Do you have to pay additional tax in the US?

கும்பகோணத்தைச் சேர்ந்த கார்த்தி கணேசன் இந்தியாவில் உள்ள மிகப் பெரிய பன்னாட்டு சாஃப்ட்வேர் நிறுவனம் ஒன்றில் ஆர்டர் மேனேஜ்மென்ட்  தலைவர் (Order Management Head) ஆக பணி புரிந்து வந்தார். 
சிங்கப்பூர், துபாய், குவைத் என்று உலகமெல்லாம் பறந்து வந்தவர் பன்னாட்டு நடைமுறைகள், போட்டி மனப்பான்மை, புது தொழில்நுட்பங்களை தழுவிக்கொள்ளும் வேகம் ஆகியவற்றை பார்த்து வியந்து போனார். ஏற்கனவே படு சூட்டிப்பாக துறுதுறுவென சொன்னதையெல்லாம் புரிந்து  கொள்ளும் தன் 6 வயது மகன் ப்ரணவ் இதையெல்லம் பார்த்து வளர்ந்தால் மேலும் மெருகேறிவிடுவான் என்று முழுமையாக நம்பினார்.

தானும் அமெரிக்காவில் இடமாற்றம் பெற்றுக்கொண்டு அங்கேயே செட்டில ஆகிவிடலாம் என்றதும், எங்கிருந்தாலும் மற்ற எதை வேண்டுமானாலும் படித்துக் கொள்ளலாம், தமிழ் கலாச்சாரமும், பழக்கவழக்கங்களும் இங்கு இருந்தால்தான் தன் மகன் கற்க முடியும் என்று போர்க் கொடி உயர்த்தினார் அவர் மனைவி நீரஜா. சரி ஒரிரு வருடங்கள் மட்டும் அங்கே இருந்து அவன் படிக்கட்டும் பிறகு திரும்ப வந்துவிடலாம் என்று கார்த்தி வெள்ளைக்கொடியைப் பறக்க விட்டதும் போர் ஓய்ந்த்து. 
மூவரும் அமெரிக்கா கிளம்ப ஆயத்தமாயினர். அரிசோனா மாகாணத்தில் இருக்கும் சிறந்த பள்ளியில் மகனை சேர்த்தார். அவருக்கு எஸ்எஸ்என் (SSN) கிடைத்துவிட்டது. மனைவிக்கும் மகனுக்கும் ஐஐஐபி டிபென்டென்ட் விசா (H1B Dependent VISA) இருந்ததால் எஸ்எஸ்என் பெற முடியவில்லை. மனைவி வேலைக்குச் செல்லாததாலும், மகன் பள்ளிக்குச் செல்ல ஐஐஐபி மட்டும் போதுமென்பதாலும் அதை பற்றி அவர் கவலைப்படவில்லை.

ஒரு வருடம் சென்றதே தெரியாமல் அழகாக கடந்து போனது. டாக்டர் மனைவி ஒரு முக்கிய பயிற்சிக்காக 2 மாதம் இந்தியா சென்றுவிட்டார்.  வரிப்படிவங்களை சமர்பிக்க தன் கம்பெனியின் சிபிஏ (CPA) -ஐ அணுகினார். அவர் அமெரிக்காவில் வரிப்படிவங்களில் வரிதாரின் மனைவியடன் (அவருக்கு வருமானம் இல்லாத பட்சத்திலும்) இணைந்து வரித்தாக்கல் செய்யும் சாத்தியம் உள்ளது. அதோடு மட்டும் இல்லாமல் தன்னைச் சார்த்து இருப்பவர்களையும் வரிப்படிவங்களில் குறிப்பிடலாம்.

