web analytics
April 20, 2014 / 20 Nisan, 5774
At a Glance

Posts Tagged ‘bank accounts’

‘The IRS Wants YOU’ and Israel Is Going to Help Them

Monday, March 10th, 2014

A mini “economic social” cabinet, headed by Prime Minister Binyamin Netanyahu, soon will approve an agreement to share information on accounts of U.S. citizens with the Internal Revenue Service, sources told the Globes business newspaper.

The newspaper said the proposal will allow the IRS full access on Americans’ accounts in Israeli banks and other financial institutions.

The U.S. government is preparing to sign agreements with other countries as well, but Israel is high on its “hit list,” partly because Swiss banks have accounts in three Israeli banks. Switzerland is no longer a safe place for foreigners to hide their money from the tax man, and so Israel has become a favorite home for money launderers and tax evaders.

The Israel Tax Authority is expecting increased revenues if the measure is approved. “The agreement will include an option under which, subject to certain conditions, information will be sent from the U.S. tax authorities to the Israeli tax authorities about the income of Israeli residents in the U.S.,” the document states.

However, while all information on American accounts in Israel will be sent to the IRS, Israel will receive data only in special cases.

The proposed agreement contained clauses aimed at protecting individuals from the IRS misusing personal information, but it is not clear if the IRS has learned its lessons from recent scandals, such as hunting down those nasty pro-Israel groups, as reported here.

Big Brother in Israel also is waiting on deck.

Attorney Yael Grossman, an expert in money laundering, told Globes, “The decision paves the way for further harm to the separation between the management of money by a bank and disclosure to Income Tax. Although at the moment, the measure helps the banks and saves them the need to work directly with the IRS, but experience shows that it will later expose all of the public’s banking activities to the Israel Tax Authority.

“This will be the final burial of banking confidentiality on one hand and a signal for the strengthening and prosperity of alternative institutions, which will rush to offer alternative instruments to the public.”

Americans living in Israel have an alternative to leaving their tax records and financial activities accessible by your closest friendly IRS clerk. They can simply void their American citizenship, a growing trend that was reported here in December.

Approximately 3,000 did so in 2013, three times the number in 2012. That means the IRS cannot snoop on them, but it also means they lose their right to vote in American elections, assuming it would be worth voting.

Three Mistakes that Can Get You in Big Trouble

Sunday, March 31st, 2013

Filing taxes is complicated. The forms aren’t particularly user friendly, and if you’re not quite sure what you’re doing you can end up making quite a few errors. The problem with errors on tax forms is that they can be very costly. For people who have multiple citizenships and residences (think olim or folks who spend a portion of the year living in Israel), the challenges of tax reporting are even more complicated.

I spoke with international tax lawyer Dave Wolf (and fellow contributor to a book on tax guidelines for American expatriates) and asked him, “What’s the worst mistake you’ve seen an expat make?”

He said: “The biggest mistake that I’ve seen expats make is believing that once they move out of America, they no longer have to report their worldwide income or report the existence of foreign bank accounts or companies.” Indeed, when it comes to the IRS, out of sight is not out of mind. It’s also important to note that if you have American citizenship through a parent or grandparent, even if you’ve never lived in America and English isn’t your mother tongue, you’re still obliged to report to the American tax authorities.

Mistake #2

Another common blunder that Dave mentioned was that people look for investment opportunities without taking into consideration the U.S. tax code. Specifically, complicated U.S. tax laws basically prevent American taxpayers from investing in overseas mutual funds. The IRS considers those investments “PFICs,” (passive foreign investment companies), and most Americans who understand how they work would not want to get involved with them or offshore mutual funds. When trying to invest smartly, lack of knowledge of international tax consequences can cost you a lot of money.

Final Mistake

The third blunder people make, Dave said, is “They either go to the wrong adviser, one who has no overseas experience, or they just don’t get any professional help at all.” I asked how you can avoid these mistakes. He said, “Make sure to consult with your tax lawyer, accountant, and/or investment manager before you leave the States to avoid any adverse tax consequences of investing or moving money overseas.” Sadly, many people overlook this seemingly small detail before making what could be one of the biggest financial decisions of their lives.

Find out more about what Dave has to say about avoiding making major tax mistakes by reading The Expatriate Guide to Managing Money and Taxes. For Jewish Press readers, get half off the regular price of the book by using the discount code JPRESS. Go to www.ExpatGuideToMoney.com and order now. The discount will expire on tax day, April 15th.

Knowledge is power, and reading this easy-to-follow guide for U.S. expats you can stay in full compliance with the law.

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/three-mistakes-that-can-get-you-in-big-trouble/2013/03/31/

Scan this QR code to visit this page online: