouldn't overcome the agency's “budgetary, statutory, and operational constraints.”

Many overseas people do best to give the IRS a USA address and then have the mail forwarded or have someone email the contents for faster results.

It would seem to make sense for the IRS to promote the idea of Expats giving the agency an email address.

That would correct for the problems of lost overseas mail .. problems delivering mail to some addresses ..  Expats missing mail due to travel and movement to other locations/countries .. and delays in receiving messages abroad due to the slowness of snail-mail.

cccmedia in Quito

cccmedia wrote:

It would seem to make sense for the IRS to promote the idea of Expats giving the agency an email address.

That would correct for the problems of lost overseas mail .. problems delivering mail to some addresses ..  Expats missing mail due to travel and movement to other locations/countries .. and delays in receiving messages abroad due to the slowness of snail-mail.

cccmedia in Quito

I agree, but the scams that have been run have included people getting emails from the fake IRS, and the IRS proclaiming that they do not send notices that way.  Would be a big change and open more scam doors.  The best thing people in  the USA can do to resolve a questionable IRS communication is to take it to the local office.  Since overseas folks cannot do that, snail mail will have to do.

That scam happened to me just before I left for EC last month.  They called and were Extremely rude very threatening. Demanding e mediate payment for back taxes.  If I did not pay them, there was an arrest warrant for me.  They even gave me the arrest warrant name & #.  They informed me the local sheriffs office would come arrest me.  If I would have had blood pressure problems it certainly would have brought it up.  They did make my Latino temper come up for sure with all the threats.  I pushed back and told them I would call the authority & that I had no IRS debt.   At that time they hung up on me.   They had me wondering if I had outstanding IRS debt I did not know about.  What made me question the call was the person calling had a strong Hindu ascent and a little hard to understand.  I thought about it and decided that if the real IRS was calling  wanting my $ they would make sure the person calling would speak very clear English.  I then called the Portland police and they told me it was a scam & that they get numerous daily call on that particular scam.  They could do nothing and I should report them to the IRS.

MGLuke wrote:

I then called the Portland police and they told me...  They could do nothing and I should report them to the IRS.

And this is why the scams will continue.  If there's no penalty for criminal activity, no downside, too many unscrupulous people think "Why not?  It's just a bunch of rich Americans!"

OsageArcher wrote:

MGLuke wrote:

I then called the Portland police and they told me...  They could do nothing and I should report them to the IRS.

And this is why the scams will continue.  If there's no penalty for criminal activity, no downside, too many unscrupulous people think "Why not?  It's just a bunch of rich Americans!"

The IRS claims they want such information, but a small percentage actually follow up, and many calls come from outside the USA.  Just gotta educate everyone, the elderly are the biggest target.

Yes, the elderly are at a high risk because, they are quite intimidating, aggressive & down right rude.   I consider my self not so easy  to intimidate & some what sharp @ 59.  I can tell you that they had me worried.  I can see were they would easily confuse and intimidate an elderly person.  When they  tell you that there is a warrant out for your arrest & the sheriff is coming and give you a bogus warrant number you think they are for real.  If it was not for my personal Latino temper and dislike for intimidation & I fought back IRS or no IRS they would have had me.  That is even knowing I did not owe any thing to IRS.  It made me dough my self.  I think the reason the police were not willing to do any thing is that they could not.  It was a scam from India they told me.  What they did tell me was to report it to IRS so they might make the public more aware.

The real IRS does not call by phone to collect debts. 

Taxpayers should expect and require any bills or demands to be in writing.  However, do not give out your address to a possible scammer who calls you.

Ask for a return-call phone number and see how quickly the scammer gets off the line.

cccmedia in Quito

Regarding the last several posts, and phone calls. Why would you answer the phone from some unknown caller? Maybe this is just a difference in age groups, but with being able to pretty much know who is always calling, don't you just hang up, or ignore an unknown caller? That's what I do. Don't know, maybe that's considered rude, but if it's someone I don't know then don't really need to talk to them.

j600rr wrote:

Regarding the last several posts, and phone calls. Why would you answer the phone from some unknown caller? Maybe this is just a difference in age groups, but with being able to pretty much know who is always calling, don't you just hang up, or ignore an unknown caller? That's what I do. Don't know, maybe that's considered rude, but if it's someone I don't know then don't really need to talk to them.

Guess not everyone can afford Caller ID.

Whats true or want to pay for it.  To many other sevices I rather pay for.

It is official, the final highway bill included the provision that anyone owing more than $50,000 in total tax, penalties and interest for all years combined will lose their passports or be denied a passport if applying.  $50,000 might seem like a large amount, but people who did not file for multiple years could receive a worst case proposed 1040 from the IRS, including penalties and interest.  Just owing that much will not result in the passport being revoked, but once it goes into final collection the passport is in danger.