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  1. Foreign real estate is not included on the 8938. Rental property is not included on the 8938. If it is held by a corp, then the corp is reported on the 8938 the IRS has a good list of what needs to be included on this link https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements If they have a Spanish property, they may have a Spanish bank account...see Sch B questions. If the bank acct exceeded 10k, than an FBAR is needed (FinCEN 114)
  2. Sorry, late coming to this topic. From the info provided, your Taxpayer client should use the Streamlined program to file the amended returns and the FBARs. I assume the client lives in the US and had filed each year. Therefore, the IRS will assess a 5% penalty. If the client does not use the Streamlined program, there is a risk that the client will get hit with all the penalties for late FBARs (10k/year). If the client is required to include other forms on the 1040 such as 8938, 5471, 8621, 926...more penalties will be assessed. It is not worth the risk for filing late FBARs when there is also int & div income that was not reported. If there is no additional int or div income to reported, your client may avoid penalties for late filing FBARs without the Streamlined program. The IRS site explains the programs very well... https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures https://www.irs.gov/individuals/international-taxpayers/delinquent-fbar-submission-procedures Extra thought....my gut feeling when you said your client did not include dividends from a foreign account gave me two thoughts 1) the foreign broker invested in US companies, which means that the client already had 30% withholding tax on the US dividends and/or 2) the foreign broker invested in non-US mutual funds and you will have a bad PFIC problem.
  3. The IRS is quick to send a letter to the taxpayer, usually the next day. The IRS letter will tell the taxpayer to resubmit the payment via Direct Pay, EFTPS, credit/debit card online or check/money order. The letter includes a payment voucher and address to send it to. After the IRS computers process the tax return (1 to 6 months), the IRS may send another letter to the taxpayer with penalties and interest. You may help the client by telling them about a first time abatement (FTA) for any penalty. However, the interest cannot be abated. The taxpayer should call the IRS to request the FTA or pay you to process a PoA form 2848, submit it to the IRS and then call the IRS and wait on hold....but usually that only make financial sense if the penalty is big and the taxpayer is too busy.
  4. If the US army man has a child dependent, he may qualify as HoH. Otherwise, he is MFS. He cannot claim wife as dependent (in 2018, dependents don't matter). Indo-wife is not required to obtain ITIN. On his MFS return, her ID is listed as NRA (see ATX first tab "Main Info" there's a checkbox in a horrible spot this year, under FOR STATE RETURN PURPOSES, put a checkmark in box next to "Check if spouse is nonresident alien, does not have and is not required to have SSN or ITIN.") However, there is an election for her to elect to be treated as a US person and file MFJ (sorry, I do not have experience with this election which is only done when the spouse does not have income or FTC to offset the income on the US tax return). To convert to USD, use the IRS average fx rates https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates or another fx site that will produce an average FX for the calendar year. Be careful the US army man may have signing authority over a non-US bank account or non-US investments (FBAR/8938)
  5. make sure TP qualifies for FEIE. TP must have a residence in the FC either a) on the day before the year began (12/31/2017) and continued the residence through at least 1/1/2019 and didn't make a stmt to the FC that they were not resident in FC, or b) meet the PPTest (330 days during any 365 period - just don't count any part day in the US as a part day in the FC. All part days in the US are consider a US day, never a FC day. Don't forget FBARs or Sch B asking if they have a non-US account.
  6. add FECWKST form to ATX If you use f2555, you have to allocate any days TP was in the US working (meeting clients, adding training, conferences, etc..) on F2555, tab Earned Inc Allocation If you use F2555ez, you have to calc your own alloc and insert the # on page 2 of F2555 line 17
  7. Please don't attach in 8275. It is used for other reasons, not for a missing SSN/ITIN of a non-resident spouse, nor would it be appropriate for a missing SSN of a dependent. Follow the 1040 instructions - under MARRIED FILING SEPARATELY (page 15 of PDF instructions). "If your spouse doesn’t have and isn’t required to have an SSN or ITIN, enter “NRA.” The way to get ATX to put NRA in the box is shown in my original post.