அதற்காக குறிப்பிட்டத் தொகையை வருமானத்திலிருந்து கழித்துக்கொள்ள முடியும். இது அனைத்தும் வரிதாரர் மற்றும் அவரைச் சார்ந்தவர்களாகக் குறிப்பிடப்படுவோர் அமெரிக்காவில் ஜனவரி முதல் டிசம்பர் வரை உள்ள வரி ஆண்டில் குறைந்தது 183 நாட்கள் தங்கியிருக்க வேண்டும். வரிதாரரின் துணைவருக்கு 183 நாட்கள் இருக்க வேண்டிய நிர்பந்தம் இல்லை. அவரை குடியாளராக கருத ஒரு உறுதி ஆவணம் சமர்பித்தால் போதுமானது. ஆனால் அவர் வேறு நாடுகளில் வரிக்குட்படுத்தப்படும் போது அவ்விரு நாடுகளின் இரட்டை வரி தவிர்ப்பு ஒப்பந்தத்தை பொருத்து இந்த விதி வேறுபடும்.

வரிப்படிவத்தில் குறிப்பிட்டுள்ள இருவருக்கும் சோசியல் செக்யூரிட்டி நம்பர் (Social Security Number) அல்லது தனி நபர் வரி குறிப்பீட்டு எண்- (ஐடிஐஎன் - Individual Taxpayer Identification Number ITIN) கட்டாயமாக இருக்க வேண்டும். இரண்டுமே இல்லாதபட்சத்தில் வரிப்படிவத்தோடு ஐடிஐஎன் விண்ணப்பத்தையும் உடன் அனுப்ப வேண்டும் என்றார். வரிதாரரைச் சார்ந்தவர்களாகக் குறிப்பிடப்படுவோருக்கும் ஐடிஐஎன் விண்ணப்பிக்க வேண்டும்.

ஐடிஐஎன் என்றால் என்ன ?

ஐடிஐஎன் என்பது அமெரிக்காவின் வரித் துறை (Internal Revenue Service) வழங்கும் ஒரு 9 இலக்க வரிதாரர் அடையாள எண்ணாகும். வரித்தாக்கலைத் தவிர வேறு எந்த ஒரு இடத்திலும் ஐடிஐஎன் ஒரு அடையாள எண்ணாகப் பயன்படாது. எஸ்எஸ்என் வாங்க தகுதி பெறாத ஆனால் வரித்தாக்கல் செய்ய தேவைப்படும் அனைவருக்கும் அவருடைய குடிவரவு அந்தஸ்த்தைக் கணக்கில் கொள்ளாமல் ஐடிஐஎன் வழங்கப்படும்.

எப்படி விண்ணப்பிக்க வேண்டும் ?

ஐடிஐஎன் விண்ணப்பம் டபிள்யூ -7 (W-7) என்ற படிவத்தில் பூர்த்தி செய்து அனுப்பப்படுகிறது. டபிள்யூ -7 படிவத்தில் விண்ணப்பதாரரின் அடையாளங்களாக சமர்பிக்கப்படும் ஆவணங்களின் எண்களும், வரிதாரரின் எஸ்எஸ்என் எண்ணும், அவருக்கும் விண்ணப்பதார்ருக்கும் உள்ள தொடர்பு போன்ற விவரங்கள் இருக்கும். விண்ணப்பதாரர் தனது விண்ணப்பத்தை வரிப்படிவங்களுடன் இணைத்து, ஆவணச் சான்றுகளுடன் ஐஆர் எஸ் (IRS) இணையதளத்தில் குறிப்பிட்டுள்ள முகவரிக்கு அஞ்சல் மூலமாகவோ, நேரில் சென்றோ சமர்பிக்கலாம். ஒப்புக்கொள்ளப்படும் ஆவணங்களில் பாஸ்போர்ட் மட்டுமே எல்லா தேவைகளையும் பூர்த்தி செய்துவிடும்.

மற்ற ஆவணங்கள் குடிவரவு அந்தஸ்த்து அல்லது அடையாளம் ஆகியவற்றில் ஏதேனும் ஒன்றை பதிவு செய்ய மட்டுமே பயன்படும். அவ்வாறு 13 ஆவணங்கள் உள்ளன. அனைத்து ஆவணங்களும் அசலாகவோ அல்லது சான்றளிக்கப்பட்ட நகல்களாகவோ மட்டுமே ஒப்புக்கொள்ளப்படும்.  

