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Tax Time Guide: Taxpayers should report digital asset transactions, gig economy income, foreign source income and assets
IR-2024-63, March 6, 2024
Excerpts: Generally, A U.S. citizen or resident alien’s worldwide income is subject to U.S. income tax, regardless of their residence. They're also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.
U.S. citizens and resident aliens must report unearned income, such as interest, dividends and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States. An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are available only if an eligible taxpayer files a U.S. income tax return.
Foreign accounts and assets
Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B (Form 1040), Interest and Ordinary Dividends, to their tax return. Part III of Schedule B asks about the existence of foreign accounts such as bank and securities accounts and usually requires U.S. citizens to report the country in which each account is located.
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.
In addition, U.S. persons with an interest in or signature or other authority over foreign financial accounts where the aggregate value exceeded $10,000 at any time during 2023 must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages U.S. persons with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is available only through the BSA E-filing System website. The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15, 2024. FinCEN grants U.S. persons who miss the original deadline an automatic extension until Oct. 15, 2024, to file the FBAR. There is no need to request this extension. See FinCEN’s website for further information. to read further click here.
IRS launches new effort aimed at high-income non-filers; 125,000 cases focused on high earners, including millionaires, who failed to file tax returns with financial activity topping $100 billion
IR-2024-56, Feb. 29, 2024
WASHINGTON — In the continuing effort to improve tax compliance and ensure fairness, the Internal Revenue Service announced a new effort today focused on high-income taxpayers who have failed to file federal income tax returns in more than 125,000 instances since 2017.
The new initiative, made possible by Inflation Reduction Act funding, begins with IRS compliance letters going out this week on more than 125,000 cases where tax returns haven’t been filed since 2017. The mailings include more than 25,000 to those with more than $1 million in income, and over 100,000 to people with incomes between $400,000 and $1 million between tax years 2017 and 2021.
These are all cases where IRS has received third-party third party information—such as through Forms W-2 and 1099s—indicating these people received income in these ranges but failed to file a tax return. To read further click here.
IRS ramps up new initiatives using Inflation Reduction Act funding to ensure complex partnerships, large corporations pay taxes owed, continues to close millionaire tax debt cases
IR-2024-09, Jan. 12, 2024
WASHINGTON — The Internal Revenue Service announced today continued progress to expand enforcement efforts related to high-income individuals, large corporations and complex partnerships as part of wider efforts to transform the agency.
IRS Commissioner Danny Werfel noted Inflation Reduction Act resources continue to help in a variety of areas. In addition to earlier announcements focusing on further improving taxpayer service during the upcoming 2024 filing season, the IRS has focused IRA resources on strengthening enforcement to pursue complex partnerships, large corporations and high-income, high-wealth individuals who do not pay overdue tax bills.
The IRS shared today progress in its focus on people using partnerships to avoid paying self-employment taxes as well as new details on current enforcement priorities. The IRS is also continuing to pursue millionaires that have not paid hundreds of millions of dollars in tax debt, with an additional $360 million collected on top of the $122 million reported in late October. The IRS has now collected $482 million in ongoing efforts to recoup taxes owed by 1,600 millionaires with work continuing in this area.
"The IRS continues to increase scrutiny on high-income taxpayers as we work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act. We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law," Werfel said. "At the same time, we are focused on improving our taxpayer service for hard-working taxpayers, offering them more in-person and online resources as part of our effort to deliver another successful tax season in 2024. The additional resources the IRS has received is making a difference for taxpayers, and we plan to build on these improvements in the months ahead." To read more, click here.
Taxpayers should continue to report all cryptocurrency, digital asset income
IR-2024-18, Jan. 22, 2024
WASHINGTON — The Internal Revenue Service today reminded taxpayers that they must again answer a digital asset question and report all digital asset related income when they file their 2023 federal income tax return, as they did for their 2022 federal tax returns.
The question appears at the top of Forms 1040, Individual Income Tax Return; 1040-SR, U.S. Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return, and was revised this year to update wording. The question was also added to these additional forms: Forms 1041, U.S. Income Tax Return for Estates and Trusts; 1065, U.S. Return of Partnership Income; 1120, U.S. Corporation Income Tax Return; and 1120-S, U.S. Income Tax Return for an S Corporation. Read more here.
