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Barry's Accounting Services, Corp.
1852 Flatbush Avenue - 2nd Floor
Brooklyn, New York 11210
(718) 677-4006
E-mail:
clembarry@aol.com
 
 
Client Update - quarterly newsletter
 
 

 

 

 

International Taxation

 

By:- Clem Barry, EA.

Tel(718) 677-4006

*M.S. Taxation (U.S. & International).

*IRS Enrolled Agent (1989 to Present).

*48-hrs of Mandatory Annual Continuing Education.

*Clients in 13 states in the USA and 5 Foreign Countries.

 

Let's get to the specifics; and cut through

the noise that everybody is making!!

 

International Taxation is basically the application of Taxes and Tax Exemptions on cross-border transactions, in accordance with agreement between countries. The agreement is called a Tax Treaty; or a bi-lateral tax agreement/policy. The Treaty is usually based on either the UN Model or the OBCD Model. It is based on 4 principles:-

#1)Citizenship Based Taxation.

#2)Residence Based Taxation.

#3)Territorial/Jurisdiction/Source Based Taxation

#4)Destination Based Taxation.

In 2010, the U.S. Congress passed the Foreign Account Tax Compliance Act (FATCA). It is a tax enforcement program under section 482. It is designed to identify/detect US taxpayers who are evading tax by hiding their money in overseas bank accounts and investments using Tax Havens and Money Laundering. It requires Foreign Financial Institutions to report the value of Foreign Bank Account and Foreign Security Account over $10,000 that are held by U.S Citizens and Permanent residents.

The IRS cross-checks financial data from foreign tax authorities and banks against U.S. tax returns filed by U.S. taxpayers to ensure they are paying the correct amount of tax. In return, the IRS gives reciprocal data to foreign tax authorities about the financial affairs of their nationals who have bank accounts and investments in the USA. Banks in foreign countries that didn't comply had difficulties clearing their transactions through U.S. Banks. However, as of 2018, over 100 countries entered into an Inter-Governmental agreement with the U.S.A to implement FACTA (share financial transaction information).

 

Who must file U.S. tax return(s).

#1) U.S. Citizens, Permanent Residents, and non-Resident Aliens living in the USA and overseas, and have foreign bank Account and foreign investments (Interest, dividends, securities, commodity futures, insurance policy with a cash value, and proceeds from the sale of property in a foreign country, etc.) with a combine/total value of over $10,000. The deadline for filing is March 15.

#2) U.S. Citizens and Permanent residence living and/or working outside the U.S.A and receiving compensation from the U.S.A. (Social Security, Pension, Interest, Dividends, Rental Income, Proceeds/Money from the sale of property, etc.).

#3) Foreign Nationals earning wages, salary or professional fees while working in the USA is considered U.S. income; and it is tax by the USA.(Payroll Forms W-8, 8233, 1042, 1042-T, 1042-S.), even if the employer is a Foreign Corporation and compensation was paid through a Foreign Bank Account. However, according to the Tax Treaty agreement between the USA and the foreign country (Foreign earned income exclusion and Foreign Tax Credit), the Foreign National MAY NOT be required to pay income tax to his/her country. Consult your Tax Advisor or your country's Consulate/Embassy office in the USA.

#4) A Foreign Parent Corporation or a Foreign Subsidiary Corporation doing business in the USA; and a U.S. Corporation that have one or more Foreign subsidiary (The Corporate Transparency Act). The tax return is due 2.5 months (75 days) after the close of the corporation tax year. Failure to timely comply could result in a penalty of $25,000. Consult you tax advisor.

 

International Tax Compliance 

International Tax Compliance is rigorous and the IRS is cracking down on Foreign Bank Accounts used for Tax Evasion. According to the IRS, this is a high fraud area. They have put resources behind it; and they are aggressively in persuit of the culprits. There are heavy/severe/stiff penalties for failure to comply with tax filing requirements.

#1)There is a $10,000 penalty for Late Filing and Non-Willful violation. Hence, claiming IGNORANCE about your tax filing responsibilities is NOT a valid argument in an IRS audit.

