Author: Crystal Stranger JD, EA, NTPI Fellow
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Navigating the Complexities of FBAR Reporting and Penalties
For U.S. taxpayers with foreign financial accounts, the obligation to report these assets often extends beyond just filing their federal income tax return. One critical reporting requirement is the Foreign Bank and Financial Accounts (FBAR) form, officially known as FinCEN Form 114. Unlike most other international information reporting forms required by the IRS, such as…
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The IRS Restores Due Process for Foreign Gift Tax Penalties
In a significant policy shift, the IRS recently announced it would no longer automatically assess penalties on late-filed returns related to foreign gifts. This change restores a measure of due process to U.S. taxpayers with international financial ties, a long-awaited correction that could be the start of a broader reform in how the IRS handles…
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Guide to Choosing the Foreign Tax Credit or Foreign Tax Deduction
Foreign taxes can be complex, especially for U.S. taxpayers with foreign income. The U.S. provides two main options to relieve the tax burden imposed by foreign governments: the Foreign Tax Credit (FTC) and the Foreign Tax Deduction. Both options are designed to prevent double taxation, but they function differently and have varying implications for individuals…
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Don’t Miss Out on the Small Business Payroll Tax R&D Credit!
If your business is involved in research and development (R&D), especially as a startup, there’s a good chance you’re eligible for some significant tax credits. However, many companies overlook or misunderstand one critical credit — the Qualified Small Business (QSB) Payroll Tax Credit for Increasing Research Activities. This article will break down how this tax…
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How Software Companies May Be Overpaying Taxes: A Guide to §174 Amortization Rules
If you’re in the software industry, there’s a good chance you may have overpaid your taxes due to recent changes in tax law and the misinterpretation of §174 amortization rules by tax preparers. Over the past year, I’ve noticed a recurring issue when reviewing tax returns for software companies: many tax accountants have mishandled the…
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Why Form 5471 is So Expensive to Prepare
Clients often are surprised when they acquire a foreign subsidiary in their US company, then go to file their taxes the next year and see how much more expensive it is. But seeing how Form 5471 is the most complex tax return, it is usually warranted. Plus with a $10,000 penalty if you fail to…
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Tax Issues for State Addresses
Throughout the 20+ years of my tax career I have seen one issue roar it’s ugly head over and over again for both individuals and companies alike- using an out of state address on a tax return. This innocent-seeming mistake can end up costing you thousands of dollars in taxes, penalties, interest, and representation fees. …
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Avoid ERC Nightmares With the Voluntary Disclosure Program
The Employee Retention Credit (ERC) certainly helped many businesses during the COVID-19 pandemic, providing relief to help retain employees and recover financial losses. While the ERC helped many, grave mistakes in claiming the credit have become a widespread issue. Many businesses, influenced by aggressive promoters advertising through payroll companies and tax preparers, unintentionally and fraudulently…
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Tax Guide to Funding your Foreign Subsidiary
Reporting Debt and Equity Contributions to a Foreign Corporation on Form 926 As a U.S. entrepreneur or business owner with foreign subsidiaries, understanding the tax implications of your financial transactions with those entities is crucial. One of the key forms that the IRS requires in this regard is Form 926, used to report transfers of cash,…
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Pay What You Can Now to Reduce Penalties
How to Lessen the Impact of Late Tax Payments Tax season can be a stressful time for many individuals and businesses. Between gathering documents, calculating deductions, and dealing with unexpected financial setbacks, it’s easy to find yourself in a position where you can’t pay your full tax bill by the deadline. If you’re in this…