Why the HIRE Act Means You Need to Get Caught Up on Your US Taxes NOW – Americans Abroad
In the last three years, more and more people are finding themselves in debt that they can not control. Some of it is due to credit cards or a mortgage that is spiraling out of control. However a lot of debt is in the form of unpaid taxes to the IRS.
Save money on taxes. Tax planning is one area in which he or she can be very beneficial. Accounts should be working tirelessly throughout the year to find ways to give your business the best tax advantages possible. In Traverse City there are a variety of special tax considerations to take into account, for example the tax incentives available to the business owners located in the Village at Grand Traverse Commons, and special historic rehabilitation tax credits for some downtown Traverse City locations.
What is the HIRE Act? The main purpose of the HIRE (Hiring Incentives to Restore Employment) Act, signed into law on March 18 2010, is to stimulate jobs growth by providing payroll tax breaks and incentives to businesses to hire unemployed workers. So, what does this have to do with Americans abroad? To help pay for the costs of the HIRE Act, there have been a number of provisions introduced which mean that Americans who live abroad will face even more scrutiny. The HIRE Act demands that international financial institutions (i.e. banks, brokerage houses, wealth management firms, etc) disclose to the IRS which of their clients are US citizens with accounts with over $50,000 in them. Non-compliance by banks will be costly: banks that do not agree to report these customers are subject to a 30% withholding tax on their US assets.
How does the HIRE Act affect American expats? The HIRE Act can affect you in a number of ways, but the two main ones are: 1) Your overseas bank may decide that US citizens are too burdensome to deal with and close down your account (this is happening with many Swiss banks and more UK banks are starting to do this as well) AND 2) if you have not been filing your US tax return, the IRS will now know that you exist and that they have no record of you, meaning you are not up to date with your tax filings.
Complete you books correctly the first time. Some business owners do not realize the value of professional bookkeeping. They may assume that keeping books can be done by anyone who can add and subtract. While this may not altogether untrue, not everyone is able to analyze accounting records and detect trends that are either good or bad for the business. In fact this is a rather rare and valuable skill. Preparing balance sheets could be more complicated than many would realize.
A tax attorney has in depth knowledge of the tax laws and will negotiate with the IRS for their client. Due to the experience, they can obtain extended payment periods or in some cases, even have the bill reduced.
Assist with special budgeting concerns. In addition to these primary areas of focus there are some special budgeting concerns that Traverse City CPA's should take into consideration. Traverse City is nestled on the northwest shore of the lower peninsula of Michigan and enjoys the benefits of being a tourist location for Chicago and the surrounding area. It also has four dramatically distinct seasons that have a huge impact on the local commerce. Businesses located here must be able to maximize their busy seasons, and find ways to budget for the long slower seasons. A quality Traverse City CPA can help business owners find ways to budget their money and manage their cash flow so they can get through the highs and lows throughout the year without a cash crunch.
Take the time to interview several CPA's and discuss your goals and how they might be able to help you attain them. Choose someone who is experienced, able to help in the areas mentioned above and easy for you to communicate with.
Harris Smith offers advice on home equity line of credit and obtaining credit
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