  8. Gifts between spouses are common, and generally subject to a 100% marital exclusion if both spouses are US citizens. However, gifts from a US spouse to their NRA/non-citizen spouse (which includes green card holders) are subject to an annual max exclusion (2018 = $152k). On the flipside, an NRA spouse can give everything to a US citizen spouse. I can't be certain that Possi's facts would be a gift, more facts would be needed, but on the face of it, if one spouse is paying for the other spouse's accommodations & living expenses that are not same principal location as the paying spouse, it looks like a gift. There will be arguments both ways. Re: joint filing. It is unlikely that they will want to file a joint return. It appears that the husband has wealth outside the US which would complicate the US tax return and subject his income to US tax.
  9. don't put your SSN on the ss4 as the responsible party unless you ultimately own or control the corporation. You have to sign the ss4 under penalties of perjury. leave line 7b blank if the responsible party does not have and is ineligible to obtain an SSN or ITIN You may not file the online ss4 (it's been awhile since i tried w/o an SSN/ITIN). Alternative-fax in the ss4 Unsolited tip-include the 5472 when you file your 1120 for the corp, and possibly an FBAR if the US corp has a non-US account.
  10. You should be able to efile through ATX. On 1040, first tab "Main Info" there's a checkbox in a horrible spot this year, under FOR STATE RETURN PURPOSES, put a checkmark in box next to "Check if spouse is nonresident alien, does not have and is not required to have SSN or ITIN." I have efiled spouses with w/o SSN/ITINs for a number of years w/ ATX. Unsolicited tips (worth the price paid) 1) be careful the US spouse may have signing authority over a non-US bank account or non-US investments (FBAR/8938) 2) if the NRA is paying for everything, there's a possibility that the payments may be treated as gifts. If gifts are over $100k for a year from the NRA, US taxpayer will report it on 3520 filed separate from 1040. 3) suggest that NRA gifts to US taxpayer instead of NRA paying expenses directly, then US taxpayer can pay for her own living expenses and those of their son. If son is dependent, US taxpayer would be treated as HoH and have better tax bracket & std deduction. 4) make sure NRA counts days to avoid substantial presence in the US. 122 days on average over 3 years or potentially a treaty may allow up to 182.
  11. I can probably help. I prepared similar returns when I worked in the Caymans (now back upstate NY). As your facts could go in multiple directions, it would be better to discuss on a tel. How do I contact you (or can you contact me - I am a novice at this board posting).
  12. Looks like your client has a PFIC. You'll likely have to include 8621 and get historic data from the client of when he put money in, distributions, div reinvested. The US tax impact will be shocking. Even if he had substantial assets to include the 8938, this investment would likely not be reported on the 8938 as the 8938 makes an exception for assets reported on the 8621. South Africa has a lot of good accountants, but the chance of finding any that know the US tax impact of this investment is near zero. It will be up to you to review.
  13. In ATX, go to line 7 of 1040 and jump to Line 7 worksheet. enter the foreign wages on line 5 of the worksheet, Foreign employer compensation not reported on w-2....it will link you to another worksheet, FECwkst (enter employer data on the FECwkst) and automatically puts the required "FEC" on line 7 of 1040 which tells the IRS it is foreign earned comp.
  14. If you determine that the TP is subject to the Totalization agreement on the income, the Sch SE provides the following instruction: If your self-employment income is exempt from SE tax, you should get a statement from the appropriate agency of the foreign country verifying that your self-employment income is subject to social security coverage in that country. If the foreign country will not issue the statement, contact the SSA at the address shown in (3a), earlier. Do not complete Schedule SE. Instead, attach a copy of the statement to Form 1040 and enter “Exempt, see attached statement” on Form 1040, line 56. In ATX, I override the line 56 and insert 0 if the Totalization Agreement applies. Otherwise, in ATX you can put the income exempt from SE tax on the detail tab for line 3 on Sch SE
  15. With regrets, there are two separate tax systems (1) social security taxes and (2) income taxes. The self employment income is subject to SE tax (social security tax) no matter where the US person performs the work, even though the net income is subject to exclusion under the Foreign Earned Income from the US income tax. However, if the TP is in a country that also charges a social security tax (eg the UK) that the TP pays in the other counrty, he may exclude the SE income from US social security tax under the US-UK treaty/Totalization agreement There are other countries with Totalization agreements with similar affect to US taxpayers, but not many. Otherwise, depending upon the costs, there's potential planning to set up a company and have the TP be the sole employee to avoid the SE tax.
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