Save time. Serve your clients. Stop the headaches.
IRS Tax Tip 2022-49, March 30, 2022
Once taxpayers file their federal tax returns, they’re eager for details about their refund. When it comes to refunds, there are several common myths that can mislead taxpayers.
By Nina E. Olson
The Washington Post
Pause all audits for four months and bring retired people back to work until the agency clears its backlog of tax returns
If there is one thing we’ve learned over the past two years, it is that the Internal Revenue Service is vital to the economic health of our nation. In the midst of a pandemic it has delivered $800 billion in economic impact payments (EIPs), or stimulus checks, almost $93 billion in advance child tax credits, and additional billions in employee retention and sick and family leave credits.
Washington, D.C. – Executive Director Chad Hooper of the Professional Managers Association (PMA) – formed in 1981 by Internal Revenue Service (IRS) Managers as a national membership association representing the interests of professional managers, management officials and non-bargaining unit employees in the federal government – released the following charge and response regarding the bipartisan Congressional letter urging IRS action to improve taxpayer services during of the 2022 filing season.
In this hour long training video for the Form 8621 Calculator you will be presented with a detailed explanation of the work-flow, setting up clients and investment portfolios, a how to guide to complete form 8621s using our software. You will also learn how to make elections under Mark to Market, QEF, and OVDP. As well as tips and best practices to save you time and money when working with PFICs.
BY MARY BETH LOUGEN, EA, USTCP
Practitioners that work with clients who have international connections often have to run the gauntlet of Code Secs. 1291–1298, the portion of the statute that covers passive foreign investment companies or PFICs. As someone who frequents the PFIC regulations, I am always in awe of this section of the Internal Revenue Code (“the Code”). The men and women who took the directive provided by Congress in the Tax Reform Act of 1986 and put to paper how we are to treat passive foreign investment companies on a U.S. tax return were geniuses. They have woven an intricate and complex web of “if this, then that” rules that speak to many other sections of the Code—if the PFIC is also a CFC, then … , if the shareholder becomes a U.S. person after already owning an investment that became a PFIC the minute they crossed into U.S. personhood, then … , if the investment was owned prior to 1987 when the regulations came into play, then … . But there is one place where the interaction between the PFIC rules and the rest of the regulations is not in sync, this is the case when there is a sale of a fiscal year qualified electing fund (QEF) during the period between the end of the fiscal reporting year and the taxpayer’s calendar year end.
It is widely thought that QEF election is the best solution to a bad problem— but I am going to have to disagree, or at least disagree when the PFIC reports on a fiscal year.
The taxation of Passive Foreign Investment Companies is incredibly complicated because of the various ways these companies can be treated federally. In this article, Mary Beth Lougen of Expat Tax Tools brings up frequently asked questions intended to make tax professionals think about what their clients with state residency or domicile who also own a PFIC are facing.
For those of U.S. who work in the arena of international taxation our idea of a great client is one who lives in Texas, Washington or any of the sevens states that do not impose income tax on their residents. On a good day figuring out how to prepare the federal tax returns for people whose fiscal lives cross international borders can be vexing and time consuming. But throw an extra taxing jurisdiction into the mix and there are now another set of regulations to consider. What may have been the best outcome when considering only the implications at the federal level may no longer be the case…
Taxpayers who move in and out of the country should fully consider the state tax consequences of living and working in another jurisdiction. In this article, Mary Beth Lougen of American Expat Taxes explains the general considerations states use in determining whether a taxpayer is a domiciliary of that jurisdiction, and makes recommendations as to the steps practitioners can help their clients take to minimize risks of state tax liability