IRS: Take care when choosing a tax return professional
IR-2024-31, Feb. 01, 2024
WASHINGTON — The Internal Revenue Service today reminded taxpayers that carefully choosing a tax professional to prepare a tax return is vital to ensuring that their personal and financial information is safe and secure and treated with care.
Most tax return preparers provide honest, high-quality service. But some may cause harm through fraud, identity theft and other scams. It is important for taxpayers to understand who they’re choosing and what important questions to ask when hiring an individual or firm to prepare their tax return.
Another reason to choose a tax preparer carefully is because taxpayers are ultimately legally responsible for all the information on their income tax return, regardless of who prepares it. To read further, click here.
2024 tax filing season starts as IRS begins accepting tax returns today; taxpayer help expands this year with more in-person hours, better service, improved tools
IR-2024-24, Jan. 29, 2024
WASHINGTON — The Internal Revenue Service successfully opened the 2024 tax season today by accepting and processing federal individual tax returns as the agency continues focusing on expanding options to help taxpayers. The IRS expects more than 146 million individual tax returns for 2023 to be filed this filing season, which has a deadline of April 15, 2024.
With the start of the 2024 filing season, the IRS will be extending hours of service in nearly 250 Taxpayer Assistance Centers (TACs) across the country, providing additional help to people. The IRS will also be working to continue improvements on its phone service as well as expanding online tools. The Where’s My Refund? tool on IRS.gov will add more details for taxpayers checking on the status of their tax refund. read more here.
Non-Fungible Token (NFT) developer charged in multimillion-dollar international fraud scheme
Date: January 5, 2023
A criminal complaint was unsealed today in federal court in Brooklyn charging Aurelien Michel, a French national residing in the United Arab Emirates (UAE), with defrauding purchasers of "Mutant Ape Planet" NFTs, a type of digital asset, of more than $2.9 million in cryptocurrency. The defendant was arrested last night at John F. Kennedy International Airport. His initial appearance is scheduled for this afternoon before United States Magistrate Judge James R. Cho.
As part of the scheme, NFTs were marketed to purchasers, who were falsely promised numerous rewards and benefits designed to increase demand for, and the value of, their newly acquired NFTs. After selling out of the NFTs, the purchasers were "rug pulled" – a cryptocurrency scam in which a developer attracts investors, but pulls out before the project is complete, leaving buyers with a worthless asset – as none of the promised benefits were provided. Instead, millions worth of the NFT purchasers' cryptocurrency was diverted for Michel's personal benefit.
Breon Peace, United States Attorney for the Eastern District of New York, Ivan J. Arvelo, Thomas Fattorusso, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), and Special Agent-in-Charge, Homeland Security Investigations (HSI), New York announced the charges.
"As alleged, the defendant used a traditional criminal scheme to defraud consumers eager to participate in a new digital asset market," stated United States Attorney Peace. "Protection from fraud and manipulation extends to all consumers and investors, including those participating in the fast-evolving market for NFTs and other crypto assets. Our Office is committed to bringing to justice any criminal actor abusing any markets for their own gain."
"It's alleged that Michel defrauded investors by making false representations of, amongst other things, giveaways, tokens with staking features, and merchandise collections. Once the NFTs were sold-out, Michel allegedly ceased communications and withdrew purchasers' funds from the company's cryptocurrency wallets, lining his pockets with nearly $3 Million of investors' money," stated IRS-CI Fattorusso. "Michel can no longer blame the NFT community for his criminal behavior. His arrest means he will now face the consequences of his own actions." To read more, click here.
IRS reminds eligible 2020 and 2021 non-filers to claim Recovery Rebate Credit before time runs out
IR-2023-217, Nov. 17, 2023
WASHINGTON — The Internal Revenue Service is reminding those who may be entitled to the Recovery Rebate Credit to file a tax return and claim their money before it's too late. The vast majority of those eligible for Economic Impact Payments related to Coronavirus tax relief have already received them or claimed them through the Recovery Rebate Credit. The deadlines to file a return and claim the 2020 and 2021 credits are May 17, 2024, and April 15, 2025, respectively.
