Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Legally-married same-sex couples generally must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status.

Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.

Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier.

Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.   www.irs.gov

How to File a Claim for Refund

Global Advisory Tax Group is available to help you file a refund claim for income taxes, as well and gift and estate taxes.   Please contact us and we would be happy to assist.
rgargani@globalatg.com 
412-904-2693

Taxpayers aren't required to explain the move, but experts said the recent rise is likely due to tougher laws and
enforcement. "The IRS crackdown on U.S. taxpayers living abroad seems to be having an effect," said Mr. Mitchel.
The IRS declined comment.
Lags in reporting renunciations might mean that many who appeared on the current list made the move months earlier. Taxpayers who renounced can be subject to an exit tax, and people who renounced last year may have avoided higher taxes on capital gains and income that went into effect in 2013. The U.S. is rare in that all income earned by citizens and permanent residents, even those living abroad, can be subject to U.S. tax, according to Bryan Skarlatos,
a New York lawyer. The U.S. also confers citizenship on people who are born on American soil.
The U.S. launched the tax crackdown after the terrorist attacks of Sept. 11, 2001, and ratcheted up its efforts after 2009, amid evidence that UBS and other foreign institutions helped U.S. taxpayers hide assets.
Some taxpayers have applied for IRS limited-amnesty programs, in which they pay stiff penalties for past noncompliance but avoid prosecution. Tax lawyers say the crackdown has ensnared smaller violators who weren't
intentionally evading U.S. taxes.
-NY Times 

Who must file an FBAR?
Any United States person who has a financial interest in or signature or other authority over, any financial account in a foreign country, if the aggregate value of these accounts exceeds US$10,000 at any time during the calendar year.
 
United States Person: includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust. This includes a single member LLC, which is considered a disregarded entity for U.S. tax purposes.
 
Signature or Other Authority: A person has signature authority over an account if such person can control the disposition of money or other property in it by delivery of a document containing their signature to the bank or other person with whom the account is maintained.
 
Other authority exists in a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.
 
Is a U.S. resident with power of attorney on his elderly parents’ accounts in Canada required to file an FBAR, even if the resident never exercised the power of attorney?
Yes. Whether or not such authority is ever exercised is irrelevant to the FBAR filing requirement. 


How do filers report their accounts to the IRS?
Complete boxes 7a and 7b on Form 1040 Schedule B, or
Box 3 on Form 1041 “Other information” section, or
Box 10 on Form 1065 Schedule B, or
Boxes 6a and 6b of Form 1120 Schedule N
AND – completing Form TD F 90.22-1. 
 
When is the FBAR Due?
June 30th of the year following the year that the account holder meets the US$10,000 threshold. An extension to file a Federal income tax return DOES NOT extend the due date for filing an FBAR. Filers cannot request an extension of the FBAR due date.
 
Where do I file the FBAR?
U.S. Department of the Treasury
P.O. Box 32621
Detroit, MI 48232-0621
 
How do I verify that my FBAR was filed?
Ninety days after the date of the filing, the filer can request verification that the FBAR was received. A request can be made by calling 866-270-0733 option 1. There is no fee for an over the phone verification.


How to amend a previously filed FBAR
-       Check the Amended box in the upper right hand corner of the first page of the form;
-       Make the needed additions or corrections;
-       Staple it to a copy of the original FBAR; and
-       Attach a statement explaining the additions or corrections.
 
What happens if you are required to file an FBAR and you fail to do so?
Failure to file an FBAR may potentially result in civil penalties, criminal penalties or both. If you learn that you were required to file an FBAR in earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be assessed if the IRS determines that the late filing were due to reasonable cause. Keep copies for your records. Records should be maintained for 5 years.
 
Form 8938 – Statement of Specified Foreign Financial Assets
 
Certain U.S. taxpayers holding specified foreign financial assets with an aggregate value exceeding US$50,000 will report information about these assets on Form 8938, which must be attached to the taxpayer’s annual income tax return.
 
However, if you do not have to file an income tax return for the tax year, you do not have to file Form 8938, even if the value of your specified foreign assets is more than the appropriate reporting threshold.
 
