If the IRS knows how much money we owe, why do we need to fill out returns?
Because the IRS doesn't know how much money you owe. They know approximately what you made, and they know a little bit about some of your deductions, but they don't know whether and to what extent you are entitled to additional deductions or credits, or whether and to what extent you earned money from transactions not reported to the IRS. Even on the transactions that were reported to the IRS, the IRS doesn't always know how much of that income is actually taxable - or at what rate.
Which IRS forms do US expats need to fill out?
That would depend on their personal situation, but should they actually have a full financial life in another country including investments, pensions, mortgages, insurance policies, a small business, multiple bank accounts…The reporting alone can be bankrupting, and that is before you get on to actual taxes that are punitive toward foreign finances owned by a US citizen and god help you if you make mistake because penalties appear designed to bankrupt you.US citizens globally are renouncing citizenship for good reason.This is extracted from a letter sent by the James Bopp law firm to Chairman Mark Meadows of the subcommittee of government operations regarding the difficulty faced by US citizens who try to live else where.“ FATCA is forcing Americans abroad into a set of circumstances where they must renounce their U.S. citizenship to survive.For example, suppose you have a married couple living in Washington DC. One works as a lobbyist for an NGO and has a defined benefits pensions. The other is self employed in a lobby firm, working under an LLC. According to the IRS filing requirements, it would take about 15 hours and $280 to complete their yearly filings. Should they under report income, any penalties would be a percentage of their unreported tax burden. The worst case is a 20% civil fraud penalty.Compare the same couple with one different fact. They moved to Australia because the NGO reassigned the wife to Sydney. The husband, likewise, moves his business overseas. They open a bank account, contribute to the mandatory Australian retirement fund, purchase a house with a mortgage and get a life insurance policy on both of them.These are now their new filing requirements:• Form 8938• Form 3520-A• Form 3520• Form 5471 (to be filed by the husbands new Australian corporation where he is self employed)• Form 720 Excise Tax.• FinCEN Form 114The burden that was 15 hours now goes up to• 57.2 hours for Form 720,• 54.20 hours for Form 3520,• 61.22 Hours for Form 3520-A.• 50 hours estimate for Form 5471For a total of 226.99 hours (according to the IRS’s own time estimates) not including time to file the FBAR.The penalties for innocent misfiling or non filings for the above foreign reporting forms for the couple are up to $50,000, per year. It is likely that the foreign income exclusion and foreign tax credit will negate any actual tax due to the IRS. So each year, there is a lurking $50,000 penalty for getting something technically wrong on a form, yet there would be no additional tax due to the US treasury.”
How do I set up an installment agreement with the IRS?
Go to the IRS website. I will assume that you are talking about 1040. I you owe $50k or less you can go to An official website of the United States government Type “installment agreement” in the search box. You may be able to pay online but first you must create an account. Make sure you have your return that created the balance due. Also have with you your bank account if you wish to have it debited automatically or else you may go every month to the site and pay. If you wish to do it by mail because you owe more than 50K go to An official website of the United States government and in the search box type in “Form 9465” If it asked you how much to pay each month divide what you owe the total by 72 months. If you cannot pay that minimum amount, begin to complete form 433-F. But that will be of another story. Your payment should be higher. if it asked the date to debit the account, you have 3 choices, 1st, 15th, or 28th. Again you need your bank info. Answer the remaining question like how may cars you are making payments, etc. Send the 9545 with the user fee. Normally the user fee is a separate fee about $107. Mark user fee on the memo portion of the check together with your SSN. Send that to where you got your notice. If by the end of 4 weeks, you get a due process letter, answer it right away because the clock is ticking within 30 days. This means you have the right to appeal judicially. If you don’t respond, after 30 days, it becomes an equivalency hearing, which means you only can appeal within the confines of the IRS. All correspondence to the IRS especially installment agreements must be sent certified with a return receipt. One more thing, you need to be current on subsequent years while the installment is in force. If you have received from a Revenue Officer, you will be reminded of your rights as a tax payer. Work with these guys, forget your rep. The Revenue Officers will help you on your collection information statement. Be truthful and give complete answers. You also should know that you are entitled to a courteous and professional service. If you are not getting it, ask the R/O for his or her manager. Don’t volunteer any unasked info. If the R/O knocks on your door, make sure that if you are not ready, ask them politely if you can set up an appt.
Does every adult US citizen have to fill out an IRS tax return?
They don’t.If you earn no income. you don’t have to fill out a return.If you earn under a certain amount, you don’t have to fill out a return.If you earned money and had an adequate payroll deduction to earn a refund, you don’t have to fill out a return (you would however, forfeit your refund by doing so).Whether to file a return depends on your income, your situation and in some cases, whether you wish to collect a refund due to you.
For taxes, does one have to fill out a federal IRS form and a state IRS form?
No, taxes are handled separately between state and federal governments in the United States.The IRS (Internal Revenue Service) is a federal, not state agency.You will be required to fill out the the necessary tax documentation for your federal income annually and submit them to the IRS by April 15th of that year. You can receive extensions for this, but you have to apply for those extensions.As far as state taxes go, 41 states require you to fill out an income tax return annually. They can either mail you those forms or they be downloaded from online. They are also available for free at various locations around the state.Nine states have no tax on personal income, so there is no need to fill out a state tax return unless you are a business owner.Reference:www.irs.gov
When dissolving an LLC do you need to fill out IRS Form 966?
The answer will be yes or no depending on how your entity is recognized for tax purposes. An LLC is not a recognized entity by the IRS. By default, a single-member LLC is organized for tax purposes as a sole proprietorship and a partnership for tax purposes if there is more than one member. However, you can make an election to be taxed as a C Corporation (i.e., an LLC for legal purposes that is taxed as a C Corporation for tax purposes).You must complete and file form 966 to dissolve your LLC if you have elected to be a C Corporation or a Cooperative (Coop) for tax purposes. S Corporations and tax-exempt non-profits are exempt from filing this form (see here).If you are organized for tax purposes as an S Corporation you would file your taxes via form 1120S for the last time and check the box indicating that your return is a “Final Return.” Same is true for a Partnership, but with form 1065.On a state and local level, best practice is to check with your state and local agencies for requirements.For digestible information and tools for understanding how the tax landscape affects your business, visit Financial Telepathy