பொதுவாக, அமெரிக்காவின் வரித் துறை ஐடிஐஎன் விண்ணப்பங்களை அங்கீகரிக்க 4 முதல் 6 வாரங்கள் வரை எடுத்துக் கொள்கிறது. ஐடிஐஎன் உறுதியான பின்னர் தான் வரிப்படிவங்கள் மதிப்பீடு செய்யப்படும்.                   
இதனைக் கேட்டறிந்த கார்த்தி தன் மனைவி ஐடிஐஎன் விண்ணப்பிக்க அசல் ஆவணங்களை இந்தியாவிலிருந்து அனுப்பிவைப்பது பாதுகாப்பானது இல்லையே என்று கவலைக் கொண்டார். ஆனால் அவருடைய சிபிஏ (CPA), ஐடிஐஎன் விண்ணப்பங்களை சரிபார்த்து ஆவணங்களை உறுதி செய்ய அக்செப்டன்ஸ் ஏஜென்ட்ஸ் (Acceptance Agents) இந்தியாவிலேயே இருப்பதாகக் கூறினார். அக்செப்டன்ஸ் ஏஜென்ட்ஸ் என்பவர்கள் ஐஆர்எஸ் (IRS) ஆல் அனுமதிக்கப்பட்ட முகவர்கள். ஆவணங்களை சரிபார்த்து
சர்டிஃபிகேட் ஆஃப் அக்கூரசி (Certificate of Accuracy) என்ற படிவத்தை ஐஆர்எஸ் (IRS) க்கு அனுப்பி வைப்பர். அதை ஆதாரமாகக் கொண்டு ஐடிஐஎன் அங்கீகரிக்கப்படும் என்றதும் சற்று நிம்மதி கொண்டு வரித்தாக்கல் செய்யும் வேலையில் இறங்கினார்.

 (இந்த கட்டுரை சம்பந்தமாக ஏதேனும் கேள்விகள் இருப்பின், karthikeyan.auditor@gmail.com என்ற மின்னஞ்சல் முகவரியில் தொடர்பு கொள்ளவும். )      

IRS loses lawsuit challenging authority to regulate tax preparers

Last year, three independent tax preparers, Sabina Loving of Chicago, Illinois, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisconsin, took on the IRS, accusing it among other things, of lacking the authority to license tax preparers. The three retained lead attorney Dan Alban of the Institute for Justice, a libertarian public interest law firm, in filing suit against the IRS in the U.S. District Court for the District of Columbia. 

U.S. District Court Judge James E. Boasberg issued an opinion that would bar the IRS from regulating tax preparers – all just days before the new tax season officially opens for business. (Jan 30, 2013)

The scheme to regulate tax preparers was a top priority for the IRS which felt that requiring tax preparers to register with the IRS, pass a competency test and take continuing education classes would protect taxpayers from potentially fraudulent preparers. The new system required registration (along with a fee), a competency exam and annual requirements to take at least 15 continuing education credits. In exchange for compliance, beginning in 2011, the IRS began issuing PTINs (Preparer Tax Identification Numbers) which must be included on paid returns; a public database of those tax preparers with valid PTINs was expected to be posted on the IRS web site.

But not everyone thought that regulation was a good idea: Under the new rules, attorneys, CPAs and enrolled agents (EAs) are exempt from the competency testing and continuing education requirements. That means that the real burden of complying with the new regulations tends to hit independent tax preparers and small businesses disproportionately – those who, under the new rules, must meet the criteria to be called a Registered Tax Return Preparer (RTRP). Without that designation, unless a preparer meets an exemption or exception, he or she may not work. Loving – and other tax preparers – thought those rules were unfair. That's how the matter ended up in district court.

Generally, a final ruling by a district court can be appealed to the United States court of appeals in the federal judicial circuit in which the district court is located. In this case, the matter would be appealed to the United States Court of Appeals for the District of Columbia Circuit – we can expect an appeal from the IRS.

