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USA CITIZENS AND INCOME TAXES

Individual Expats who have been living overseas during a tax year get an automatic extension to file until June 15 of the following year.

This is in addition to the right to request an extension until October.

Although the June 15 extension does not require an advance request, the taxpayer should assert the right to it in his or her filing in accordance with IRS regulations.

Expats filing based on the June extension are liable for any interest accruing after April 15.

As always, the April and June dates are subject to slight adjustment if they fall on a weekend or holiday.

Source:  multiple current advisories posted at www.irs.gov

  -- cccmedia

cccmedia :

Individual Expats who have been living overseas during a tax year get an automatic extension to file until June 15 of the following year.

I’ve just come across an irs.gov page that makes me question the above citation from my earlier post.

According to this posting on irs.gov, U.S. citizens who live in another country and “both live and work” in that country have an automatic extension of two months in filing.

A strict reading of that phrase “live and work," I submit, does not include retired Expats -- who live but do not work in a foreign country.

If in doubt, I suggest requesting an extension -- until October -- before the regular tax date (which is on or about April 15).  For information on how to do this, go to www.irs.gov

cccmedia

Form 4868, the application for an automatic extension to file, can be mailed to the IRS from Ecuador.

But, given the sad history of Ecuadorian mail service, I wouldn’t trust seeking an extension that way.

In my case, I expect to use another option to get an extension which may be more reliable -- phoning in a payment by April 15th.  According to my research at the IRS website, this will qualify me for the extension until October without relying on the mails.

Three ways to file the form or otherwise get an extension are detailed on page 1 of form 4868 at www.irs.gov

cccmedia

If one is not making a payment, then filing an electronic extension is very easy.

Even though the IRS demands to know every penny any American expat owns anywhere in the world, unfortunately they don't seem to be able to keep that information to themselves -

The IRS is using a system that was hacked to protect victims of a hack—and it was just hacked

http://qz.com/628761/the-irs-is-using-a … st-hacked/

gardener1 :

Even though the IRS demands to know every penny any American expat owns anywhere in the world, unfortunately they don't seem to be able to keep that information to themselves -

The IRS is using a system that was hacked to protect victims of a hack—and it was just hacked

http://qz.com/628761/the-irs-is-using-a … st-hacked/

And one of the IRS employees who was supposed to be helping  victims of identity theft instead created more victims.

mugtech :
gardener1 :

Even though the IRS demands to know every penny any American expat owns anywhere in the world, unfortunately they don't seem to be able to keep that information to themselves -

The IRS is using a system that was hacked to protect victims of a hack—and it was just hacked

http://qz.com/628761/the-irs-is-using-a … st-hacked/

And one of the IRS employees who was supposed to be helping  victims of identity theft instead created more victims.

In addition, it was reported yesterday that the 6 digit IP numbers given to identity theft victims to use in place of their SS# were also stolen for some.  IRS claims they will use a different system next year.

Those of you planning to earn money in Cuba got some good news today.  Previously a foreign tax credit was disallowed and also deferral of income earned in Cuba through a controlled foreign corporation had been disallowed.  Both are now allowed.

Mugs, I wonder if you might weigh in on this, a very good question that that turned up on reddit today in USExpatTaxes ---

---

"Hey all, just thought you'd all like to know.
I've talked to the IRS who WOULD not answer my question. They told me that. They WOULD not answer this question. (and yes, I clarified "would" not "could")
I've talked to the respective offices of senators and a congressman, who could not (have not after almost a month) answer my question.
So I guess I'll ask reddit, because from what I've researched and gathered from implied answers with my extensive questioning and (many many many hours) on the phone with the IRS.
IRS (US Government) requires Foreign Financial Institution through FATCA to collect your SSN on form W-9. But since they are foreign entities, there is no assurance of confidentiality of your information on the W-9. (which includes your SSN)
So quite literally your reported SSN through whatever FFI you may use, could be farmed out to the highest bidder or foreign governments or anyone.
Please, prove me wrong anyone, In over a month of research, I can not find any verbal or (even better) hard print evidence of the assurance of confidentiality of our SSN's which we are supposed to supply to any FFI we may be using.
Isn't it nice our government forces foreign entities to collect our most precious information as a US citizen with no enforceable assurance of confidentiality? Please prove me wrong, reddit!
From what I understand, your local FFI may lump the confidentiality of your W-9 information in with all the other information they collect about you, However, many do not since it is considered required information from an outside source. (the IRS, US Government) Link to the IRS page on FATCA: https://www.irs.gov/Businesses/Corporat … -Act-FATCA
and no, I'm not trying to get out of reporting. I just want my information confidentiality to be assured. US entities must comply with US law regarding confidentiality of your SSN which are inapplicable to FFI's."

