During the filing season, the IRS offered online tax tips for U.S. taxpayers who received foreign income. Although the international tax team at LSL CPAs believes that not all of the tax tips apply to local taxpayers, there are 3 tips that make very good sense and should be taken into consideration.
If you live in California and you received income from foreign sources in 2013, please consider these tax tips and take the right actions. If you need help, the international tax consultants at LSL CPAs are here if you take the first step and contact us.
3 Tips For Taxpayers Who Received Foreign Income
1) Make Sure To Report Foreign Income
Not reporting foreign income is a major mistake. As the IRS clearly states in their tax tip, “By law, U.S. citizens and resident aliens must report their worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.” Penalties for not reporting foreign income are extremely high. With most of the countries signing FATCA disclosure agreements, the risks of any foreign income being reported to the IRS by third parties has risen as well. LSL CPAs help clients to obey the laws while saving money by doing it right.
2) Remember The Possibility Of Tax Credits & Deductions
If you paid taxes in a foreign country, you may be able to claim a tax credit or a deduction. The idea is to eliminate the double taxation in income subject to tax in multiple jurisdictions. To understand such financial tax subtleties, it is important to work with international tax experts like the LSL CPAs foreign tax team. The goal of our international tax consultants is to lower your tax liability while making sure you do not raise any red flags.
3) Make Sure You File All The Required Forms
U.S. income tax compliance is complicated for those who receive income from foreign countries and/or have accounts abroad. The majority of the forms that are required to be filed serve wither for disclosure or informational purposes only, yet they come with an array of very steep penalties. Examples of these forms include: Form 114, Form 8938, Form 3520, Form 5471, Form 8858, and Form 8865. If this seems intimidating, the international tax team at LSL CPAs can help you across the board with all of these filings, letting you know what you need to do and doing the filing for you with a precision born of experience and expertise.
Pursuant to U.S. Treasury Department Regulations, any federal tax advice in this article is not intended or written to be used for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate. To learn more about tax filing requirements for taxpayers with foreign income, please call LSL CPAs international tax accountant Yana Weaver at 714.569.1000.
