Keeping Good Records Reduces Stress at Tax Time
• Bills• Credit card and other receipts• Invoices• Mileage logs• Canceled, imaged or substitute checks or any other proof of payment• Any other records to support deductions or credits you claim on your return
Clarification from Minister of State for Finance on Processing of PAN Card
INCOME TAX RETURN DATE EXTENDED TO 4TH AUGUST
US tax crackdown extends to residents with Indian ties
July 7th 2010: Rediff.com
In a crackdown on offshore tax evasion, American authorities have begun a criminal probe into HSBC individual account holders, who may not have disclosed their accounts in India.
Indian Finance Ministry officials admitted that authorities in New Delhi [ Images ] "must have passed on the information to their US counterparts as part of bilateral or multilateral agreements".
Bloomberg reported on Sunday that the US Justice Department has initiated a criminal investigation of HSBC Holdings' clients who may have failed to disclose their accounts in India or Singapore to the US Internal Revenue Service (IRS).
"The information about the accounts is unlikely to have come from the HSBC bank and is also very unlikely that US authorities or its agencies would have gone fishing for the individual accounts which are outside their country," he said.
In India, the financial information is gathered by different authorities such as Reserve Bank of India [ Get Quote ], various banks, Financial Intelligence Unit and the income tax department.
"It is possible that one of these authorities passed on the information about the bank accounts of foreigners in India to the US IRS under an exchange of information programme," the official said.
In the US, it is obligatory for any citizen to provide details regarding any financial transaction he or she may have carried out overseas. Routine information passed by a foreign government does lead to some disclosures at times.
According to the Bloomberg report, the US Justice Department has sent out letters to about a dozen HSBC clients having accounts in India or Singapore in late June asking them to explain reasons for not disclosing to either the IRS or the Treasury Department.
Quoting lawyers having access to the letters, the report said that the letters went to US residents who have ties to India, including people who inherited money from relatives or maintained assets in India after leaving the country.
The latest crackdown suggests the US is coming down heavily on offshore tax evasion even beyond the generally considered tax havens such as Switzerland
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with IRA Financial Services & NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
First-Time Homebuyer Credit Closing Deadline Extended to September 30, 2010
The Homebuyer Assistance and Improvement Act of 2010, enacted on July 2, 2010, extended the closing deadline from June 30 to Sept. 30 for eligible homebuyers who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010.
Here are five facts from the IRS about the First-Time Homebuyer Credit and how to claim it.
1. If you entered into a binding contract on or before April 30, 2010 to buy a principal residence located in the United States you must close on the home on or before September 30, 2010.
2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
3. To be considered a long-time resident homebuyer, your settlement date must be after November 6, 2009 and you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased.
4. The maximum credit for a first-time homebuyer is $8,000. The maximum credit for a long-time resident homebuyer is $6,500.
5. To claim the credit you must file a paper return and attach Form 5405, First Time Homebuyer Credit, along with all required documentation, including a copy of the binding contract. New homebuyers must attach a copy of the properly executed settlement statement used to complete the purchase. Long-time residents are encouraged to attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statements, property tax records or homeowner’s insurance records.
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with IRA Financial Services & NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
What is Foreign Bank Account Reporting?
What is Foreign Bank Account Reporting?
Anindya, or Andy, as he prefers to be called, is the biggest party animal I have ever seen and an oddity in my otherwise dull and boring circle of friends. Hence, seeing him sitting quietly in my living room at seven in the evening, that too on a Friday night, really took me aback. At this time of the night, he would generally be painting the town red.
“What’s up buddy?” I asked, fearing he may be ill. Andy was born in the US, had spent the early part of his life there and was quite susceptible to Indian bugs.
“Have you heard of F BAR?” He asked, looking distinctly morose.
“Well, who hasn’t? Isn’t it the most happening bar and lounge in the city these days?” I replied.
“Oh God! I am not talking of that F BAR, I am talking of FBAR—Foreign Bank Account Reporting under US laws. Have you heard of that?” Andy sounded distinctly irritated at my obtuseness.
Suddenly, enlightenment dawned upon me. “Yes, of course I’ve heard about it. What do you want to know?” I asked.
Who should file FBAR and when?
I explained, “Well, to the extent I know, FBAR is a form specified by the US government, which has to be filed by all US persons (including US citizens and green card holders) providing information of any financial interest they may have in any financial account outside the USA. This form, called Form TD F 90-22.1, to be more precise, has to be filed for each calendar year on or before June 30 of the following year. Since you are a US national, it applies to you as well.”
“Oh God!” Andy exclaimed once again. This FBAR, at the very least, was actually turning a decadent atheist like Andy into a believer, I was happy to note.
FBAR requirements
“So what do I have to report? I have already reported all my worldwide income in my tax return and paid all my taxes. Is this part of the tax return?” Andy asked.