The Recovery Rebate Credit is a refundable credit for those who missed out on one or more Economic Impact Payments. Economic Impact Payments, also referred to as stimulus payments, were issued in 2020 and 2021. The IRS estimates that some individuals and families are still eligible for the payment(s). However, taxpayers must first file a tax return to make their claim even if they had little or no income from a job, business or other source. To read further, to learn about who is eligible and the deadlines for claiming these refunds, click here.
IRS issues guidance, seeks comments on nonfungible tokens
IR-2023-50, March 21, 2023
WASHINGTON — The Treasury Department and the Internal Revenue Service today announced that they are soliciting feedback for upcoming guidance regarding the tax treatment of a nonfungible token (NFT) as a collectible under the tax law. Today's guidance also requests comments on the treatment of NFTs as collectibles and describes how the IRS intends to determine whether an NFT is a collectible until the further guidance is issued.
A nonfungible token (NFT) is a unique digital identifier that is recorded using distributed ledger technology and may be used to certify authenticity and ownership of an associated right or asset. Distributed ledger technology, such as blockchain technology, uses independent digital systems to record, share and synchronize transactions, the details of which are recorded simultaneously on multiple nodes in a network. A token is an entry of data encoded on a distributed ledger. A distributed ledger can be used to identify ownership of both NFTs and fungible tokens, such as cryptocurrency, as described in Rev. Rul. 2019-24.
Section 408(m)(2) of the tax code provides for a specific list of items that constitute collectibles for certain purposes. Acquisition of a collectible by an individual retirement account (IRA) or individually-directed account of a qualified plan is treated as a distribution from the account equal to the cost to the account of the collectible. Generally, collectibles also do not have as advantageous capital-gains tax treatment as other capital assets.
Until additional guidance is issued, the IRS intends to determine when an NFT is treated as a collectible by using a "look-through analysis." Under the look-through analysis, an NFT is treated as a collectible if the NFT's associated right or asset falls under the definition of collectible in the tax code. For example, a gem is a collectible under section 408(m); therefore, an NFT that certifies ownership of a gem is a collectible.
In Notice 2023-27PDF, the Treasury Department and the IRS are requesting comments on any aspect of NFTs that might affect the treatment of an NFT as a collectible as well as certain comments specifically set out in the notice.
IRS: Updates to question on digital assets; taxpayers should continue to report all digital asset income
IR-2023-12, January 24, 2023
WASHINGTON — The Internal Revenue Service today reminded taxpayers that they must again answer a digital asset question and report all digital asset-related income when they file their 2022 federal income tax return, as they did for fiscal year 2021. The term "digital assets" has replaced "virtual currencies," a term used in previous years.
The question, which appears at the top of Forms 1040, Individual Income Tax Return; 1040-SR, U.S. Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return, was revised this year to update terminology.
In addition, the instructions for answering the question were expanded and clarified to help taxpayers answer it correctly. All taxpayers must answer the question regardless of whether they engaged in any transactions involving digital assets.
For the 2022 tax year it asks: "At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"
What is a digital asset?
A digital asset is a digital representation of value which is recorded on a cryptographically secured, distributed ledger. Common digital assets include:
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Convertible virtual currency and cryptocurrency
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Stablecoins
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Non-fungible tokens (NFTs)
Everyone must answer the question
Everyone who files Form 1040, Form 1040-SR or Form 1040-NR must check one box, answering either "Yes" or "No" to the digital asset question. The question must be answered by all taxpayers, not just those who engaged in a transaction involving digital assets in 2022.
To read more about IRS position on digital assets, click here.
IRS kicks off 2023 tax filing season with returns due April 18
IR-2023-11, January 23, 2023
WASHINGTON — The Internal Revenue Service kicked off the 2023 tax filing season with a focus on improving service and a reminder to taxpayers to file electronically with direct deposit to speed refunds and avoid delays. Following a successful opening of its systems today, the IRS is now accepting and processing 2022 tax returns. Most of the individual tax returns for the 2022 tax year are expected to be filed before the April 18 tax deadline. Taxpayers have until April 18 to file their taxes this year, but some taxpayers living overseas and disaster victims may have later filing deadlines. Alabama, California and Georgia storm victims now have until May 15 to file various federal individual and business tax returns and make tax payments.
