U S Tax Changes You Need To Know For 2011

[Mr Lee]

Here is one new Tax law that could affect some of us with foreign assets. If I am reading this correctly and look at the term Assets, then that would include a home, condo, land, bank accounts etc, am I correct? I already report income from overseas bank accounts but having to report property may be a little over the top IMO. If I am correct then thank you US govt for making mine and others lives even more complicated.

• Foreign Account Reporting. On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law. The new law imposes additional reporting and disclosure requirements on your income tax return for U.S. taxpayers with any interest in certain foreign assets worth more than $50,000. This doesn't replace the existing FBAR (Report of Foreign Bank and Financial Accounts) requirements; those still apply.

Read the others HERE

[Art2ro]

Ever since we retired here in the Philippines in 1998, we always filed joint 1040 short form without any exemptions or special benefits! We never show any balances in our bank accounts over $10,000 in the U.S. or in the Philippines, so we never had to inform IRS when asked on the tax forms. Owning real estate in the Philippines, why should that be any of the IRS or U.S. Government's business? But if $50,000 is the cap, I just set our assets below that so it doesn't pertain to us and we do not declare it in our tax forms! So, when I do our U.S. tax forms e-filing via the internet, it's pretty simple and only takes me 45 minutes to do, because we have nothing to itemize or declare! Makes life easy and stress free!

[United Army]

Here is one new Tax law that could affect some of us with foreign assets. If I am reading this correctly and look at the term Assets, then that would include a home, condo, land, bank accounts etc, am I correct? I already report income from overseas bank accounts but having to report property may be a little over the top IMO. If I am correct then thank you US govt for making mine and others lives even more complicated.

• Foreign Account Reporting. On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law. The new law imposes additional reporting and disclosure requirements on your income tax return for U.S. taxpayers with any interest in certain foreign assets worth more than $50,000. This doesn't replace the existing FBAR (Report of Foreign Bank and Financial Accounts) requirements; those still apply.

Read the others HERE

Interesting...just what does the US Govt, mean by Assets? All Assets or just certain assets.Tangible assetsTangible assets are those that have a physical substance and can be touched, such as currencies, buildings, real estate, vehicles, inventories, equipment, and precious metals.Since I just purchased a townhouse, well I supplied the money, its in my wifes name, (I cannot own land in the PH) and my wife is not a US citizen. So is this townhouse a asset of mine?? I do not own it.

[Mr Lee]

Here is one new Tax law that could affect some of us with foreign assets. If I am reading this correctly and look at the term Assets, then that would include a home, condo, land, bank accounts etc, am I correct? I already report income from overseas bank accounts but having to report property may be a little over the top IMO. If I am correct then thank you US govt for making mine and others lives even more complicated.

• Foreign Account Reporting. On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law. The new law imposes additional reporting and disclosure requirements on your income tax return for U.S. taxpayers with any interest in certain foreign assets worth more than $50,000. This doesn't replace the existing FBAR (Report of Foreign Bank and Financial Accounts) requirements; those still apply.

Read the others HERE

Interesting...just what does the US Govt, mean by Assets? All Assets or just certain assets.Tangible assetsTangible assets are those that have a physical substance and can be touched, such as currencies, buildings, real estate, vehicles, inventories, equipment, and precious metals.Since I just purchased a townhouse, well I supplied the money, its in my wifes name, (I cannot own land in the PH) and my wife is not a US citizen. So is this townhouse a asset of mine?? I do not own it.

I believe you wrote in past posts that it will be titled in both names, so even though you cannot own land, if your name is on the deed then IMHO I believe that the US will expect you to show it as an asset and that is why I posted the above, to warn all to seek proper tax advice, as to not violate the IRS laws, since the penalties are usually outrages, as in the case of money, if you have or had over $10,000 US in a foreign bank any time during a calendar year and do not declare it to the US, then it could be subject to total confiscation. Anyway I have nothing to hide and all money we used to buy our condos came from checks written on our US accounts, so I have no problem showing the ownership of them, but what I do have a problem with is that I am pretty sure that this is a precursor of a way for them to tax us later on, probably so they will know we own it, so if we sell it, then they want their share of the profits, but it could be a way for them to find a new way to tax us in the future on say the increased value, such as by making us get it appraised and paying taxes on gains in value because it is out of the country. I do not know what the purpose of the new law is but I am old and do not like change and I have found that most changes made will usually cost us more money in the future. Time will tell.

[Dave Hounddriver]

Since I just purchased a townhouse, well I supplied the money, its in my wifes name, (I cannot own land in the PH) and my wife is not a US citizen. So is this townhouse a asset of mine?? I do not own it.