“No, this is not a part of your tax return filing obligations. In fact, FBAR is a totally separate requirement. As I understand, you need to provide details of bank accounts, fixed deposits, even liquid mutual funds wherein you either have financial interest or have signatory powers to operate such accounts. The most common example will be any savings or current bank account in your name or where you are a sole or joint signatory” I said.
Thresholds for filing FBAR
“Are there any thresholds or is anybody who has even a rupee in a bank account has to file this?” Asked Andy.
“Yes, the FBAR filing is only required if the aggregate value of the financial accounts exceed $10,000 at anytime in the calendar year. This means that you may have accounts whose value is less than $10,000 but if the value of all accounts added together, at any point in time during the calendar year, exceeds $10,000, then details of all financial accounts have to be provided. If the value of the account is in rupees, you may use any reasonable exchange rate to make the conversion.”
The law has been in place for about 40 years
“Is this a new requirement? How come I never heard of this?” Andy wailed.
“Well, as one says—ignorance is no excuse. I believe this law has been in place for the last 40 years or more. However, it has not been widely publicised and has only recently gained prominence as the US government starts taking strong measures around money laundering and tax evasion by non-declaration of foreign assets.” I said, trying to recall a few articles I had read on the subject.
Late filings carry risk of civil and criminal penalties
“So what do I do? I don’t remember filing this form for the past years. Can I get an extension? Are there any fines for late or non-filers?” Andy asked nervously.
“The deadline for 2009 filing is June 30, so you should try and meet that. For earlier filings, I suggest you consult an attorney who can advise you since late filings carry risk of civil and criminal penalties where fines can range from $10,000-500,000 for willful defaults and imprisonment up to 10 years.”
“Look, you need not panic. From what I understand, while there are no guarantees, the IRS does not levy penalty if there are bona-fide reasons for late filing and the same are properly explained through a voluntary filing. I would suggest that you immediately take professional advice as you would be in a greater soup if your default is noticed by the IRS and you are made to file after that.” I tried to give him some comfort.
Many countries have similar requirements
“Oh God, please help me!” Andy had become a devout believer by now. “I am sure USA is the only country that has such rules?” he said.
“Well, I think not. For example, Brazil and Canada have similar reporting requirements. In fact, I was reading an OECD report which has recommended that countries that do not have rules for reporting foreign transactions and foreign operations of its resident taxpayers should actively consider formulating such rules. I am sure many countries, including India, are thinking on the very same lines.”
Source: http://economictimes.indiatimes.com/quickiearticleshow/6096952.cms
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with IRA Financial Services & NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
Fewer than half of large companies' 401(k) plans include automatic enrollment
The vast majority (94 percent) of employers surveyed report that they are either very familiar or somewhat familiar with automatic enrollment in 401(k) plans. While familiarity with automatic escalation is lower than familiarity with automatic enrollment, a majority (78 percent) of employers also report that they are familiar with automatic escalation.
Although nearly all large employers with 401(k) plans are at least somewhat familiar with automatic enrollment, the majority have not adopted it for their own 401(k) plan, according to AARP, which is a nonprofit, nonpartisan membership organization for people at least 50 years old. Specifically, fewer than half (42 percent) of respondents report that their 401(k) plan includes automatic enrollment. Fewer (28 percent) report that their 401(k) plans have an automatic escalation feature.
The majority of employers with automatic enrollment (58 percent) report that they automatically enrolled only new hires when they first adopted automatic enrollment. Just over one-third (35 percent) automatically enrolled all non-participating employees who were eligible for the plan.
Of those employers who automatically enrolled only new hires at adoption, only about one in ten (11 percent) report that they have automatically enrolled all non-participating employees at least once since adopting automatic enrollment.
Employers were most likely to identify the following as major reasons that companies offer automatic features:
• It helps employees save more for retirement (74 percent)
• It is easier to pass nondiscrimination testing (49 percent)
• It demonstrates that we are a socially responsible company (35 percent)
When asked why they do not have automatic enrollment for their 401(k) plan, employers without automatic enrollment most frequently cited employee-related challenges such as:
Concern that employees would not like automatic enrollment (30 percent)
• Costs (20 percent)
• Contentment with the status quo (14 percent)
• Lack of information (10 percent)
When employers without automatic escalation were asked to explain their reasons for not including this feature in their 401(k) plan, the most frequent responses included:
• The company thinks employees would not like it (66 percent)
• The company thinks employees would find it confusing (52 percent)
Additionally, one-third of employers without automatic escalation (35%) indicated that the company is concerned about matching costs.
Employers that automatically enroll only new hires were asked why they do not automatically enroll all non-participating employees who are eligible for the plan. As with the reasons expressed for not having automatic features, employee-related challenges also were the reasons most frequently expressed for limiting automatic enrollment to new hires.