"Following months of hard work, we successfully opened our processing systems today to start this year's tax season," said IRS Acting Commissioner Doug O'Donnell. "Getting to this point is a monumental effort not only for the IRS but also for the nation's tax community. The hard-working employees of the IRS look forward to serving taxpayers this filing season, and I personally want to thank them, and all of the tax and payroll community for their dedication to making tax time smoother for the nation."
O'Donnell also noted that taxpayers can count on IRS delivering improved service this filing season. As part of the August passage of the Inflation Reduction Act, the IRS has more than 5,000 new telephone assistors and added more in-person staff to help taxpayers.
"We continue to increase IRS staffing to help provide taxpayers with the information and assistance they need," said O'Donnell. "The IRS reminds taxpayers to take some important steps when filing their tax returns for a smoother process. They should gather their necessary tax records, file an accurate return electronically and choose direct deposit to get their refunds faster."
Taxpayers who electronically file a tax return with no issues and choose direct deposit should still receive their refund within 21 days of the date they file – similar to previous years. Due to tax law changes such as the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year. To read more click here.
National Taxpayer Advocate delivers 2022 Annual Report to Congress; focuses on taxpayer impact of processing and refund delays
IR-2023-04, January 11, 2023
WASHINGTON — National Taxpayer Advocate Erin M. Collins today released her 2022 Annual Report to Congress, saying taxpayers and tax professionals "experienced more misery in 2022" due to paper processing delays and poor customer service. But the report also says the Internal Revenue Service made considerable progress in reducing the volume of unprocessed tax returns and correspondence and is poised to start the 2023 filing season in a stronger position.
The Advocate's report assesses taxpayer service during 2022, identifies the ten most serious problems taxpayers are experiencing in their dealings with the IRS, and makes administrative and legislative recommendations to address those problems. This year's report recommends specific initiatives that Collins is urging the IRS to include in its plan showing how the additional funding it received in the Inflation Reduction Act will be spent. It also contains two research studies – one on ways to restructure the Earned Income Tax Credit to increase participation among eligible taxpayers while reducing improper payments, and the other designed to help the IRS improve its online operations by studying the functionality of online operations offered by over 40 states and several foreign countries.
Taxpayer service challenges
Return processing and refund delays. For most taxpayers, the most important function the IRS performs each year is issuing timely tax refunds. In 2022, about two-thirds of individual taxpayers were entitled to refunds, and the average refund amount was nearly $3,200. The report says the IRS failed to meet its responsibility to pay timely refunds to millions of taxpayers for the third year in a row. About 13 million individual taxpayers filed paper returns. Because of paper processing delays, refunds for these taxpayers were delayed, generally by six months or longer. Millions of e-filed individual returns were "suspended" because they tripped IRS processing filters and required manual review by IRS employees before refunds could be released. Hundreds of thousands of business returns claiming the Employee Retention Tax Credit were delayed.
However, the report says the IRS will be starting the 2023 filing season in much better shape than the last two years. The IRS began 2022 with an unprocessed paper backlog of 4.7 million original individual returns (Forms 1040), 3.2 million original business returns, and 3.6 million amended returns (individual and business combined). When the Advocate's report went to press in mid-December 2022, the IRS had reduced those backlogs to 1 million original individual returns, 1.5 million original business returns, and 1.5 million amended returns. By Dec. 23, the IRS had further reduced its unprocessed paper backlog of original individual returns to about 400,000 and original business returns to about 1 million. This significant reduction in the paper return inventory will enable the IRS to begin processing paper-filed tax year 2022 returns during the upcoming filing season. That contrasts with the previous two years, when the IRS was not able to process current-year returns until months after the filing season had ended.
The number of returns suspended during processing is the only significant return category in which inventories increased. The IRS entered 2022 with an inventory of 4.2 million suspended returns. The inventory grew to 5.9 million suspended returns by mid-December.
Cases involving suspected identity theft account for about half the inventory of suspended returns. In mid-December, the IRS reported 2.9 million identity theft cases in its inventory. While some will turn out to be fraudulent claims, the IRS website as of January 9 states: "[D]ue to extenuating circumstances caused by the pandemic, our identity theft inventories have increased and on average it is taking about 360 days to resolve identity theft cases." The report calls a year-long delay "unacceptable" and urges the IRS to assign additional employees to process these cases.
