Tax Preparation

Whether tax season is fast approaching, or the year has just started, it is never too early to begin preparing your taxes. Leaving this task for late in the year can result in forgetting to include vital information or worse missing the tax deadline altogether. Being prepared in advance of tax season will save you a lot of trouble. If you or a family member needs assistance preparing their taxes, you should consult with an experienced Central Oregon certified public accountant (CPA).

Together with your CPA, you can stave off the most common errors that get taxpayers into hot water with the federal government.  Avoiding pitfalls such as unreported income, misplaced deductions, and missed filing deadlines will save you the headache that comes with a subsequent IRS audit.  Below, we will provide you with a checklist for use to determine how to properly prepare and submit your tax filings.  This can be particularly helpful if you are unsure whether you are foreign person for tax purposes or if you are subject to FBAR requirements.

With over 30 years of tax preparation experience, CPA Ted Kleinman is here to help you efficiently prepare your taxes. US Tax Help understands how difficult it can be to make sense of various types of tax law that may apply to you and your business and he is here to guide you through the process. To schedule a consultation, contact US Tax Help at (541) 923-0903.

Why Do I Need a Tax Preparer?

Taxes are an ever-changing landscape. There are constant regulations that address various topics like taxation rates and tax exemptions for real and personal property. With all of these moving parts, it is important to understand the invaluable role that tax preparers play and the reasons why you need one.

One of the first factors you should consider when you are on the fence about hiring a tax preparer is how well you understand the tax return process. While the tax return process certainly includes various documents like W-2s, 1099s, or Schedule K-1s if you invested in a corporation or limited liability company, there are many other factors that you must take note of when preparing taxes.

Deductible expenses are one factor that you should be mindful of when you file taxes. A deductible is an expense that is subtracted from your adjusted gross income. This means that a deductible expense decreases your taxable income which in turn decreases your tax liability. Over the course of the year you may accumulate all kinds of deductible expenses like the interest on your mortgage, property or cash given to charity, and even student loan interest.

If you are a foreign business owner and you conduct business in the U.S. and various parts of the globe, you will have to be especially keen when calculating income and deductibles. You will also be responsible for picking the correct forms you need to report all taxable transactions. This process can become quite complex if you are a business owner. In addition, if you are engaged in buying and selling stocks, providing financial support for another person, or you have multiple sources of income, you may have trouble keeping all of those issues in order when preparing your taxes.

If your tax return will require that you make sense of several lengthy IRS provisions, a certified public accountant may be the answer to your problems. CPAs have to meet extremely demanding educational and experience requirements in order to meet the requirements for certification. They must also pass a rigorous exam to become certified and have a duty to keep abreast of new tax regulations that can affect individuals and businesses nationally and internationally. A CPA like Ted Kleinman will work diligently to make the most out of your tax returns.

Tax Prep Checklist

The United States has different tax laws depending on whether you are a U.S. person or a foreign person. This means that one of the first tasks on your tax preparation checklist should be understanding which definition of person that you fall under. The following is a list of foreign persons for tax purposes:

  • Nonresident alien individual (green card test or residency test)
  • Foreign corporation
  • Foreign partnership
  • Foreign trust
  • A foreign estate
  • Anyone that does not qualify as a U.S. person

The next list defines the meaning of a U.S. person for tax purposes:

  • A resident or citizen of the U.S.
  • A domestic corporation (incorporated in the U.S.)
  • Domestic partnership
  • Non-foreign estates
  • A trust that is controlled by a U.S. person or can be controlled by a U.S. court
  • Any individual who does not qualify as a foreign person

If you are a nonresident alien, the U.S. income tax will only apply to income derived from a U.S. source. It is important to note that your U.S. source income is affected by two different tax rates for effectively connected income (ECI) and fixed or determinable, annual, or periodic (FDAP) income.

ECI refers to income that is produced by the operation of a business in the U.S. or personal service income like money made from wages or from self-employment. ECI is subject to a graduated tax rate which means the rate of tax will become higher or lower depending on the amount of taxable income.

FDAP refers to income sources like rent, royalties, dividends, interest, and other sources of income that is passively collected. FDAP income is taxed at a flat 30% rate unless some regulation or tax treaty allows for a different rate. Some tax forms that we can help you prepare if you are a nonresident alien include Form 1040NRs or Form 1040NR-EZs.

Foreign corporations, foreign partnerships, and other foreign persons are also subject to taxes on income that is earned from sources within the United States. US Tax Help will create a tax preparation plan that aims to take advantage of all the tax incentives that your business has earned. Allow us to handle your tax preparation so that you can continue to efficiently run your business.

