Latest news with #1040
Time Business News
28-06-2025
- Business
- Time Business News
Avoiding Dual Taxation: Why Renouncing Citizenship Makes Financial Sense
Introduction: When Patriotism Costs Too Much In an era of intensified global tax enforcement, increasing automatic data sharing, and expanding fiscal compliance obligations, more high-net-worth individuals (HNWIs), digital nomads, entrepreneurs, and offshore investors are taking an unprecedented step: renouncing their citizenship. While citizenship was once considered untouchable, it is now seen by many as a financial liability, particularly when it triggers dual taxation across borders. This press release from Amicus International Consulting examines why citizenship renunciation has become a financial strategy in 2025, particularly for individuals burdened by overlapping tax obligations from both their country of origin and their country of residence. It highlights which countries create the most punitive tax structures, explains the legal steps involved in renunciation, and showcases real-world case studies of individuals who chose sovereignty over taxation. What Is Dual Taxation? Dual taxation refers to a situation in which an individual is taxed on the same income, assets, or capital gains by two or more countries. This typically arises when: A person holds citizenship in one country but resides or earns income in another but Both countries have the authority to tax global income Tax treaties fail to eliminate redundancy or apply only partial credits While tax treaties exist to mitigate these issues, they are often complex, ineffective, or filled with exemptions that still leave citizens overexposed to global tax burdens. Section I: The U.S. Tax Trap—Why Americans Lead in Renunciation The United States remains the only developed country that imposes citizenship-based taxation, meaning all U.S. citizens are required to file and potentially pay taxes on their worldwide income, regardless of their place of residence. U.S. Citizens Abroad Must: File annual IRS tax returns (Form 1040) Submit FBAR (Foreign Bank Account Reports) if foreign accounts exceed $10,000 (Foreign Bank Account Reports) if foreign accounts exceed $10,000 Report foreign investments via FATCA (Form 8938) (Form 8938) Face double reporting with foreign financial institutions forced to comply under FATCA Record-Breaking Renunciations In 2024, the U.S. saw over 10,500 individuals officially give up their citizenship—a number driven not by politics but by tax exhaustion. Many cited the high cost of compliance, punitive exit taxes, and the global reach of U.S. taxation as unsustainable. The Cost of Holding U.S. Citizenship Abroad Annual Cost Category Average Expense Tax prep/compliance (basic) $3,000–$10,000+ FATCA-related legal advisory $5,000–$20,000 Penalties for non-disclosure Up to $100,000+ Time spent on reporting 40–80 hours/year Section II: Other Nations Where Dual Taxation Hurts the Most While the U.S. is the most well-known offender, other countries also create dual taxation traps, including: 1. France Taxes on global income if you are a French tax resident, even if you hold another passport. An exit tax applies to unrealized gains if you relocate. Some double-tax treaties don't cover certain investment vehicles. 2. South Africa Worldwide income is taxed unless you sever residency-based taxation via financial emigration. via financial emigration. High-income earners working abroad are still required to declare foreign income. 3. India Resident but not ordinarily resident (RNOR) status still requires disclosure of foreign assets. Double taxation persists in real estate and capital gains. 4. Canada Taxes global income for residents, even non-citizens on long-term visas. Severing ties requires proof of permanent departure, and exit taxes may apply. Who Suffers the Most? Dual taxation disproportionately affects: Retired expats living abroad on pensions or trusts living abroad on pensions or trusts Remote workers earning globally distributed income earning globally distributed income Crypto traders holding tokens in offshore jurisdictions holding tokens in offshore jurisdictions Entrepreneurs managing cross-border companies managing cross-border companies Multinational executives paid in multiple jurisdictions Section III: Renouncing Citizenship as a Financial Exit Strategy Legal Basis Renunciation is permitted under international law, and nearly every country offers a formal process. In the U.S., it involves: Appearing at a U.S. consulate Signing Form DS-4080 (Oath of Renunciation) Submitting Form DS-4079 Paying a $2,350 processing fee Completing IRS Form 8854 to mark tax exit The Exit Tax: The Final Toll The U.S. imposes an exit tax on certain renunciants if: Their average annual income tax liability exceeds ~$190,000 (indexed annually) Their net worth is $2 million+ They fail to certify 5 years of tax compliance What's taxed? Your entire global portfolio is considered sold the day before renunciation, and capital gains taxes are applied—even if no asset was sold. Other Countries With Exit Taxes: Country Exit Tax Description France Unrealized capital gains on shares and securities Canada Departure tax on worldwide property Spain Exit tax on unrealized gains above thresholds Section IV: Countries That Welcome Former Citizens With No Tax Strings The goal after renunciation is to resettle in a country that: Does not tax non-resident citizens Has a territorial tax system Offers residency or citizenship with low fiscal exposure Ideal Post-Renunciation