But while all that gets sorted out, tax preparers wonder: what does this all mean for the upcoming tax season? That's not exactly clear. In theory, the decision should allow unregulated and unregistered tax preparers to file tax returns when the season opens on January 30. However, that's just days away – and the IRS has a system in place already predicated on the idea that preparers have to be registered with a valid PTIN. Whether a return submitted by an unregistered preparer will bounce because of the IRS system is yet to be determined. The IRS has not yet issued a statement about the ruling.

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What if you missed your tax filing deadline?

What if you missed your tax filing deadline?

Hello, it is April 24, and a whole week has gone by after the Tax Day on April 17^th.

You must have filed your tax return, or requested an extension at the least. Even if not, do not press the panic button, the IRS is not going to pull you away and penalize you, still it would like to see your return filed, as soon as possible.

After April 17, all your appeals for a tax filing extension would be rejected by the IRS – but do not fret, there are other options you can explore, namely:

a. If you have a refund due, you will not be penalized for late filing, but if you overhaul the 3-year window before you forfeit your refund, you lose your refund. So be sure to file before April 15, 2015. Else, your refund will be converted into a simple donation for the US Treasury J

b. Else, you will have to eke out a late filing penalty - 5 percent of your unpaid balance per month, or part of a month, up to a maximum of 25 percent.

c. If you didn’t pay additional taxes owed by April 17, whether you filed an extension or not, a late payment penalty of one-half of one percent (0.5%) will also accrue each month or part of a month until the balance is paid in full.

If you have a valid reason for failing to file on time, the IRS may consider reduction of penalty charges. Remember, even those who have died are entitled to file a return, and their survivors could end up paying penalties for late filing!

If there’s a legitimate reason you miss the deadline such as a divorce, illness, death in the family, or a natural disaster, you can sometimes get those fees reversed.

When you get a past-due notice, just send a certified letter to the address it came from saying you are “requesting abatement.”  Then explain why you couldn’t file in time.

If you DON’T have a good reason for being late, just file as soon as possible to avoid that extra 4.5% penalty.

How does it work?

Example: Let's say you didn't file your return or extension by the April deadline, and you still owe the IRS an additional $2,000.

Best-case scenario: You file your return in late April of 2012 and submit your payment for $2,000. You would owe an additional $100 for filing late ($2,000 x .05) plus another $10 for late payment ($2,000 x .005) for a total penalty of $110.

(Had you filed your extension by the deadline, your total penalty would only be $10. It pays to file an extension!)

Worst-case scenario: You file your 2011 return in April of 2017, 5 years late, and submit your payment for $2,000. You would owe an additional $500 for filing late ($2,000 x the maximum .25) plus another $500 for late payment ($2,000 x the maximum .25), for a total penalty of $1,000.

Any circumstances while allow me to file late?

If you are out of the country on the April filing deadline, you are allowed two extra months to file your return and pay the amount due, without needing to request an extension.

You're out of the country if:

• You live outside of the United States or Puerto Rico and your main place of work is outside of the United States or Puerto Rico; or
• You are in military or naval service outside of the United States or Puerto Rico.
•  

If you need more time, you can request four additional months by filing an extension along with paying any taxes you owe.

Other situations

• If you have not received Form W-2, or you believe your Form W-2 is incorrect, contact the IRS for a resolution.
• If you cannot pay the amount of taxes owed, you should file your tax return anyway before the deadline and pay as much as you can to avoid additional penalties. The IRS will send you a bill or notice for the balance due. In some cases the IRS can offer alternative account resolutions if a taxpayer cannot pay in full with the return.
• If you are self-employed, you must file returns reporting self-employment income within three years of the original filing deadline in order to receive Social Security credits toward your retirement.

If you need to pay additional tax, ensure filing of your return at the earliest. The penalties for not filing are much higher than the penalties for not paying, and the longer you wait, the worse it gets. At least file your return on time, it can always be amended later!

Into farming? Some key tax tips from IRS

You are in the business of farming if you cultivate, operate or manage a farm for profit, either as an owner or a tenant. A farm includes livestock, dairy, poultry, fish, fruit and truck farms. It also includes plantations, ranches, ranges and orchards.