-----

https://www.reddit.com/r/USExpatTaxes/c … tizen_ssn/

The only non-USA government or institutions I have dealt with are in the Philippines.  For confidentiality and economic security purposes we keep all of our cash and investments in USA accounts, transferring for local use only into non-interest bearing checking accounts.  I believe many in Ecuador do the same, and as long as you maintain your USA citizenship and pay taxes on your worldwide income, seems best and easiest to keep the money in the USA.  Hard to believe, but most foreign countries are more corrupt than the USA, so any "guarantees" they issue not worth the paper on which it is printed.

Agreed.

But in order to open a foreign bank account in a foreign country where an expat may live - that US expat must identify to that foreign bank their US Social Security Number si?

Then the expat must deal with all the plethora of IRS forms, and the foreign bank, which has all of their identifying information has no particular obligation to protect that information, si?

I believe this is what our redditor was asking.

The data privacy laws in the United States are considered "STRONG" as is Canada and most countries in the European Union (The EU has the strongest privacy protection directives.)  I recall a data protection initiative began in Ecuador last year but did not hear whether anything was implemented. Regardless, passing a law does not make data secure; it requires adopting a focused discipline towards electronic and physical protection and substantial investment in (i) infrastructure, hardware and software, (ii) education, training and testing of processes and (iii) enforcement for data protection laws to serve any purposes.

In the meantime, Ecuador typically ranks with most African countries in terms of data protection in the category of "none."

gardener1 :

Agreed.

But in order to open a foreign bank account in a foreign country where an expat may live - that US expat must identify to that foreign bank their US Social Security Number si?

Then the expat must deal with all the plethora of IRS forms, and the foreign bank, which has all of their identifying information has no particular obligation to protect that information, si?

I believe this is what our redditor was asking.

Also agreed, but my wife is a citizen of the Philippines, a dual citizen, so everything is in her name with her Philippines ID, so very little is at risk under her Philippines SS#, for we deal with transfer in and then take cash out.

But reading through our redditor's post, it sounds like  that person is NOT married to a native citizen and so has no opportunity to route the foreign banking through any spouse's name.

Therefore exposing the US expat redditor to revealing his US Social Security and other information to a foreign bank, which has no obligation in any way, shape, or form to protect that information. Which has the redditor quite aggrieved.

In order to comply with FATCA, foreign banks servicing US citizens must collect this kind of identifying information. And yet they are not responsible for protecting this information.

I think he has grounds to be worried.

The IRS is about finished with Swiss banks concerning tracking down hidden assets of USA citizens.  Sounds like the next stop could be Singapore, whose system appears to be more cooperative and also a haven for Asians with USA citizenship.  Consider yourselves warned.

mugtech :

The IRS is about finished with Swiss banks concerning tracking down hidden assets of USA citizens.  Sounds like the next stop could be Singapore, whose system appears to be more cooperative and also a haven for Asians with USA citizenship.  Consider yourselves warned.

Any American still trying to maintain an undisclosed bank account anywhere is a fool and should have been warned when UBS scandal broke years ago.  Exactly how much interest income from their bank account or capital appreciation and dividend income from their investment account are they earning "tax free" to justify risking loss of not only much of their assets but their liberty too?   Don't give up on foreign investment accounts, just go legal and sleep at night.

As predicted, UBS Group AG in Singapore has turned over investment info on a non-reporting USA citizen living in China.  Said citizen had moved his UBS investments from Switzerland to Singapore in 2001, and the IRS tracked him down.  Despite a shrinking budget the IRS is inspired by the $5 billion already collected, expect more of the same.

