Important Tips for Reporting Foreign Income

Did you receive income from a foreign source in 2015? Are you a U.S. citizen or resident who worked abroad last year? If you answered ‘yes’ to either of those questions,  the IRS provides tips to keep in mind about foreign income:

1. Report Worldwide Income. By law, U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts and foreign bank and securities accounts.

2. File Required Tax Forms. You may need to file Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts.

3. Review the Foreign Earned Income Exclusion.  If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $100,800 of your wages and other foreign earned income in 2015.

4. Don’t Overlook Credits and Deductions.  You may be able to take a tax credit or a deduction for income taxes paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.

5. Additional Child Tax Credit. You cannot claim the additional child tax credit if you file Form 2555, Foreign Earned Income, or 2555-EZ, Foreign Earned Income Exclusion.

6. Tax Filing Extension.  If you live outside the U.S. and can’t file your tax return by the April 18 due date, you may qualify for an automatic two-month extension until June 15. This extension also applies to those serving in the U.S. military abroad. You will need to attach a statement to your tax return explaining why you qualify for the extension.

 

IRS Scam Calls and Emails

Scams using the IRS as a lure continue as reported by the IRS. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.
Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS. Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it. Here are several tips that will help you avoid becoming a scam victim.

The real IRS will NOT:
• Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
• Demand tax payment and not allow you to question or appeal the amount you owe.
• Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
• Ask for your credit or debit card numbers over the phone.
• Threaten to bring in local police or other agencies to arrest you without paying.
• Threaten you with a lawsuit.

If you don’t owe taxes or have no reason to think that you do:
• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” to the comments of your report.

If you think you may owe taxes:
• Ask for a call back number and an employee badge number.
• Call the IRS at 800-829-1040. IRS employees can help you. Green Financial Services also understands how to navigate the IRS and can call on your behalf.

In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

If you get a ‘phishing’ email, the IRS offers this advice:
• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete the email.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

More information on how to report phishing or phone scams is available on IRS.gov.

2014 IRA Contribution is Still Possible

There is still time to make your IRA contribution for the 2014 tax year. You have until April 15 to contribute.  Below are tax tips from the IRS about saving for retirement using an IRA.

Age rules

You must be under age 70½ at the end of the tax year in order to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.

Compensation rules

You must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If you are married and file a joint tax return, only one spouse needs to have compensation in most cases.

When to contribute

You can contribute to an IRA at any time during the year. That means most people must contribute by April 15, 2015. If you contribute between Jan. 1 and April 15, make sure your plan sponsor applies it to the year you choose (2014).

Contribution limits

 If you contribute between Jan. 1 and April 15, make sure your plan sponsor applies it to the year you choose (2014). The full amount you can contribute is $5,500 (or $6,500 if you’re age 50 or older) or your taxable compensation for the year.

Taxability rules

You normally won’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.

Deductibility rules

You may be able to deduct some or all of your contributions to your traditional IRA. You may not deduct contributions to a Roth IRA.

Saver’s Credit

If you contribute to an IRA you may also qualify for the Saver’s Credit. The credit can reduce your taxes up to $2,000 if you file a joint return. Use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.

Contact GFS if you have questions about your IRA contributions.

6 Steps to Take if You Become a Victim of Identity Theft

During tax season, identity theft picks up. If you have become a victim of identity theft, contacting a credit bureau is not enough. The steps below, as outlined by the IRS, will help you get through the process easier .

1.File a report with law enforcement.

2.File a complaint with the Federal Trade Commission at www.identitytheft.gov or call the FTC Identity Theft Hotline at 1-877-438-4338 or TTY 1-866-653-4261.

3.Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records

a. Equifax, www.Equifax.com, 1-800-525-6285

b. Experian, www.Experian.com, 1-888-397-3742

c. TransUnion, www.TransUnion.com, 1-800-680-7289

4. Contact your financial institutions, and close any accounts that have been tampered with or opened without your permission.

5. Check your Social Security Administration Earnings Statement. You can create an account online at www.ssa.gov, and check it annually.

6. If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

a. Respond immediately to any IRS notice; call the number provided. The IRS will only contact you via mail. They do not call or email.

b. Complete IRS Form 14039, Identity Theft Affidavit. Use the fillable form, print, then mail or fax according to instructions.

c. Continue to pay your taxes and file your tax return, even if you must do so by paper.