The IRS has 10 key points for farmers regarding federal income taxes.

1.                              Crop insurance proceeds You must include in income any crop insurance proceeds you receive as the result of crop damage. You generally include them in the year you receive them.

2.                              Sales caused by weather-related condition If you sell more livestock, including poultry, than you normally would in a year because of weather-related conditions, you may be able to postpone until the next year the reporting of the gain from selling the additional animals.

3.                              Farm income averaging You may be able to average all or some of your current year’s farm income by allocating it to the three prior years. This may lower your current year tax if your current year income from farming is high, and your taxable income from one or more of the three prior years was low. This method does not change your prior year tax, it only uses the prior year information to determine your current year tax.

4.                              Deductible farm expenses The ordinary and necessary costs of operating a farm for profit are deductible business expenses. An ordinary expense is an expense that is common and accepted in the farming business. A necessary expense is one that is appropriate for the business

5.                              Employees and hired help You can deduct reasonable wages paid for labor hired to perform your farming operations. This includes full-time and part-time workers. You must withhold Social Security, Medicare and income taxes for employees.

6.                              Items purchased for resale You may be able to deduct, in the year of the sale, the cost of items purchased for resale, including livestock and the freight charges for transporting livestock to the farm.

7.                              Net operating losses If your deductible expenses from operating your farm are more than your other income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid for past years, or you may be able to reduce your tax in future years.

8.                              Repayment of loans You cannot deduct the repayment of a loan if the loan proceeds are used for personal expenses. However, if you use the proceeds of the loan for your farming business, you can deduct the interest that you pay on the loan.

9.                              Fuel and road use You may be eligible to claim a credit or refund of federal excise taxes on fuel used on a farm for farming purposes.

Tips to check if your gift is taxable

If you gave money or property to someone as a gift, you may owe federal gift tax. Many gifts are not subject to the gift tax, but the IRS offers the following eight tips about gifts and the gift tax.

1. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you make a gift to someone else, the gift tax usually does not apply until the value of the gifts you give that person exceeds the annual exclusion for the year. For 2011 and 2012, the annual exclusion is $13,000.
2. Gift tax returns do not need to be filed unless you give someone, other than your spouse, money or property worth more than the annual exclusion for that year.
3. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.
4. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).
5. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. The following gifts are not taxable gifts:

• Gifts that are do not exceed the annual exclusion for the calendar year,

• Tuition or medical expenses you pay directly to a medical or educational institution for someone,

• Gifts to your spouse,

• Gifts to a political organization for its use, and
• Gifts to charities.

6. You and your spouse can make a gift up to $26,000 to a third party without making a taxable gift. The gift can be considered as made one-half by you and one-half by your spouse. If you split a gift you made, you must file a gift tax return to show that you and your spouse agree to use gift splitting. You must file a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if half of the split gift is less than the annual exclusion
7. You must file a gift tax return on Form 709, if any of the following apply:
   • You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.

• You and your spouse are splitting a gift.

• You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.

• You gave your spouse an interest in property that will terminate due to a  future event.

8. You do not have to file a gift tax return to report gifts to political organizations and gifts made by paying someone’s tuition or medical expenses.

2 Month Extension of Time to File for US Citizens & Resident Aliens abroad

Internal Revenue Service (“IRS”) has allowed U.S. Citizens and Resident Aliens Abroad an 


automatic 2 month extension of time to file their tax return and pay any federal income tax that is 


due.


You will be allowed the extension if you are a U.S. citizen or resident alien and on the regular due 


date of your return:


(i) You are living outside of the United States and Puerto Rico and your main place of business or 


post of duty is outside the United States and Puerto Rico, or


(ii) You are in military or naval service on duty outside the United States and Puerto Rico


If you use a calendar year, the regular due date of your return is April 15, and the automatic 


extended due date would be June 15.


In case of Married Taxpayers who are filing joint returns, either you or your spouse can qualify for 


the automatic extension. If you and your spouse file separate returns, this automatic extension 


applies only to the spouse who qualifies.