Looking at the year ending in 5 weeks, time to take a look at 2016 income taxes, due 4/17/17.  Not as many last minute tax changes this year, being an election year, all the extensions were done for 2 years or made permanent last year.
         Some due dates have changed, with partnerships, form 1065, now due 3/15, extended due date is still 9/15.  Most important for those with foreign accounts, the new form FINCEN Form114 , replacing form TD F 90-22.1, is now due 4/15 with an automatic 6 month extension available until 10/15.  This is only available online through the BSA e-filing system website.  The earned foreign income exclusion has been increased to $101,300 for 2016.  Interest or dividends of $10 or more must be reported as income no matter what the source.
          USA citizens must file form 114 if at on any day in 2016 the total value of all foreign accounts was equal to or greater than $10,000.  A recent court case said that the taxpayer's online accounts with poker companies were determined to be "bank, securities or other financial" accounts.  The court determined that the accounts were digital constructs that the financial institutions, all located outside the USA, created and maintained on the taxpayer's behalf.  These foreign countries were deemed to be the location of the accounts, no matter where the countries in fact kept his funds (US vs Homes  (DC CA 6/4/2014) 113 AFTER 2d, 2014-893).

As usual, Expats living abroad with legal residency .. and U.S. military personnel abroad .. get an automatic two-month extension to file a federal return, until mid-June.  For tax year 2016, it’s June 15, 2017.

No form or paperwork is required for this extension.

Homeland-based USA Citizens and Expats and military may obtain extensions until October 2017 by filing form 4868, which is available at the IRS website.

Expats with Social-Security income below a certain threshold are not required to file a federal return if their non-SSA-income is small.  Check the IRS website for details on the threshold(s).

source:  www.irs.gov

cccmedia :

As usual, Expats living abroad with legal residency .. and U.S. military personnel abroad .. get an automatic two-month extension to file a federal return, until mid-June.  For tax year 2016, it’s June 15, 2017.

No form or paperwork is required for this extension.

Homeland-based USA Citizens and Expats and military may obtain extensions until October 2017 by filing form 4868, which is available at the IRS website.

Expats with Social-Security income below a certain threshold are not required to file a federal return if their non-SSA-income is small.  Check the IRS website for details on the threshold(s).

source:  www.irs.gov

All true, and if you are not filing until after 6/15 then you should file the 4868 by 4/15/17 .  If there is no balance due for form 1040 then an extension is not required to file after 6/15/17.  If you have an overpayment you have until 4/15/20 to file and get a refund.

More bitcoin news from the IRS. A John doe summons was sent to Coinbase in California, for the info on 5 million holders of their product from 2013 to 2015.  They are fighting the summons, but only 4% of those opposing such IRS summons are successful.  Individuals cannot be prosecuted by the IRS when they gather information in this matter.  The IRS claims they just want to establish that the transactions using cyber currency are vastly under reported.
The IRS views bitcoins not as currency but as a security.  Therefore every time such currency is used there is a gain or loss that should be reported on Schedule D, capital gains and losses,  on form 1040.  The IRS wants such transactions reported to them on a form 1099B, the same way trading in stocks and bonds is reported currently.  Anyone who uses such instruments should realize the IRS wants to know about their transactions, could claim an incomplete tax return was filed.
Not sure how much any of this effects expats currently in Ecuador, for it appears that the systems set up is used mainly by citizens to help them avoid having to have bank accounts

Starting Monday, 1/23/17, the IRS is accepting form 1040 and all its variations to file income taxes for 2016.  Those filing for refunds using Earned Income Credit, and other refundable credits such as the child tax credit and American Opportunity education credit will have their refunds held until 2/15/17 because of the great amount of fraud involved in claiming these credits.

The IRS has enlisted tax preparers to aid in stopping the fraud.  Tax preparers are now required to file a form 8867 if any of the above credits are sought.  Preparers must ask pointed questions,document the conversation, and keep evidence collected for 3 years after the due date of the return.  So if a client is claiming an education credit, the student must produce a form 1098T from the learning institution plus proof that the tuition was paid, either with a copy of the checks used or a copy of the loan used to pay the tuition, including who is responsible for said loan, including co-signers.  It is worse for EIC.
          Glad this is my last year for this, 4/18/17 can't come soon enough for me.

Just read the new info, 5,411 gave up their USA citizenship in 2016, up from 4,279 in 2015.  Again the enforcing of income tax laws and the discovery of unreported foreign investments is listed as the main reason for the increase.  As a percentage of the world wide expats it is quite small, for many with multination citizenship prefer to keep their US citizenship as an insurance.  Also most pay little in taxes, and the process to get rid of USA citizenship can cost thousands of dollars.  Has anyone out their ever met someone who did this?

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