Reporting Foreign Income

If you a U.S. citizen or resident who worked abroad and received income from a foreign source in 2015, you must file a US tax return and report your foreign income. Here are some details:

Report Worldwide Income. By law, U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts and foreign bank and securities accounts.

Review the Foreign Earned Income Exclusion.  If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $100,800 of your wages and other foreign earned income in 2015. 

Don’t Overlook Credits and Deductions.  You may be able to take a tax credit or a deduction for income taxes paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.

Additional Child Tax Credit. You cannot claim the additional child tax credit if you file Form 2555, Foreign Earned Income, or 2555-EZ, Foreign Earned Income Exclusion.

Tax Filing Extension is Available.  If you live outside the U.S. and can’t file your tax return by the April 18 due date, you may qualify for an automatic two-month extension until June 15. This extension also applies to those serving in the U.S. military abroad. You will need to attach a statement to your tax return explaining why you qualify for the extension.

Get IRS Tax Help.  Check the international services site (https://www.irs.gov/uac/Contact-My-Local-Office-Internationally) for the types of help the IRS provides, including how to contact your local office internationally. All IRS tax tools and products are available at IRS.gov.

For more on this topic refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. You can get all IRS tax products on IRS.gov/forms.

Additional IRS Resources available at www.IRS.gov :

• Taxation of U.S. Resident Aliens
• Publication 514, Foreign Tax Credit for Individuals
• International Taxpayers

IRS YouTube Video:

• International Taxpayers - Foreign Earned Income Exclusion - English

From IRS

Bartering Produces Taxable Income and Reporting Requirements

Bartering is the trading of one product or service for another. Often there is no exchange of cash. Some businesses barter to get products or services they need. For example, a gardener might trade landscape work with a plumber for plumbing work. If you barter, you should know that the value of products or services from bartering is normally taxable income. This is true even if you are not in business.

A few facts about bartering:

• Bartering income. Both parties must report the fair market value of the product or service they get as income on their tax return.

• Barter exchanges. A barter exchange is an organized marketplace where members barter products or services. Some operate out of an office and others over the Internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. Exchanges must give a copy of the form to its members who barter each year. They must also file a copy with the IRS.

• Trade Dollars. Exchanges trade barter or trade dollars as their unit of exchange in most cases. Barter and trade dollars are the same as U.S. currency for tax purposes. If you earn trade or barter dollars, you must report the amount you earn on your tax return.

• Tax implications. Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place. Barterers may owe income taxes, self-employment taxes, employment taxes or excise taxes on their bartering income.

• Reporting rules. How you report bartering on a tax return varies. If you are in a trade or business, you normally report it on Form 1040,Schedule C, Profit or Loss from Business.

For more information, go to www.irs.gov and go to the Bartering Tax Center 

From IRS

Save on Your Taxes and for Retirement with the Retirement Savings Contribution Credit

If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Retirement Savings Contribution Credit, also known as the Saver's Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:

• Formal Name.  The formal name of the Saver’s Credit is the Retirement Savings Contribution Credit. The Saver’s Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may also be able to deduct your contributions to a traditional IRA.

• Maximum Credit.  The Saver’s Credit is worth up to $4,000 if you are married and file a joint return and up to $2,000 if you are single. The credit you receive is often much less than the maximum. This is partly because of the deductions and other credits you may claim.

• Income Limits.  You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2015 tax return if you are:
• Married filing jointly with income up to $61,000
• Head of household with income up to $45,750
• Married filing separately or a single taxpayer with income up to $30,500

• Other Rules.  Other rules that apply to the credit include:
• You must be at least 18 years of age.
• You can’t have been a full-time student in 2015.
• No other person can claim you as a dependent on their tax return.

• Contribution Date.  You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2015. The due date for most people is April 18, 2016.

• Use the Interactive Tax Assistant interview tool to help you determine if you qualify to claim the Retirement Savings Contributions Credit. https://www.irs.gov/uac/Do-I-Qualify-for-the-Retirement-Savings-Contributions-Credit%3F

From IRS

Still Time to Make Your IRA Contribution for the 2015 Tax Year

Did you contribute to an Individual Retirement Arrangement last year? Did you know there is still time THIS YEAR to contribute to your 2015 IRA? To qualify, you must make a contribution by the due date of your tax return, NOT including extensions. Here are some other IRS tips about Individual Retirement Accounts:

• Age Rules. You must be under age 70½ at the end of the tax year in order to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.