How To Get The Extension:
To use this automatic 2-month extension, you must attach a statement to your return explaining 


which of the two situations listed earlier qualified you for the extension.

IRS Audit Rate Nears 30% for Those Making $10 Million and Up

The Internal Revenue Service in 2011 audited 29.93 percent of taxpayers who reported more than $10 million of income, according to statistics released today.

That’s up from an audit rate of 18.38 percent in 2010 and 10.60 percent in 2009 for a group that consists of 0.01 percent of taxpayers. Overall, the agency’s rate of audits for individual taxpayers stayed constant at 1.11 percent.

Joe Perry, partner-in-charge of tax services at the accounting firm Marcum LLP in New York, said he has seen a ten- fold increase in clients being audited, including at least five under the more intense scrutiny of a new IRS task force that is targeting high net-worth taxpayers.

"Those are very time consuming and costly¸" said Perry, who represents several clients with incomes exceeding $10 million. "It´s worse than a root canal."

The IRS statistics cover audits conducted in fiscal year 2011¸ which generally corresponds to returns filed during 2010.

For U.S. taxpayers with adjusted gross incomes between $5 million and $10 million, the audit rate rose to 20.75 percent from 11.55 percent. People making between $200,000 and $500,000 were audited at a 2.66 percent rate.

Quicker to Audit

The IRS is quicker to audit individual returns than in the past, sometimes contacting people within months of their return being filed, Perry said.

In some cases, the IRS requires taxpayers to produce and prove every item on their return including such things as their children’s Social Security numbers. Perry said the firm has also seen an increase in so-called correspondence audits, where the IRS will send a letter asking a taxpayer to verify a specific item on the return such as charitable deductions.

In 2009, the IRS created a special unit to examine the tax returns of high-wealth individuals.

"We will take a unified look at the entire web of business entities controlled by a high-wealth individual, which will enable us to better assess the risk such arrangements pose to tax compliance and the integrity of our tax system," IRS Commissioner Douglas Shulman said in a December 2009 speech. "We want to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise."

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net; Margaret Collins in New York at mcollins45@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

How to know if an IRS audit is round the corner?

With ever improving improved detection systems and computerized checks, the IRS can more easily identify red flags that trigger audits.

Contact typically starts with a letter requesting more information and can lead to in-person meetings. It is usually triggered by a tax return that contains something unusual, such as an above-average deduction or change in income from previous years. As long as the taxpayer can defend his filings with the proper paperwork and logic, he has nothing to worry about--other than the time it takes to respond.

Here are a few of the signs you need to take note of:

1. Earning a lot less money last year.

The IRS looks out for any major changes in income, which can signify that a taxpayer is under-reporting his earnings. As the IRS tracks historic data, people who suddenly start reporting much less income can be flagged for an audit.

2. High incomes.

According to IRS 2010 enforcement results, your chance of being audited triples once your income crosses $200,000.

3. Over-sized medical expenses.

Medical expenses - You only can deduct these costs to the extent they're greater than 7.5 percent of your adjusted gross income, and it's important to have detailed records.

Any higher-than-average deduction in any category will send out a signal to the IRS that all is not right.

4. You work for yourself. 

It might not seem fair, but being self-employed can raise red flags for the IRS, especially if you claim your home office and other costs as business expenses but don't earn much income. The best advice is to keep careful track of all paperwork so you can defend any deductions and credits you take.

Home offices -  You can only take a home office deduction if you regularly and exclusively use part of your home as your principal place of business. If your office doubles as the kids' playroom, forget about it. For details, see IRS Publication 587.

5. You claim losses from a hobby. 

While writing off business expenses can be legitimate, it's illegal to pretend a hobby is a business and then write off the related expenses. For example, if you enjoy woodworking, you might practice the craft on the weekends for fun. Doing so does not enable you to write off the cost of wood and tools. (If you were selling those creations online, that would be a different story.) The difference between a small business and a hobby is that a business "must be entered into and conducted with the reasonable expectation of making a profit."