My personal experience, in Canadian law, is that your wife indeed owns it but any income from rents or sale of the property would be 'deemed' to be yours as you supplied the investment capital. I only post this so you can check to see if your country has the same law.

[Art2ro]

For the past 10 yrs, I've been using Turbo Tax On-line to do my U.S. income tax. They ask about 150 questions and I don't recall any questions about owning real estate in a foreign country, but I'll just have to wait and see if the tax laws have changed when I start doing my 2010 taxes! This year it seems like it is taking longer to get copies of my 1099R forms and Annuity Statements on-line from OPM available Jan 31 and Social Security form 1099s available only on Sundays starting Feb 2. The Military 1099R and Annuity Statements are already available on-line!

[No name]

Ever since we retired here in the Philippines in 1998, we always filed joint 1040 short form without any exemptions or special benefits! We never show any balances in our bank accounts over $10,000 in the U.S. or in the Philippines, so we never had to inform IRS when asked on the tax forms. Owning real estate in the Philippines, why should that be any of the IRS or U.S. Government's business? But if $50,000 is the cap, I just set our assets below that so it doesn't pertain to us and we do not declare it in our tax forms! So, when I do our U.S. tax forms e-filing via the internet, it's pretty simple and only takes me 45 minutes to do, because we have nothing to itemize or declare! Makes life easy and stress free!

It is called cash flow analysis. Congress is looking for people that are putting money in overseas investments to hide income.I don't know how much good it will do. If you're going to report the property, surely you have enough sense to report enough income to enable you to buy it. But a lot of people don't do that.I was an agent many years ago. Hate me if you want, I'm use to it. :lol: I figured if I couldn't beat them, I could join them. The biggest changes on individual tax returns don't come from expenses if an agent comes to visit. They are to income. In the old days the IRS looked at how much you spent. If you spent more than you earned, you needed to explain that. Could be explained by loans, gifts and cash on hand at the start of the year. This method of auditing made it unnecessary to verify expenses. We gave you that but if you reported more expenses than you can pay for, well, how did you pay for it. So if people pad the expenses, they too get income added to their returns.The method proved to be very accurate. I didn't trust it when I first started but then I saw taxpayer after taxpayer suddenly remember a sale of real estate they forgot to report.I don't think the method is used as much as it use to be but it is still used. You'll see references to it on mob shows.... This is what they mean when they say things like report enough income to justify what you're spending.People do really dumb stuff, like put their unreported income in interest bearing accounts.But the major evaders are using off shore accounts with strong privacy laws. That's why the countries have them, to encourage funds from overseas to come pouring in.I gotta say though, I just can't see how this law is going to help much in voluntary compliance. Though it might be very helpful in prosecution for fraud if the assets are found but not reported. It is probably related to the recent disclosures of funds held in Swiss bank accounts. I'm still surprised the Swiss caved on that. Now the money will go to Panama and Cayman Island. But if one is hiding money there, that problem in with the Swiss bank accounts has got to have those using that method a bit concerned.It is also likely a tool to help fight money laundering.Folks like Lee get the burden with another form to complete and assets to track. Once again, the "average Joe" pays for what the not so average are doing.When I was in college, studying to be an accountant, I'd see a tax law and think what on earth is this for. It is so unfair.Well, first my tax law professor would say "Tax law is not made to be fair, it is written to raise revenue." Well that's a little bit sour puss. :lol: Instead of asking why, ask why not. You might have to be an accountant to figure it out sometimes but often if you think why not. What if the law was not there, how could I twist the other law. That is where one will usually find the answer to what looks like an unjust tax law. There is usually a very good reason for it.Yeah, I hate taxes too so don't rip me. Don't even rip the IRS. Rip congress. If the IRS doesn't enforce those laws, I can assure the the GAO will eat the IRS for lunch, they love to do it. When the IRS does enforce them, congress holds hearings and rips the bad old IRS for enforcing them.Now that's not to say there are no IRS employees abusing their authority. Of course they are, I've seen it on the news. I never saw it in person.Reminds me of something my on the job trainer use to say, "if someone tries to bribe me and its not enough, I'm insulted. If it is enough, I know its a setup from Internal Affairs." lolI'll hush now.

[No name]

Here is one new Tax law that could affect some of us with foreign assets. If I am reading this correctly and look at the term Assets, then that would include a home, condo, land, bank accounts etc, am I correct? I already report income from overseas bank accounts but having to report property may be a little over the top IMO. If I am correct then thank you US govt for making mine and others lives even more complicated.