• Compensation Rules. You must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If you are married and file a joint tax return, only one spouse needs to have compensation in most cases.

• When to Contribute. You can contribute to an IRA at any time during the year. To count for 2015, you must contribute by the due date of your tax return. This does not include extensions. This means most people must contribute by April 18, 2016. If you contribute between Jan. 1 and April 18, make sure your plan sponsor applies it to the year you choose (2015 or 2016).

• Contribution Limits. In general, the most you can contribute to your IRA for 2015 is the smaller of either your taxable compensation for the year or $5,500. If you were age 50 or older at the end of 2015, the maximum you can contribute increases to $6,500. If you contribute more than these limits, an additional tax will apply. The additional tax is six percent of the excess amount contributed that is in your account at the end of the year. 

• Taxability Rules. You normally don’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.

• Deductibility Rules. You may be able to deduct some or all of your contributions to your traditional IRA. See IRS Publication 590-A for more.

• Saver’s Credit. If you contribute to an IRA you may also qualify for the Saver’s Credit. It can reduce your taxes up to $2,000 if you file a joint return. U

• New myRA. If your employer does not offer a retirement plan, you may want to consider myRA. It is a new retirement savings plan offered by the U.S. Department of the Treasury. It's safe and affordable. You can also direct deposit your entire refund or a portion of it into an existing myRA – Retirement Account.

Additional IRS Resources available from www.IRS.gov :

• Do I Qualify for the Retirement Savings Contributions Credit?

From IRS

What's the story with....Early Retirement Distributions and Your Taxes

Many people find it necessary to take out money early from their IRA or retirement plan. Doing so, however, can trigger an additional tax (early withdrawal penalty) on top of the income tax you may have to pay. Here are a few key points to know about taking an early distribution:

1. Early Withdrawals.  An early withdrawal normally means taking the money out of your retirement plan before you reach age 59½.

2. Additional Tax.  If you took an early withdrawal from a plan last year, you must report it to the IRS. You may have to pay income tax on the amount you took out. If it was an early withdrawal, you may have to pay an additional 10 percent tax.

3. Nontaxable Withdrawals.  The additional 10 percent tax does not apply to nontaxable withdrawals. They include withdrawals of your cost to participate in the plan. Your cost includes contributions that you paid tax on before you put them into the plan.

A rollover is a type of nontaxable withdrawal. A rollover occurs when you take cash or other assets from one plan and contribute the amount to another plan. You normally have 60 days to complete a rollover to make it tax-free.

4. Check Exceptions.  There are many exceptions to the additional 10 percent tax. Some of the rules for retirement plans (401K, 403B, etc) are different from the rules for IRAs.

More information on this topic is available on IRS.gov.

• IRA FAQs – Distributions (Withdrawals)
• Publication 590-B, Distributions from Individual Retirement Arrangements
• Publication 575, Pension and Annuity Income

From IRS

What to Do if You Don't Receive Your Health Care Information Forms

This year, you may receive one or more forms that provide information about your 2015 health coverage; these forms are 1095-A, 1095-B and 1095-C. The IRS does not issue these forms and cannot provide you with a copy of any of these forms.  Here's guidance about what you should do if you are expecting to receive any of these forms, but do not have them by the time you are ready to file your tax return.

Form 1095-A, Health Insurance Marketplace Statement, provides you with information about your 2015 health care coverage if you or someone in your family enrolled in coverage through the Health Insurance Marketplace. The Marketplace should have furnished Form 1095-A to you by February 1, 2016.

• If you were expecting a form and did not get one, you should contact your Marketplace. Visit your Marketplace’s website to find out the steps you need to follow to get a copy of your Form 1095-A online. The IRS does not issue and cannot provide you with your Form 1095-A.
• You should wait to file your 2015 income tax return until you receive this form. 
• Filing before you receive this form may delay your refund.  You need the information from Form 1095-A to reconcile the Premium Tax Credit if you received Advance Premium Tax Credit Payments

Form 1095-B, Health Coverage, provides you with information about your health care coverage if you, your spouse or your dependents enrolled in coverage through an insurance provider or self-insured employer last year. Coverage providers should furnish Form 1095-B to you by March 31, 2016.