If you are required to file Form 8938, you do not have to report financial accounts maintained by:

• A U.S. payer (such as a U.S domestic financial institution);
• The foreign branch of a U.S. financial institution; or
• The U.S. branch of a foreign financial institution.

 
You must file a Form 8938 if:
 
1. You are a specified individual:

• U.S. citizen; or
• Resident alien of the United States for any part of the tax year; or
• Nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. 

AND
2. You have an interest in specified foreign financial assets required to be reported.
 
Specified foreign financial asset: 

• Any financial account maintained by a foreign financial institution, except as indicated above.
• Other foreign financial assets held for investment that are not in an account maintained by a U.S. or foreign financial institution - such as stock or securities issued by someone other than a U.S. person, or any interest in a foreign entity, and
• Any financial instrument or contract that has an issuer or counter-party that is other than a U.S. person.

  AND
3. The aggregate value of your specified foreign financial assets is more than the reporting threshold that applies to you:
 
Unmarried taxpayers living in the U.S.: total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than US$75,000 at any time during the tax year.
 
Married taxpayers filing a joint income tax return and living in the U.S.: total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than US$150,000 at any time during the tax year.
 
Married taxpayers filing separate tax returns and living in the U.S.: total value of your specified foreign financial assets is more than US$50,000 on the last day of the tax year or US$75,000 at any time during the tax year.
 
Taxpayers living abroad you must file if:
You are filing a return other than your joint return AND the total value of your specified foreign financial assets is more than US$200,000 on the last day of the tax year or more than US$300,000 at any time during the year; or
You are filing a joint return AND the value of your specified foreign financial asset is more than US$400,000 on the last day of the tax year or more than US$600,000 at any time during the year.
 
 
If you have any questions about the requirements for filing an FBAR or Form 8938 please do not hesitiate to contact us at 412-904-2693 or by emailing rgargani@globalatg.com.

The streamlined procedures are designed for taxpayers who present a low compliance risk, which is generally specified as a tax liability of less than USD 1,500 for each delinquent year.

In addition, the streamlined procedures provide retroactive relief for taxpayers who failed to make a timely election for income deferral on certain foreign retirement and savings plans (e.g. Canadian Registered Retirement Savings Plans) for which relevant treaties allow deferral only if an election is made on a timely basis.

The FAQs include the following clarifications:

• Taxpayers will not be disqualified from admission to the streamlined procedures even if their tax liability exceeds USD 1,500 for any of the 3 years. However, submissions by such taxpayers may be determined to be higher risk, and applicable penalties and an examination may ensue.
• If qualifying taxpayers have been accepted into one of the offshore voluntary disclosure programs (OVDPs) prior to 1 September 2012, they may opt out of the OVDP and request the streamlined procedures (seeUnited States – Offshore Voluntary Disclosure Program reopened indefinitely, United States-1, News 11 January 2012United States – Offshore Voluntary Disclosure Program reopened indefinitely, United States-1, News 11 January 2012 ).
• Qualifying taxpayers may have their case reconsidered under the streamlined procedures even if they have entered into a closing agreement (IRS Form 906) with the IRS under one of the OVDPs.
• For the streamlined procedures, taxpayers should use IRS Form 1040 (US Individual Income Tax Return), except that taxpayers should use IRS Form 1040X (Amended US Individual Income Tax Return) if they are submitting amended returns for the sole purpose of submitting late-filed IRS Form 8891 (US Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans).

©copyright IBFD. 

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will not only reduce the amount of hours of paperwork the old method requires but will also alleviate the fear and complexity associated with the taking the home office deduction. The new method will encourage more taxpayers - who formerly did not take the deduction at all - to use the simpler method. 
 
"This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013."
 
The new option provides an easier way to claim this deduction. Currently, taxpayers must fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.
 
Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.
 
Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.
 
It is of utmost importance to remember that the current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option. 
 
The new simplified option is not available for your 2012 return, only your 2013 return that will be filed in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after Jan. 1, 2013.
 
Please note that the new deduction is not right for everyone. If the $5 per square foot allocation is more than $1,500 limit and you have a significant amount of depreciation, the old method may be best for you.
 