• Foreign Account Reporting. On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law. The new law imposes additional reporting and disclosure requirements on your income tax return for U.S. taxpayers with any interest in certain foreign assets worth more than $50,000. This doesn't replace the existing FBAR (Report of Foreign Bank and Financial Accounts) requirements; those still apply.

Read the others HERE

Interesting...just what does the US Govt, mean by Assets? All Assets or just certain assets.Tangible assetsTangible assets are those that have a physical substance and can be touched, such as currencies, buildings, real estate, vehicles, inventories, equipment, and precious metals.Since I just purchased a townhouse, well I supplied the money, its in my wifes name, (I cannot own land in the PH) and my wife is not a US citizen. So is this townhouse a asset of mine?? I do not own it.

I believe you wrote in past posts that it will be titled in both names, so even though you cannot own land, if your name is on the deed then IMHO I believe that the US will expect you to show it as an asset and that is why I posted the above, to warn all to seek proper tax advice, as to not violate the IRS laws, since the penalties are usually outrages, as in the case of money, if you have or had over $10,000 US in a foreign bank any time during a calendar year and do not declare it to the US, then it could be subject to total confiscation. Anyway I have nothing to hide and all money we used to buy our condos came from checks written on our US accounts, so I have no problem showing the ownership of them, but what I do have a problem with is that I am pretty sure that this is a precursor of a way for them to tax us later on, probably so they will know we own it, so if we sell it, then they want their share of the profits, but it could be a way for them to find a new way to tax us in the future on say the increased value, such as by making us get it appraised and paying taxes on gains in value because it is out of the country. I do not know what the purpose of the new law is but I am old and do not like change and I have found that most changes made will usually cost us more money in the future. Time will tell.

If you file joint tax returns, I'd say the asset must be reported and that you must report it. However, I'm sure you have an accountant that is more up on the exact law and the volumes of regulations that I'm sure go along with it. I am not up on it at all.Her not being a citizen doesn't relieve her of any of the burden of the law. So she had to report if she files a return and since you have to file one, she does has to file one too.If she has no income (I don't know) and she reports it, it could send up red flags. See my cash flow above. As an X agent, I'd look at the return and say, why does she have assets and no income. Why is she filing separate if she has no income. Does hubby have something to hide?Even though you don't, you just don't want your returns looked at with those questions popping up. Audits can be very expensive even if the agent finds nothing, often their is a CPA or God forbid, a Tax Lawyer, to pay fees too.

[Art2ro]

I haven't done our income tax yet so I don't yet know the answer to this, but some of you out there may have the answer. As for real estate in the Philippines, the price what is on the Deed of Sale is some what different what was assessed after any home improvements and documented on the land title tax declaration form in the City Hall Municipality records section for property tax purposes. Which figures should be given to the U.S. IRS tax crunchers? What one paid at time of purchase documented on the Deed of Sale or what the fair market value of the property is according to what's documented on the real estate tax declaration form from City Hall that one pays each year here in the Philippines?

[Mr Lee]

I haven't done our income tax yet so I don't yet know the answer to this, but some of you out there may have the answer. As for real estate in the Philippines, the price what is on the Deed of Sale is some what different what was assessed after any home improvements and documented on the land title tax declaration form in the City Hall Municipality records section for property tax purposes. Which figures should be given to the U.S. IRS tax crunchers? What one paid at time of purchase documented on the Deed of Sale or what the fair market value of the property is according to what's documented on the real estate tax declaration form from City Hall that one pays each year here in the Philippines?

The way I read the story, it is for 2011 filing, so we do not have to worry about it until next year when we file this years taxes, and a lot can change by then. I would think that it will come with instruction of what they consider the value to be, but IMHO it will be what we paid for it, because my guess is that they are going to expect their taxes on any sale of property that we might make, which would be the difference between the purchase price and the sale price. I of course do not have to worry about that because I never intend to sell our condo and it will be my wifes problem down the road. Now if you tell them it is worth more than you paid, then they might ask where the money came from to buy it. I do not feel we have anything to worry about at this point, and a lot of these laws may get repealed or modified during this year anyway. I will worry about it in 2012 when I file my 2011 taxes. So far this year I do not see anything in the current Turbo Tax which asks any of questions related to assets beyond that they now ask exactly how much was the maximum amount of cash we had anytime during the last calendar year outside the country, that is if at anytime there was more than $10,000 and because I declare the interest, my guess is they will try to calculate if the interest I declare seems to be reasonable for the amount I told them we had in banks outside the US. I keep statements, as well as ledger entries on interest, so I am not concerned.