Sacramento Tax Attorney
Like most people living in and around Sacramento, California you work hard and endeavor to pay your taxes on time and in full. However sometimes mistakes are made. In some circumstances it is the tax payer who makes an error by failing to pay or file taxes. However in other circumstances the mistake may have been made by the IRS or by the state taxing authority such as the California Franchise Tax Board (FTB).
Understanding the tax obligations you hold and must satisfy is the first step to understanding whether the alleged error was on your part or by the IRS or FTB. Working with an experienced tax attorney such as the lawyers of the NewPoint Law Group, LLP, can ensure that your interests are advocated in a clear an effective manner to the taxing agency or the tax court.
What Tax Obligations Does An Individual Hold?
Practically all United States citizens, legal permanent residents and others with sufficient connections to the United States are required to file and pay income taxes every year. While taxpayers are only obligated to file if their income exceeds a certain level, the threshold is so low that the vast majority of taxpayers will indeed have a tax filing obligation. For a sole filer under age 65 in 2015, $10,150 or more in income reported on a W-2 will give rise to a tax presorting obligation. Similarly, if you work as an independent contractor and show $400 or more in 1099 income, you will also have a tax reporting obligation. Unless the taxpayer files for an extension by completing form 4868, income taxes must be filed by April 15 every year a reporting obligation exists. Even if you do not owe any tax, the only way to receive your tax refund is to file.
Along with the duty to file taxes, taxpayers also have a duty to pay taxes. All taxes due and owning must be paid by the April tax deadline or the taxpayer is likely to owe additional fines and penalties. It is also important to note that an extension of time to file is not an extension of time to pay. Even if a taxpayer properly files for an automatic extension, he or she must still make an estimated tax payment. If this estimated tax payment is at least 90 percent of the amount due and owing, the taxpayer is exempted from any additional fines, interest, or penalties.
Both the failure to file taxes and the failure to pay taxes are violations of the U.S. Tax Code. Individuals that fail to satisfy these duties may find themselves facing a tax enforcement action or, if willful or fraudulent conduct is perceived, criminal tax charges.
Must You Report Assets Held in Offshore Accounts?
In today’s world and in most cases Americans must report foreign accounts and foreign assets to the United States government due to obligations created by report of Foreign Bank and Financial Accounts (FBAR) and Foreign Account & Tax Compliance Act (FATCA). Under these laws, U.S. taxpayers that fail to disclosure foreign accounts when a duty to do so exists can face harsh penalties. In the case of a willful FBAR violation, penalties often exceed the original account value.
For FBAR, taxpayers must file FinCEN Form 114 via the Bank Secrecy Act’s e-portal when the offshore account or accounts are valued at greater than $10,000. While most foreign assets are included in this computation, there are certain assets that are exempt from being included in the valuation of the account. These assets include certain accounts jointly owned by spouses, foreign financial accounts owned by a government entity, owners and beneficiaries of a U.S.-based IRA, certain individuals with signature authority over the account only. An experienced tax attorney can assist in the valuation of your accounts, determining whether a filing obligation exists, and can work to mitigate past offshore tax mistakes.
For FATCA, the filing threshold is less clear because one’s obligation to disclose is based both on tax filing status and whether one is living in the United States or a foreign country. As a general rule, joint filers can hold more assets than single filers before a reporting obligation arises. Similarly, individuals living abroad also receive a heightened asset threshold. Therefore, while married taxpayers filing jointly and living abroad can hold the greatest amount of assets before a filing obligation arises, single filers living in the United States can hold the least.