Delays in processing taxpayer correspondence and other cases in the Accounts Management function. The IRS sent millions of notices to taxpayers during 2022. These included 17 million math error notices, Automated Under reporter notices (where an amount reported on a tax return did not match the corresponding amount reported to the IRS on a Form 1099 or other information reporting document), notices requesting a taxpayer authenticate identity where IRS filters flagged a return as potentially fraudulent, correspondence examination notices, and some collection notices. Notices often require written taxpayer responses. If the IRS did not process a taxpayer response, it may have taken adverse action against the taxpayer or not released the refund claimed on the tax return. During fiscal year (FY) 2022, it took the IRS an average of 193 days to process taxpayer responses to proposed tax adjustments – about six months. That compares with 89 days in FY 2019, the most recent pre-pandemic year. The report also calls the delays in resolving these cases unacceptable.
Difficulty reaching the IRS on its toll-free telephone lines. The IRS received 173 million calls during FY 2022. Only 22 million (13%, or roughly one out of eight calls) got through to an IRS employee. As a result, most callers could not get answers to their tax-law questions, receive help with their account problems, or speak with an employee about compliance notices. Those who got through waited an average of 29 minutes on hold before the call began.
Telephone service for tax professionals was worse than the prior year and hit an all-time low. Because tax professionals prepare the majority of tax returns and often call with complex account-specific questions, the IRS has established a Practitioner Priority Service (PPS) telephone line to handle their calls. In FY 2022, IRS employees answered only 16% of PPS calls (fewer than one out of six), and the average hold time for those who got through was 25 minutes. Telephone delays place tax professionals in the difficult position of billing clients for the time spent trying to reach the IRS or writing off that time. "Tax professionals are key to a successful tax administration," Collins wrote. "The challenges of the past three filing seasons have pushed tax professionals to their limits, raising client doubts in their abilities and creating a loss of trust in the system."
US Department Of Justice: Court Authorizes Service Of John Doe Summons Seeking The Identities Of U.S. Taxpayers Who Have Used Cryptocurrency
Date 16/08/2022
On Aug. 15, 2022, a federal court in the Central District of California entered an order authorizing the IRS to serve a John Doe summons on SFOX, a cryptocurrency prime dealer headquartered in Los Angeles, California, seeking information about U.S. taxpayers who conducted at least the equivalent of $20,000 in transactions in cryptocurrency between 2016 and 2021 with or through SFOX.
“Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” said Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division. “The information sought by the summons approved today will help to ensure that cryptocurrency owners are following the tax laws.”
“The John Doe summons remains a highly valuable enforcement tool that the U.S. government will use again and again to catch tax cheats and this is yet one more example of that,” said IRS Commissioner Chuck Rettig. “I urge all taxpayers to come into compliance with their filing and reporting responsibilities and avoid compromising themselves in schemes that may ultimately go badly for them.”
To read more, click here.
IRS Experiencing Severe Delays in the Processing of Tax Returns and Refunds
IRS.gov Updated: 28-Dec-2021
Due to the lingering effects of COVID-19, the IRS continues to experience inventory backlogs resulting in significantly long wait times.
The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review. As of December 18, 2021, we had 6.3 million unprocessed individual returns. Unprocessed individual returns include tax year 2020 returns with errors and those returns requiring special handling such as those that require correction to the Recovery Rebate Credit amount or validation of 2019 income used to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). This work does not require us to correspond with taxpayers but does require special handling by an IRS employee so, in these instances, it is taking the IRS more than 21 days to issue any related refund and in some cases this work could take 90 to 120 days. The IRS is having to correct significantly more errors on tax returns than in previous years. The IRS has reduced the number of returns requiring special handling from an historical high of 9.8 million on May 1, 2021 to the current level of 42,000 individual returns as of December 18. If a correction is made to any RRC, EITC or ACTC claimed on the return, the IRS will send taxpayers an explanation. Taxpayers are encouraged to continue to check Where’s My Refund? for their personalized refund status and can review Tax Season Refund Frequently Asked Questions.
As of December 18, 2021, we had 2.3 million unprocessed Forms 1040-X (Amended Returns). We are processing these returns in the order received and working hard to get through the inventory. The current timeframe can be more than 20 weeks instead of up to 16. Please don't file a second tax return or contact the IRS about the status of your amended return. Taxpayers should continue to check Where's My Amended Return? for the most up to date processing status available. For further information visit www.irs.gov
The Recovery Rebate Credit
IRS.gov Updated: 30-Jul-2021
The first two rounds of Economic Impact Payments were advance payments of the 2020 Recovery Rebate Credit. Most eligible people already received the payments and won't include this information on their 2020 tax return.
