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Technical Update- September International Tax Alert

Notice 2017-42 Delays Effective/Applicability Dates in Dividend Equivalent Rules

 

Summary

Notice 2017-42 (the “Notice”) provides taxpayers with additional guidance for complying with final and temporary regulations under Sections 871(m), 1441, 1461, and 1473 of the Internal Revenue Code (collectively referred to as the “Section 871(m) regulations”) in calendar year 2018 and 2019. The Department of the Treasury and the Internal Revenue Service (collectively, “Treasury”) announced in the Notice their intention to amend the Section 871(m) regulations to delay the effective/applicability date of certain rules in those final regulations and also extend the phase-in period provided in Notice 2016-76 for certain provisions of the Section 871(m) regulations.  Read more

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Extending Your Individual Filing When You Reside Abroad

Individual Filings

Those living abroad may be eligible for extensions on individual tax returns.

By Bethany Bouw

The due date for extended individual income tax returns (October 16, 2017) is rapidly approaching. For individuals who live abroad, there may be questions about when to file and when to extend, especially if you are struggling to gather your tax information across multiple countries/continents. Fortunately, the IRS understands that residing abroad may pose problems with gathering the pertinent information. They have provided a variety of extensions to meet the needs of the affected filers. Read more

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Expiring ITINs – Do You Need to Renew?

By Bethany Bouw

The IRS has recently begun mailing letters to over 1 million taxpayers whose Individual Taxpayer Identification Numbers (ITINs) are expiring at the end of 2017. In accordance with the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), ITINs that have not been used on a federal return at least once in the last three years will expire on December 31, 2017. Additionally, ITINS bearing specific middle digits are also due to expire on the same date. The IRS is encouraging taxpayers to renew their ITINS as soon as possible to avoid delayed tax refunds and return processing. Read more

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Seven Foreign Bank Account Report (FBAR) Reminders

Foreign Bank Account

Make sure you know these seven things before filing your FBAR.

By Bethany Bouw

With globalization reaching new heights, many individuals and entities are faced with questions about reporting their foreign bank accounts. This is a serious matter from both a penalty standpoint and a multi-country perspective. In an effort to locate those attempting to hide taxable income, many countries have agreed to share information regarding accounts held by foreign owners. Failure to file informational reports related to your foreign bank accounts can lead to hefty penalties and stress. Read more

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Cash Management Increases Your Company’s Chances of Success

If you want your business to grow and remain competitive, a solid financial plan and a well-conceived strategy can mean the difference between boom and bust.

Cash Management

The obvious place to start is with a cash-flow analysis.

Review your company’s cash flow statements to understand the cycle of inflows and outflows that stem from accounts receivables, inventory, accounts payable and credit terms. This helps identify any problem areas that need improvement.

A cash flow statement also highlights important distinctions, such as the differences between cash and sales or inventory. A ledger full of credit sales may look good on your Statement of Income, but that won’t help if you can’t pay your employees until you collect on those accounts.  Read more

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Report Warns Retirees about Potential Downsides of Reverse Mortgages

Reverse Mortgages

The IRS is warning senior citizens against taking out reverse mortgages.

Reverse mortgages have been around for years. But they’re getting a new spin: Some senior homeowners are tapping into their home equity to “bridge the gap” until the time they’re ready to apply for Social Security benefits.

However, an independent consumer agency — the Consumer Financial Protection Bureau (CFPB) — is cautioning retirees against using this strategy. A recent CFPB report claims that the costs and risks associated with a reverse mortgage often exceed the cumulative increase in Social Security benefits you would receive by delaying benefits.  Read more

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IRS Guidance on Leave-Sharing Programs to Help Hurricane Harvey Victims

The IRS recently announced special tax relief for leave-based donation programs set up by employers to assist victims of Hurricane Harvey and Tropical Storm Harvey.

Basics of Employer Programs

Under a leave-based donation program, an employer can allow its employees to forgo their vacation, sick, or personal time off in exchange for cash payments made by the employer to charitable organizations. Under IRS regulations, leave-based charitable donations are ordinarily included in the donating employee’s income. In addition, the opportunity to elect such contributions raises the concern that eligible employees might be taxed on income that could have been donated because the ability to make the contribution triggers “constructive receipt.”  Read more

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Disaster Recovery: Ask ‘What If?’

Disasters never happen at a good time. But the timing is irrelevant. What counts is that your business can recover quickly with minimal long-term effects.

Disaster Recovery

In the event of an emergency, every company should have a disaster recovery plan in place.

And that means having a disaster recovery program in place so that your company is well-positioned to respond to — and rebound from — a wide range of calamities. The issues your business may need to deal with range from persuading loyal employees to stay home if they are not needed and determining how to pay vendors if the payment system is down.

Asking “what if” is the first preparation step. Answering that question allows your company to work out what it would do if hit by, for instance, a natural disaster, a flu pandemic, a burst water pipe at headquarters, a power failure at the main warehouse, or other disaster.  Read more

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Tax Breaks When Caring for Aging Parents

Aging Parents

Caring for aging parents can actually lead to tax relief.

As life expediencies continue to increase, it becomes much more likely that you will need to financially help an aging parent. If you find yourself in that situation, review the tax laws to determine whether you can obtain some tax relief.

The key is to determine whether you can deduct your parent as a dependent, which entitles you to an additional personal exemption on your tax return, reducing your taxable income by $4,050 in 2017 (unchanged from 2016). To do so, your parent’s gross income can’t exceed the exemption amount and you must provide over half your parent’s support. For purposes of the gross income test, Social Security benefits typically aren’t considered. Read more

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Strictly Speaking: Travel and Entertainment Recordkeeping

travel and entertainment

While tax breaks for business travel and entertainment can be awarded, the rules are very strict.

If you’re reporting travel and entertainment (T&E) expenses on your tax return and you’re audited, there’s a good chance an agent will take a hard look at those items.

Often the challenge won’t be whether the expense was appropriate for the business, but whether your records meet the letter of the law. And the IRS and courts take a strict position on recordkeeping — miss one element and the deduction is most likely to be disallowed. Read more