#2)A Penalty of $100,000 or 50% of the amount in the largest account; or the amount of reportable transaction in each year is charged for willful failure to file.

#3)Criminal Prosecution for failure to file comes with a fine of up to $250,000 and/or 5-years imprisonment.  The statute of limitation will NEVER expire if you never filed your tax retuns. Hence, the IRS has FOREVER to come after you. Consult your Tax Advisor.

 

***UPDATE:-If a U.S. Citizen or Permanent Resident failed to file U.S. tax returns and pay taxes, the IRS will issue a Tax Warrant and send it to U.S. immigration offices in U.S. Airports, Seaports, Border Crossings, and countries that have extradition treaty with the USA. The taxpayer can be arrested, U.S. passport seized; or Permanent Residency revokedConsult your Tax Advisor and an Immigration Attorney. 

 

Services we provide for clients

#1) We provide pre-move planning (to and from the U.S.A).

#2) Formulate U.S. business structure.

#3) Advise on International Transaction.

#4) Structure U.S. Real-Estate Investments.

#5) Oversee Business and Real-Estate operations for absentee owners.

#6) Prepare and file Personal and Business tax returns, including Foreign Bank & Financial Accounts Reports and Foreign Assets information (FBARS) over $10,000, with the IRS and the Financial Crimes Enforcement Network(FinCEN), in compliance with the Foreign Account Tax Compliance Act(FACTA), for U.S. Citizens and Permanent Residents living in the USA and outside the USA; and have a Financial interest or Signature authority in one or more foreign bank/financial account. Tax Filing deadline is March 15.

 

 

 

 

Taxation of Expatriates (Expats)

U.S. Tax Treaties, Totalization Agreements, Foreign Tax Credits (FTC), Foreign Earned Income Exclusion(FEIE), Qualified Foreign Housing Expenses (QFHE) -(U.S. Physical Presence Test or U.S. Bona Fide Residence Test), Tax Equalization, Repatriation of income analysis, etc.
  What we want from you
1) Your cell phone and e-mail address for quick communication.
2) A paper copy of the last tax return you filed (Fax it). No e-mail.
3) Your Foreign bank and securities statement, showing interest and dividends earned and account balance.
4) Mortgage Interest & Property tax for each property you own in the U.S.A. Rental Income you received from each rental property, and an ANALYSIS of ALL rental expense you pay to operate each property.
5) Business Gross Income and an ANALYSIS of ALL business expense.
6) Your Credit Card or Bank Account information to pay for the service.

Absentee Owners

They had been doing business with the firm when they lived in the U.S.A., and have decided to live overseas.
  We oversee their business operations; and we prepare their personal, business and commercial property tax returns. We speak to them directly and ensure they receive a monthly check/cheque from their investments. 
   

Clients' Testimonials

#1)"Thanks for helping me claim the Foreign Earned Income Exclusion and the Foreign Tax Credit on my US Tax return for income tax I paid in the UK. You are sharp!! You gave me a quick and accurate assessment; and you prepared my tax returns quickly". - Capt., J. Dundee (London, UK).

#2)"Clem! thanks for helping me comply with the US foreign account reporting; and thanks for filing my personal and business tax returns. As usual, my nephew will bring you the information to prepare and file those tax returns". - D. Walcott (St. Michael, Barbados). 

#3)"Mr. Barry, thanks for overseeing the operations and maintenance of my rental buildings in Brooklyn and filing all my tax returns on time. Great job!!" -K. Szablewski (Gdansk, Poland).

#4)"I'm a U.S. Expat living in Canada. During the past 10-years, my Accountant prepared my Canada tax return and Barry prepared my U.S. Non-Resident tax return. I trust my Accountant; but Barry is super transparent and ingeneous with our shared goals. He adds value and he gives me peace-of-mine".-M. Edghill (Montreal, Canada).

#5)"I am a citizen of France. I came to the USA as a foreign student. I got married to my fiance, Suizette and we had a baby over there. We thank Barry for preparing our tax returns and sharing with us, his knowledge and experience about employment opportunities and U.S. immigration since he also came to the USA as a foreign student."-K. Bedeau (Marseille, France).

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