Death Certificate Lawyer Argentina

Death Certificate Lawyer Argentina

Foreign tax credits and the new Medicare tax

 The Affordable Care Act includes an additional Medicare tax in the form of a 3.8% Net Investment Income Tax (NIIT) on some net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts.

Be sure not to overlook this new tax. Americans abroad who fall into the categories referred to will owe the tax to the US since foreign tax credits are not applicable against this tax.

This new tax leads to pure double taxation of those Americans resident abroad since foreign tax credits cannot be applied against this tax due to a simple drafting technicality.  ACA, Inc. urges Congress to apply tax fairness on Obamacare and allow foreign tax credits against the additional Medicare tax.

Death Certificate Lawyer Argentina

Death Certificate Lawyer Argentina

Virginia La Torre Jeker, member of the ACA, Inc. Professional Tax Advisory Council has written a detailed blog about how the new NIIT tax will affect Americans Abroad “NIIT-Picky Nuances for Americans Overseas or With Offshore Investments”

No passport revocation if you owe tax

The proposal of the House Ways and Means Committee and the second version of the Senator Finance Committee’s “Preserving America’s Transit and Highways Act of 2014”, as reported by the Joint Committee on Taxation, July 9, 2014 (JCX-83-14), does not include “The Revocation or Denial of Passports in Case of Certain Unpaid Taxes”.

The initial version of the Senate Finance Committee which included this passport revocation provision, was alarming to the community of Americans overseas, in particular since this is the second time in two years that such a provision has been included in proposed legislation.  

New FATCA Regulations

With the recent enforcement of FBAR, new FATCA regulations and the complexity of filing US taxes from overseas, a provision to revoke or deny a U.S. passport could easily be applied on US citizens living overseas that make  honest errors in their tax declaration, have been erroneously assessed penalties or are in penalty dispute with the IRS.  Under such a passport revocation provision, any of the aforementioned could result in the denial of what for many Americans is their only U.S. identification document.  

The law is clear that all Americans are subject to pay US taxes irrespective of where they live and work. Actually, these filings are complex. For example, there is no immediate access to pertinent information for Americans living and working overseas. When disagreements arise as to the determination of the tax due, negotiations and litigation between taxpayers and the IRS can span months and even years. A provision such as that contemplated could block honest, taxpaying Americans living and traveling overseas, intending to comply with the law, from exercising their profession and could have catastrophic consequences for a person’s financial and physical safety. 

FBAR Reports

For example, there numerous Americans living abroad. However, out of error or ignorance had not filed FBAR reports and were assessed penalties in excess to $50,000. Afterward, they may reduce and/or eliminate them through mitigation with the Taxpayer Advocate Service. Or directly between the IRS and the individual.  Thus, under this provision, their passports could have been denied passports during the disputed period. However, they were not liable for any taxes or penalties.

In conclusion, a passport is the sole identity document allowing Americans the right of free movement and travel. Also, it is a universal right, expressed in the U.S. Constitution and in U.S. law. Thus, these rights form part of a basket of liberties which have been defended at the price of American blood. Moreover, these human rights are sacred and immutable. 

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