If you have any questions about the new home office deduction or any other tax issue please contact us at 412-904-2693 or rgargani@globalatg.com.

Prior to the enactment of the ATRA, the exemption amounts and other key elements of the AMT were not indexed for inflation. Over the past decade, Congress had enacted a series of temporary increases of the AMT exemption amounts and allowed non-refundable personal tax credits to reduce AMT liability. These measures were popularly referred to as the AMT patch.

Without the enactment of the ATRA, the AMT exemption amounts would have reverted to lower statutory amounts (i.e. USD $45,000 for married individuals filing joint returns, USD $33,750 for unmarried individuals, and USD $22,500 for married individuals filing separate returns) for 2012 and most non-refundable personal credits would have ceased to be allowed against the AMT.

The ATRA increases the AMT exemption amounts for 2012 and permanently adjusts the AMT exemption amounts for inflation for tax years beginning after 2012, with the result that temporary AMT patches will no longer be needed. The ATRA also permanently allows non-refundable personal tax credits to offset AMT liability.

In addition, the ATRA indexes other elements of the AMT for inflation after 2012, including the taxable excess amounts above which the 28% rate apples and the thresholds at which the exemption amounts begin to phase out.

©copyright IBFD. This article is part of a selection of daily news from the IBFD Tax News Service (TNS). All rights to the content reside with IBFD. Any use requires IBFD’s prior permission in writing. 

Kinds of Records to Keep
 
The IRS does not tell you how to keep your records, or that you need to keep them in a particular way. What’s important is that you have the records. Keeping your records in a way that allows you, and the IRS if necessary, to determine your correct tax is what is important. 
 
Basic Records
 
EVERYONE should keep basic records. These are the records that prove your income and expenses.
 
For items concerning…
What should be kept       
 
Income

• W-2s
• 1099s
• Bank Statements
• Brokerage Statements
• K-1s

Expenses

• Sales slips
• Invoices
• Receipts
• Canceled Checks
• Charitable Contributions

Home

• Closing Statements
• Purchase and Sales Invoices
• Proof of Payment
• Insurance Records
• Improvement Costs

Investments

• Brokerage Statements
• Mutual Fund Statements
• 1099 Forms
• 2439 Forms

 
Proof of Payment
 
One of your basic records is proof of payment. Proof of payment alone is not proof that the item claimed on your return is allowable. You should also keep other documents to help prove your case.
 
Generally, you prove payment with a cash receipt, financial account statement, credit card statement, or canceled check.
 
If payment is by…
 
Then the statement must show…
Cash

• Amount
• Payee’s name
• Transaction Date

Check

• Check Number
• Amount
• Payee’s Name
• Date the Check Amount was Posted

Debit or Credit Card

• Amount Charged
• Payee’s Name
• Transaction Date

Electronic Funds Transfer

• Amount Transferred
• Payee’s Name
• Date the Transaction was Posted

Payroll Deduction

• Amount
• Payee Code
• Transaction Date

 
Specific Records
 
Listed below (alphabetically) are examples of items that may require specific records in addition to your basic records.
 

• Alimony
• Business Use of Your Home
• Casualty and Theft Losses
• Child Care Credit
• Contributions
• Health Savings Accounts (HSA) and Medical Savings Accounts (MSA)
• Individual Retirement Arrangements (IRA)
• Medical and Dental Expenses
• Education Expenses
• Exemptions
• Employee Business Expense
• Energy Incentives
• Gambling Winnings and Losses
• Mortgage Interest
• Moving Expenses
• Pensions and Annuities
• Taxes
• Sales Tax on Vehicle
• Tips

 
How Long To Keep Records
 
You should keep records that support items shown on your return until the period of limitations for that return runs out.  The period of limitation is the amount of time that you can amend your return to claim a credit or refund or the IRS can assess additional tax.  Refer to the table below that shows the period of time that applies to income tax returns. The years refer to the period of time AFTER the return was filed. Returns that are filed before the due date are considered to be filed on the due date.
 
If you…
Then the period is…
 
1. Owe additional tax and (2), (3), and (4) do not apply to you.
3 years
2. Do not report income that you should and it is more than 25% of your gross income shown on your return.
6 years
3. File a fraudulent return.
 