6. Deducing home office (or car) expenses. 

While plenty of people can legitimately claim home office expenses on their taxes, some people do so incorrectly. Merely checking email from home after work, for example, does not justify a home office deduction. In order to qualify, the home office must be used for work only. Likewise, claiming a car as a business expense can also raise red flags; taxpayers doing this need to keep careful track of how much they use the car for business versus personal use.

7. You included expensive meals and entertainment costs among your deductions.

The IRS often double-checks these types of claims to make sure they are legitimate business expenses, says Perry.

8. You were particularly generous this year. 

The IRS is on the lookout for people who inflate their charitable donations, and the agency takes a close look at taxpayers who say they donated $500 or just under, since anyone who donates more than that amount must file form 8283. (And if you do donate more than $500, be sure to file that form.)

Charitable deductions. - You'll need a canceled check or dated receipt for any cash contributions, and contributions of $250 or more require a written acknowledgement from the charity. If you made a noncash contribution valued at more than $5,000, you'll need an expert appraisal to back up your claim.

9. You maintain an overseas bank account. 

The IRS has added more reporting requirements this year for people with money in foreign accounts. Failing to report one could trigger an audit.

10. Your numbers don't match. 

If numbers on various forms don't match or add up correctly, the IRS is likely to notice and look into any disparities. So treat your taxes like a final exam in algebra and check over all the numbers before submitting.

As long as you know you filed your paperwork properly, you can sit back and enjoy any refunds coming your way.

For more on getting through an IRS audit, refer to our earlier blogpost http://gkminc.blogspot.in/2011/11/how-to-get-through-irs-audit.html.

Failed to file FBAR for your offshore funds?

The failure to file a Foreign Bank Account Report TD F 90-22.1 (FBAR) for an offshore bank account has led to the seizure of an Alaska plastic surgeon's $4.6 million dollar account at a Seattle branch of Bank of America. According to the complaint filed in District Court Alaska plastic surgeon Michael Brandner was involved in a contested divorce proceeding with his wife, and decided to hide around $4.6 million from her by depositing the funds in a foreign bank account in Panama held in the name of a nominee offshore company. The complaint alleges that he drove the money from Alaska to Panama in the form of several cashier's checks. He was assisted in the transaction by an individual he met in Panama.

As luck would have it the person who Brandner sought assistance from got caught up in an investigation into a totally unrelated stock fraud scheme, and began cooperating with the government. Reading between the lines here it seems that the so-called cooperating witness spilled the beans on Brandner in order to try and get some leniency in whatever mess he was involved in. The cooperating witness told the government that he had advised Brandner of the obligation to file an FBAR reporting for the offshore Panamanian account on at least two occasions. 

The cooperating witness also advised Brandner that a new tax treaty with Panama might compromise the secrecy of his offshore account. Brandner then inquired if there was any other place he could hide the Panamanian funds. With the assistance of the cooperating witness created an offshore entity which then opened up an account at Bank of America held in the name of the foreign LLC. Homeland Security Investigations (HSI) then promptly seized the account in a civil in rem forfeiture action.

There are a number of lessons to be learned other than don't try and cheat your wife in a divorce action. Clients always ask our tax litigation attorneys variations of the question: "How is the IRS going to find out about my offshore bank account." The truth is that the IRS may not find out, but the consequences can be dire if they do. In Brandner's case he had the bad luck to trust someone who later came to have his own problems (which were not even tax problems) with the authorities. Always keep in mind that if two people know a secret it's not a secret. 

The government has attempted to use the civil forfeiture statute to seize 100% of the proceeds of offshore funds for failure to file an FBAR. It certainly significantly ups the stakes; especially since there is nothing to stop the IRS from criminally prosecuting Brandner for willfully failing to file an FBAR, or criminal tax fraud and that may be the next episode in this drama.

As a technical matter it is not clear to our tax litigation lawyers that the IRS has the right to seize the proceeds of an account simply because no FBAR was filed. 

If you have an undeclared offshore bank account it is past time for you to get solid advice from a tax litigation attorney about your options. 