Who May Be Eligible to Claim the 2020 Recovery Rebate Credit?
If you didn't get a first and second Economic Impact Payment or got less than the full amounts, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if you don't usually file a tax return.
Claiming the Credit
To claim the 2020 Recovery Rebate Credit, you must file a 2020 tax return, even if you aren't required to file. You must also know the amount of any first and second Economic Impact Payment you received. For further information visit www.irs.gov.
Third Economic Impact Payment
Washington, March 31, 2021
The third round of Economic Impact Payments was authorized by the American Rescue Plan Act of 2021 as an advance payment of the tax year 2021 Recovery Rebate Credit.
The IRS started issuing the third Economic Impact Payments to eligible individuals on March 12, 2021, with more payments sent by direct deposit and through the mail as a check or debit card in the weeks that follow. The IRS will continue to issue payments throughout the year as tax returns are processed.
Most eligible people won’t need to take additional action to get a third payment. Due to new income limitations, some individuals won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit.
Generally, someone is eligible for the full amount of the third Economic Impact Payment if they:
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are a U.S. citizen or U.S. resident alien (and their spouse if filing a joint return), and
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are not a dependent of another taxpayer and
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their adjusted gross income (AGI) is not more than:
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$112,500 if filing as head of household or
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$75,000 for eligible individuals using any other filing status
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$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
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Payments will be phased out – or reduced -- above those AGI amounts. This means people will not receive a payment if their AGI exceeds the above amounts. To read more on the 3rd EIP, For further information visit www.irs.gov.
Nonfilers - IRS launches campaign aimed at bringing into compliance high-income individuals who have not filed their tax returns.
July 2019
U.S. citizens and resident aliens are subject to tax in the United States on their worldwide income, no matter what form that income takes. Taxpayers are often under the misconception that they are taxed in the United States only on income generated or earned in the United States. Using examinations, the LB&I department will concentrate in this campaign on bringing into compliance high-income taxpayers who have not filed tax returns. To read more on this, For further information visit www.irs.gov.
With the increased collection of data by the IRS and the Department of Justice, and the prioritization of data analytics, taxpayers should expect an increase in the number of high-income individuals who are flagged for examination. It is also important to note that the US Senate recently ratified a number of long-stalled international tax treaties, including treaties with Switzerland and Luxembourg, which allow the IRS to obtain even more information from these other countries on high income, non-compliant US taxpayers.
Relief Procedures for Expatriating or Former U.S. Citizens
Updated November 22, 2019
The IRS announced procedures for certain persons who have relinquished, or intend to relinquish, their United States (U.S.) citizenship and who wish to come into compliance with their U.S. income tax and reporting obligations and avoid being taxed as a “covered expatriate” under section 877A of the U.S. Internal Revenue Code (IRC). Please read all information for these procedures including the Frequently Asked Questions and Answers (FAQs) to determine eligibility. Relinquishing U.S. citizenship and the tax impacts of relinquishing U.S. citizenship are serious matters that involve irrevocable decisions. Consider consulting legal counsel before making any decisions about relinquishing U.S. citizenship.
The Department of the Treasury, the Department of State, the Internal Revenue Service, and the Social Security Administration have prepared a brief “frequently asked questions” document on obtaining social security numbers, expatriation, and tax implications of expatriation. For further information, click here...
The filing obligations of U.S. Citizens and Long-term Residents living and working outside the United States.
Updated December 13, 2019
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside. To read further, click here...
Most People Abroad Need to File...
A filing requirement generally applies even if the taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit, that substantially reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return. Click to read the rest of this article.
Compliance Options for Non-Filers
Options Available For U.S. Taxpayers with Undisclosed Foreign Financial Assets
The implementation of FATCA and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to non-U.S. investments. Because the circumstances of taxpayers with non-U.S. investments vary widely, the IRS offers the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those investments:
Each of these options is explained on the linked pages. The IRS encourages taxpayers to consult with professional tax or legal advisers in determining which option is the most appropriate for them.
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