Rich people in a panic over new IRS rules

Wealthy Americans are ringing up their financial advisors and attorneys in a panic ahead of a looming September 23 IRS deadline to correctly report assets being held offshore.

A United States citizen or resident must file a Report of Foreign Bank and Financial Accounts (FBAR) if the aggregate value of the accounts in a foreign country exceeds $10,000 at any time during the calendar year. This includes any bank, securities, securities derivatives, along with any savings, checking, deposit, or other account maintained with a financial institution, according to the law firm Nixon Peabody.


http://xml.channel.aol.com/xmlpublisher/fetch.v2.xml?option=expand_relative_urls&dataUrlNodes=uiConfig,feedConfig,entry&id=578814&pid=578813&uts=1252598528
http://cdn.channel.aol.com/cs_feed_v1_6/csfeedwrapper.swf
Lots of Tax Hikes Coming in 2011
Tax increases will hit businesses and individuals, and don't think for a minute that only the wealthy will feel the pain. Click through our gallery as Kiplinger.com shares what tax hikes you might be able to expect.
Getty Images
AP
WalletPop is not responsible for caption content.


"The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law," according to the IRS web site. "Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad."

There is widespread fear among U.S. overseas residents that they will run afoul of the new IRS regulations.

According to the Financial Times, lawyers and tax advisers from London to Hong Kong have had a surge in inquiries from expatriate Americans. Inquiries rose ten-fold to one advisor, following the settlement of the U.S. government's case against Swiss banking giant UBS AG (UBS). Earlier this year, the company agreed to pay $780 million in fines for helping wealthy Americans hide $20 billion in assets overseas.

Apparently, many taxpayers have only recently become aware that they have to comply with FBAR. Taxpayers may escape serious IRS penalties if they come forward to the agency as long as they are not already under investigation. An amnesty is available.

Look for the IRS to crack down on offshore tax havens as the government tries to recoup the billions hidden in these countries. "A recent GAO report found that 83 of the 100 largest publicly traded U.S. corporations reported having subsidiaries in these countries that don't tax corporate profits," according to Citizens for Tax Justice.

What is Form 8958: Allocation of Tax Amounts Between Certain Individuals in Community Property State

Several states have "community property" laws, which say that most income earned and most assets acquired during a marriage are the equal property of both spouses, regardless of whose name is on the check or the title. This can sometimes create additional work for couples filing separately for federal income taxes. The Internal Revenue Service (IRS) created Form 8958 to allow couples in community property states to correctly allocate income to each spouse that may not match what is reported to the IRS.

Read More

Brought to you by TurboTax.com

What Is the IRS Form 8863?

If you plan on claiming one of the IRS educational tax credits, be sure to fill out a Form 8863 and attach it to your tax return. These credits can provide a dollar-for-dollar reduction in the amount of tax you owe at the end of the year for the costs you incur to attend school. Before preparing the form, however, make sure that you satisfy the requirements of an eligible student.

Read More

Brought to you by TurboTax.com

Getting Divorced

If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.

Read More

Brought to you by TurboTax.com

Tax Tips for Bitcoin and Virtual Currency

Virtual currency like Bitcoin has shifted into the public eye in recent years. Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. Recently, the Internal Revenue Service (IRS) clarified the tax treatment of Bitcoin and Bitcoin transactions.

Read More

Brought to you by TurboTax.com
Read Full Story