• For questions about your Form 1095-B, contact the coverage provider. See line 18 of the Form 1095-B for a contact number. The IRS does not issue and cannot provide you with your Form 1095-B.
• You might not receive a Form 1095-B by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.

Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance, provides you with information about the health coverage offered by your employer.  In some cases, it may also provide information about whether you enrolled in this coverage. Employers that are required to issue Form 1095-C should furnish it to you by March 31, 2016.

• For questions about your Form 1095-C, contact your employer. See line 10 of Form 1095-C for a contact number. The IRS does not issue and cannot provide you with your Form 1095-C.
• You might not receive a Form 1095-C by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.

.

For more information on these forms, see Questions and Answers about Health Care Information Forms for Individuals at www.irs.gov

From IRS

IRS Has Refunds Totaling $950 Million for People Who Have Not Filed a 2012 Federal Income Tax Return

The Internal Revenue Service announced today that Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. To collect the money, these taxpayers must file a 2012 tax return with the IRS no later than this year's April tax deadline.

"A surprising number of people across the country overlook claiming tax refunds each year. But the clock is ticking for taxpayers who didn’t file a 2012 federal income tax return, leaving nearly $1 billion in refunds unclaimed," said IRS Commissioner John Koskinen. "We especially encourage students and others who didn't earn much money to look into this situation because they may still be entitled to a refund. Don't forget, there’s no penalty for filing a late return if you’re due a refund.”

In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. For 2012 tax returns, the window closes on April 18, 2016. The law requires the tax return to be properly addressed, mailed and postmarked by that date.

The IRS reminds taxpayers seeking a 2012 refund that their checks may be held if they have not filed tax returns for 2013 and 2014. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2012. Many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). For 2012, the credit is worth as much as $5,891.   The EITC helps individuals and families whose incomes are below certain thresholds. 

Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years 2012, 2013 or 2014 should request copies from their employer, bank or other payer. Taxpayers who are unable to get missing forms from their employer or other payer should go to IRS.gov and use the  "Get a Transcript by Mail" button to order a paper copy of their transcript and have it sent to their address of record. Taxpayers can use the information on the transcript to file their return.

From IRS

What's the story about: Claiming a Tax Deduction for Medical and Dental Expenses

Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:

• Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.

• Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income.

• Temporary Threshold for Age 65.  If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.

• Qualifying Expenses.  You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:
• The costs of diagnosing, treating, easing or preventing disease.
• The costs you pay for prescription drugs and insulin.
• The costs you pay for insurance premiums for policies that cover medical care qualify.
• Some long-term care insurance costs.

Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.

• Travel Costs Count.  You may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.

• No Double Benefit.  You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.

• Use the Tool.  Use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. It can answer many of your questions on a wide range of tax topics including the health care law.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources available at www.irs.gov :

• Schedule A (Form 1040), Itemized Deductions
• Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

IRS YouTube Video:

• Medical and Dental Expenses – English | Spanish | ASL

IRS Podcasts:

• Medical and Dental Expenses – English | Spanish

From IRS

What is the Additional Medicare Tax and Who Pays It?

Some taxpayers may be required to pay an Additional Medicare Tax if their income exceeds certain limits. The Additional Medicare TaxHere are some things that you should know about this tax:

• Tax Rate.  The Additional Medicare Tax rate is 0.9 percent.
• Income Subject to Tax.  The tax applies to the amount of certain income that is more than a threshold amount.  You base your threshold amount on your filing status. If you are married and file a joint return, you must combine your spouse’s wages, compensation or self-employment income with yours. Use the combined total to determine if your income exceeds your threshold. The threshold amounts are: 

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household	$200,000
Qualifying widow(er) with dependent child	$200,000

• Withholding/Estimated Tax. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year. If you are self-employed you should include this tax when you figure your estimated tax liability.
• Underpayment of Estimated Tax.  If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty. For more on this, see Publication 505, Tax Withholding and Estimated Tax.

Additional IRS Resources:

• Questions and Answers for the Additional Medicare Tax at IRS.gov

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax

From IRS