It is also important to note that if you are a US expatriate (you live outside the country) you may still have U.S. tax obligations, or you may have to report foreign income to offset your U.S. tax liability. This process can become complicated, but an experienced CPA can help you streamline it.

US Tax Help will also guide you through new tax regulations. For example, the Tax Cuts and Jobs Act of 2017 will be implemented soon. This regulation would reduce various individual income tax rates and would reduce the corporate income tax rate as well. These are just two provisions in a large act that will likely have a profound impact on the way you file your taxes.

FBAR Preparation and Filing

If you are a U.S. taxpayer who holds assets or derives income from foreign sources, the federal government wants you to provide them with information.  They typically gather this information through what is called the Report of Foreign Bank and Financial Accounts, or FBAR for short.  The FBAR is unlike your typical tax return because it is not submitted to the IRS, but rather directly to the Treasury Department.  Because it is not included in a typical income tax filing, it has the tendency to be overlooked at great cost to the taxpayer.

FBAR filings do not require payments.  The report itself is merely an “information return.”  The only requirement of an FBAR is the timely disclosure of the taxpayer’s foreign bank accounts.  You only need to file an FBAR if the total amount in assets that you hold in foreign accounts exceeded $10,000 at any point during the taxable year.  For the purposes of determining whether you meet the $10,000 reporting threshold, you must total up all of the foreign accounts that you hold.  In other words, you cannot hold $9,999 in one account and $2 in another.  Treating accounts in such a piece-meal fashion can lead the government to infer that you are intentionally deceiving them, which is never good.

For those who must file an FBAR, the deadline for submitting the report is the same as the deadline for submitting federal income tax returns, which for the vast majority of taxpayers is April 15.  However, you may be eligible for an extension on this deadline.

Failing to meet an FBAR deadline is the same as failing to file entirely in the eyes of the government.  US Tax Help can prepare and file your FBAR return on your behalf so that you avoid making an honest but costly mistake.  If you feel that you may already be delinquent on FBAR filing requirements, there are avenues in place that allow for taxpayers who made genuine mistakes as to their FBAR responsibilities.  The CPAs at US Tax Help can help you through this process so that you avoid cumbersome fines.

Tips for Avoiding Mistakes in Tax Preparation

Keep Organized Records

It is very hard to be perfect for the government when you have bad information.  Taking the extra time here and there to compile diligent records in a system that is easy to understand may feel tedious.  However, the monotony of establishing and following your record-keeping system is nothing compared to the stress and panic of frantically searching out information when it comes time to file your taxes.  Even worse, if you do not succeed in your frantic search, you might wind up the subject of a government audit.  The professionals at US Tax Help can work with you to pick out an organizational system that works best for you or your business.

File on Time

Missing deadlines is the easiest way to attract the eye of IRS auditors.  Tax preparation can be a time-consuming process, so you should make sure from the outset that you have a reasonable plan to get your submissions complete and in the mail prior to your particular deadline.  If you feel that you may need an extension, there may be ways to attain one, provided certain conditions are met.  Typically, all that is required to delay a filing deadline is the timely submission of IRS Form 4868.  However, to delay actual tax payment requires substantially more effort and information.

If you have already missed a tax deadline, there are still options at your disposal.  However, choosing the correct actions following a missed deadline can be a nuanced decision process.  You should not attempt to take on the system by yourself without the help of seasoned professionals.  If you are unsure about whether you qualify for delayed payment or filing, speak to one of the CPAs at US Tax Help.

Use the Professionals

Sometimes a taxpayer’s situation is just too complicated to try to handle everything alone.  The tax code is incredibly complicated and constantly shifting.  If you are ever unsure of how to go about your tax business, you should just ask.  Trying to forge ahead without expert advice can land a genuinely mistaken taxpayer in the ire of the federal government, which is never a pleasant place to be.  However, bear in mind that, at the end of the day, your name is on your tax filings, regardless of who prepared them.  You should only use a tax preparer who you know you can trust.  The CPAs at US Tax Help have decades of experience providing our clients with sensible, strategic options and ensuring their financial security.  You deserve to benefit from our wealth of experience and resources in the tax world.

U.S. and International Tax Services for Foreign Persons and Expatriates

There is no such thing as being prepared for tax season too early. US Tax Help and tax accountant Ted Kleinman is available to provide you with tax planning services year-round. You should begin documenting everything you need to file taxes over the course of the year. Not only will this make it easier for us to help with your taxes, but it could make it easier to discover tax provisions that could alleviate some of your tax burdens. To schedule a consultation to discuss tax preparation, schedule an appointment, or contact US Tax Help online.

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