Not filed your 2008 tax return? Rush before April 17, 2012

Refunds totaling more than $1 billion may be waiting for one million people who did not file a federal income tax return for 2008, the Internal Revenue Service announced today. However, to collect the money, a return for 2008 must be filed with the IRS no later than Tuesday, April 17, 2012.

The IRS estimates that half of these potential 2008 refunds are $637 or more.

Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes property of the U.S. Treasury.

For 2008 returns, the window closes on April 17, 2012. The law requires that the return be properly addressed, mailed and postmarked by that date. There is no penalty for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2008 refund that their checks may be held if they have not filed tax returns for 2009 and 2010. In addition, the refund will be applied to any amounts still owed to the IRS, and may be used to offset unpaid child support or past due federal debts such as student loans.

By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2008. Some people, especially those who did not receive an economic stimulus payment in 2008, may qualify for the Recovery Rebate Credit. In addition, many low-and moderate-income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds. 

The thresholds for 2008 were:

• $38,646 ($41,646 if married filing jointly) for those with two or more qualifying children,
• $33,995 ($36,995 if married filing jointly) for people with one qualifying child, and
• $12,880 ($15,880 if married filing jointly) for those with no qualifying children.
  For more information, visit the EITC Home Page on IRS.gov.

Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 800-TAX-FORM (800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2008, 2009 or 2010 should request copies from their employer, bank or other payer. If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by ordering it on IRS.gov, filing Form 4506-T, or by calling 800-908-9946.

Individuals Who Did Not File a 2008 Return with a Potential Refund

State	Individuals	Median Potential Refund	Total Potential Refunds ($000)*
Alabama	18,400	$641	$15,738
Alaska	5,800	$641	$5,952
Arizona	29,000	$558	$24,913
Arkansas	9,600	$620	$8,152
California	122,500	$595	$112,201
Colorado	20,500	$589	$18,909
Connecticut	12,500	$697	$13,893
Delaware	4,200	$644	$3,784
District of Columbia	4,000	$642	$3,791
Florida	70,400	$650	$66,974
Georgia	35,800	$581	$30,661
Hawaii	7,600	$714	$8,307
Idaho	4,700	$541	$3,878
Illinois	40,800	$692	$40,712
Indiana	21,800	$664	$19,590
Iowa	10,600	$658	$9,295
Kansas	11,500	$631	$10,084
Kentucky	12,300	$640	$10,501
Louisiana	20,500	$662	$18,859
Maine	4,000	$579	$3,248
Maryland	24,600	$641	$22,591
Massachusetts	23,900	$699	$22,957
Michigan	33,300	$660	$30,903
Minnesota	15,200	$584	$12,772
Mississippi	9,900	$591	$8,254
Missouri	21,600	$593	$18,213
Montana	3,600	$599	$3,192
Nebraska	5,100	$623	$4,371
Nevada	14,500	$619	$13,381
New Hampshire	4,300	$733	$4,518
New Jersey	31,300	$716	$31,185
New Mexico	8,000	$611	$7,420
New York	60,300	$686	$61,240
North Carolina	30,800	$558	$24,997
North Dakota	2,000	$625	$1,895
Ohio	36,400	$622	$31,018
Oklahoma	16,800	$620	$14,787
Oregon	18,500	$527	$14,819
Pennsylvania	38,700	$695	$35,565
Rhode Island	3,400	$674	$3,040
South Carolina	12,200	$547	$10,158
South Dakota	2,300	$669	$2,234
Tennessee	18,400	$626	$16,130
Texas	96,200	$689	$97,057
Utah	7,800	$536	$6,676
Vermont	1,700	$647	$1,410
Virginia	30,800	$624	$28,670
Washington	29,900	$705	$32,138
West Virginia	4,300	$687	$4,068
Wisconsin	14,100	$592	$11,885
Wyoming	2,600	$773	$2,919
Grand Total	1,089,000	$637	$1,009,905

*Excluding the Earned Income Tax Credit and other credits.

Source:www.irs.gov