No Limit
4. Do not file a return.
 
No Limit
5. File a claim for credit or refund after you file your return.
 
The later of 3 years or 2 years after the tax was paid
6. File a claim for a loss from worthless securities.
7 years
 
If you have any questions about record keeping, or any other tax related matter. Please contact us at help@globalatg.com or call 412-904-2693.
 
For a more complete overview of record keeping requirements, please visit www.irs.gov or IRS Publication 552.

How Failing to Patch the AMT by Year-End Will Jeopardize the 2013 Filing Season

Acting IRS Commissioner Steven Miller has emphasized the significance of patching the AMT by year-end. He stated that, without a timely patch, the IRS would have to operate the 2013 filing season based on the expiration of the current patch (reverting to 1998 figures) which would result in filing delays and subject approximately 28 million taxpayers to a large and unexpected tax liability for the 2012 tax year. Also, in order for the IRS to make the necessary changes to its tax programs, filing of tax returns would likely be delayed until late March of 2013. This, in turn, will delay the issuance of refunds for over 60 million taxpayers.
 
For tax year 2012, if not "patched" the individual AMT exemptions will fall to the permanent AMT amounts unless Congress retroactively changes them. The permanent amounts are: $33,750 for unmarried taxpayers (compared to $48, 450 in 2011 - reduced by 25% of the amount for which AMTI exceeds $112,500 in both years), $45,000 for joint filers (compared to $74,450 in 2011 - reduced by 25% when AMTI exceeds $150,000), and $22,500 for married filing separately (compared to $37,225 in 2011 - reduced by 25% in both years when AMTI exceeds $75,000).
 
States with high income tax rates will be hit the hardest. For example, in the District of Columbia and Maryland, where approximately 6 percent of taxpayers have become accustomed to paying the AMT, the figure would jump to 41 percent in D.C. and 38 percent in Maryland. In Virginia, where 4 percent of taxpayers have routinely paid the AMT, the figure would increase to 28 percent.
 
Residents in other high-cost areas would also get hit hard by AMT. In New Jersey, for example, more than half of all households would owe unexpectedly large tax bills, the highest percentage in the country. (Source: The Washington Post)
 
What is the Alternative Minimum Tax?


The AMT is best understood as a separate tax system, computed on IRS Form 6251, with its own rules for deductions as well as its own set of tax rates. The AMT starts with your regular taxable income and then adds back the tax preferences and adjustments until you arrive at “alternative minimum taxable income” (AMTI). After subtracting an exemption amount, a tax rate of 26% applies to the first $175,000 of this income and 28% to amounts above $175,000. If the tax liability under the AMT system is higher than your regular tax liability, you must pay the higher amount. If it is below, then you pay the regular tax amount owed. The excess of the tentative minimum tax over the regular tax liability for the tax year is the AMT.
 
Below are some of the most common adjustments and preferences used to arrive at AMTI. If you currently take advantage of any of these deductions, pay special attention to the possibility of paying the AMT this year.
 
Tax Exempt Interest: Although excluded from your regular taxable income, it must be included in AMTI.
 
Interest Deduction: For AMT purposes you can only deduct mortgage or home equity loan interest on funds you used to buy, build, or substantially improve your home or second residence.
 
State and Local Tax Deduction: For AMT purposes you get NO deduction for state and local income taxes, or real estate or other property taxes, although a deduction is allowed for regular tax purposes.
 
Medical Expenses: For AMT purposes, they are only deductible to the extent they exceed 10% of AGI. For regular tax purposes, medical expenses are deductible to the extent they exceed 7.5% of adjusted gross income (AGI). 
 
Misc. Itemized Deductions: For AMT purposes, you do not get ANY deductions. 
 
Personal and Dependency Exemptions: You do not get ANY deduction for AMT purposes and must be added back to your regular taxable income to determine AMTI.
 
Standard Deduction: If you take a standard deduction instead of itemizing, you must add the deduction back in to determine AMTI.
 
Global Advisory Tax Group will continue to post updates as they become available. If you have any questions about AMT or any other tax issue please contact us at help@globalatg.com or 412-904-2696.