About the survey:
AARP commissioned Woelfel Research, Inc., to conduct this telephone survey of 806 large employers with 401(k) plans. Partial funding was provided by Retirement Made Simpler, a coalition formed by AARP, the Financial Industry Regulatory Authority (FINRA), and the Retirement Security Project (RSP). For more information, visit www.RetirementMadeSimpler.org The survey was fielded from December 15, 2009, to February 24, 2010, and results were weighted by company size. For more information on the survey, please contact S. Kathi Brown of AARP Research & Strategic Analysis at (202) 434-6296 begin_of_the_skype_highlighting (202) 434-6296 end_of_the_skype_highlighting. You can read the full report here.
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
Failure to file an FBAR?
Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records till five years.
Penalties
The following chart highlights the civil and criminal penalties that may be asserted for not complying with the FBAR reporting and recordkeeping requirements.
|
Violation |
Civil Penalties |
Criminal Penalties |
Comments |
|
Negligent Violation |
Up to $500 |
N/A |
31 U.S.C. |
|
Non-Willful Violation |
Up to $10,000 for each negligent violation |
N/A |
31 U.S.C. § 5321(a)(5)( |
|
Pattern of Negligent Activity |
In addition to penalty under § 5321(a)(6)(A) |
N/A |
31 U.S.C. 5321(a)(6)( |
|
Willful - Failure to File FBAR or retain records of account |
Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. |
Up to $250,000 or 5 years or both |
31 U.S.C. § 5321(a)(5)(C) |
|
Willful - Failure to File FBAR or retain records of account while violating certain other laws |
Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. |
Up to $500,000 or 10 years or both |
31 U.S.C. § 5322(b) and 31 C.F.R. § 103.59(c) for criminal |
|
Knowingly and Willfully Filing False FBAR |
Up to the greater of $100,000, or 50 percent of the amount in the account at the time of the violation. |
$10,000 or 5 years or both |
18 U.S.C. § 1001, |
|
Civil and Criminal Penalties may be imposed together. 31 U.S.C. § 5321(d). |
|||
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
Homebuyers could get more time for tax credit
NEW YORK (CNNMoney.com) -- First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law.
As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years.
The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions -- especially short-sales, which is a more involved process.
"By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said.
It remains to be seen, however, whether the amendment will go anywhere. It's part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.
Income Tax Dept told to disburse refunds within 2 months and to set up task force to revamp refund issue system
The Income-Tax Department must progressively reduce the time taken for refunds from the present period of more than four months to a maximum of 60 days, Mr S.S. Palanimanickam, Minister of State for Finance, has said.
There is also a need to review and revamp the existing Tax Deducted at Source (TDS) administration, he said in his valedictory address at the 26th Annual Conference of the Chief Commissioners of Income-Tax (CCIT) and Director General of Income Tax (DGIT) here on Thursday.
Mr Palanimanickam noted that the Department’s efficiency had to be benchmarked by the satisfaction level of the users. He highlighted that a major source of dissatisfaction of income-tax assessees is with respect to refund of taxes. “The time taken to grant refunds is very high when compared to international standards,” the Minister said, adding that the department should set up a task force to revamp the system of tax refunds.
The objective of the revamp should be to progressively bring down the time taken for refunds to a maximum of 60 days. He also pointed out that the taxpayers are facing difficulties in getting credit of the TDS paid by them.
Mr Palanimanickam, who is in charge of revenue and tax administration at the central level, stressed the need for taxpayers to receive uniform treatment of their cases in any part of the country.
“In order to ensure uniformity of approach and transparency in its functioning, the Department should put in place a mechanism to disseminate information on all such important orders, judgments to all field formations,” he said. He also urged the CBDT to take up cadre restructuring in right earnestness, stating that it was important to satisfy the professional aspirations of officers in a timely manner.
The Union Finance Minister, Mr Pranab Mukherjee, had in his inaugural address on Wednesday laid emphasis on taking up cadre restructuring proposal, which had been delayed.
Meanwhile, Mr Palanimanickam urged the Income-Tax Department to “actively work” on a proposal to enhance delegation of financial powers to its field formations. “To ensure better coordination of expenditure on human and material resources, the department should consider setting up of a dedicated Directorate of Finance. There is an urgent need to tone up the vigilance machinery of the Department. It is imperative that the Department fixes timeframe to decide vigilance related cases,” he said. He also highlighted the delay in compiling the monthly revenue figures within the first week of the following month. “I would like to be apprised of the bottlenecks, if any, in timely compilation of the revenue figures,” Mr Palanimanickam said.
Contact sales@globalvalueadd.com OR Call 210-248-3397, India +91-80-41633973, if you are looking for professional advisory services. GVA is not an attorney or attorney firm. GVA has partnered with NAFEP for Estate Planning services. Unless we expressly state otherwise in this post any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or other matter addressed herein.