Destinations: 1. Panama Territorial taxation Friendly Nations Visa available No tax on offshore income 2. UAE No personal income tax Strong business infrastructure Welcomes HNWIs and family offices 3. Paraguay Residency for $5,000 bank deposit No tax on foreign income Simple documentation 4. Vanuatu Zero personal income tax Citizenship by investment in under 60 days No reporting to CRS or FATCA 5. Saint Kitts and Nevis Passport issued in 90 days No global income tax Full confidentiality for offshore holdings Section V: Case Studies in Strategic Renunciation Case Study 1: Crypto Wealth and Caribbean Reinvention An early Bitcoin investor based in California relocated to the UAE in 2022. After consulting Amicus, he renounced U.S. citizenship in 2024 and acquired Saint Kitts citizenship. By 2025, he was fully non-resident, held no tax obligations to the U.S., and legally realized token gains via offshore trusts. Case Study 2: The Consultant Who Outgrew the IRS A Canadian-American strategy consultant living in Germany found herself filing returns in three countries—each claiming taxing rights. After renouncing U.S. citizenship in Frankfurt, she streamlined her tax exposure and relocated to Portugal under the Non-Habitual Resident (NHR) program. Her annual tax advisory bill dropped by 75%. Case Study 3: Dual Taxed and Denied An Indian national working remotely in Dubai continued facing tax scrutiny from Indian authorities over U.S. stock dividends. After giving up Indian citizenship and securing Grenadian CBI status, he legally shifted his financial center of gravity and opened new offshore accounts without fear of dual reporting or seizure. Section VI: Common Misconceptions Misconception Reality 'I'll become stateless' Most people secure second citizenship before renouncing 'Renunciation eliminates past taxes' You must still file and pay prior obligations before exit 'My bank will block me' New citizenship often expands financial options, not shrinks them 'It's illegal to avoid tax' Legal tax minimization via renunciation is 100% compliant with law Section VII: The Role of Amicus International Consulting Amicus provides expert legal and financial advisory for those seeking to escape dual taxation through legal channels: U.S. citizenship renunciation support Second citizenship planning and acquisition Asset protection pre-exit via offshore trusts Exit tax mitigation Banking passport solutions CRS/FATCA detachment strategies We do not engage in tax evasion. All services are structured around legal transparency, cross-jurisdictional protection, and long-term asset security. Why Timing Matters Renunciation isn't a quick fix—it's a strategic transition that must be executed with precision. Acting in the wrong tax year, renouncing before securing alternative banking, or failing to comply with prior reporting can trigger audits, fines, or even international asset freezes. Conclusion: The Price of Freedom—or the Cost of Staying? In 2025, citizenship is no longer a static identity—it is a financial choice. For many, staying tied to countries with expansive, outdated, or punitive tax systems is simply too costly. By legally renouncing citizenship and choosing a more efficient jurisdiction, individuals are reclaiming control over their wealth, privacy, and global mobility. If dual taxation is draining your financial freedom, renunciation may be the smartest investment you'll ever make. 📞 Contact InformationPhone: +1 (604) 200-5402Email: info@ Website:
CNBC
15-06-2025
- Business
- CNBC
IRS: Avoid ‘falling behind' by making second-quarter estimated tax payment by June 16
The second-quarter estimated tax deadline is June 16 — and on-time payments can help you avoid "falling behind" on your balance, according to the IRS. Typically, quarterly payments apply to income without tax withholdings, such as earnings from self-employment, freelancing or gig economy work. You may also owe payments for interest, dividends, capital gains or rental income. The U.S. tax system is "pay-as-you-go," meaning the IRS expects you to pay taxes as you earn income. If your taxes are not withheld from earnings, you must pay the IRS directly. Here's a look at other stories affecting the financial advisor business. The quarterly tax deadlines for 2025 are April 15, June 16, Sept. 15 and Jan. 15, 2026. These dates don't line up with calendar quarters and so can easily be missed, experts said. The second-quarter deadline in particular "often sneaks up on people," especially higher earners or business owners with irregular income, said certified financial planner Nathan Sebesta, owner of Access Wealth Strategies in Artesia, New Mexico. "I often see clients forget capital gains, side income, or large distributions that were not subject to withholding," Sebesta said. Quarterly payments are due for individuals, sole proprietors, partners and S corporation shareholders who expect to owe at least $1,000 for the current tax year, according to the IRS. The threshold is $500 for corporations. If you skip the June 16 deadline, you could see an interest-based penalty based on the current interest rate and how much you should have paid. That penalty compounds daily. On-time quarterly payments can help avoid "possible underpayment penalties," the IRS said in an early June news release. Employer withholdings are considered evenly paid throughout the year. By comparison, quarterly payments have set time frames and deadlines, said CFP Laurette Dearden, director of wealth management for Dearden Financial Services in Laurel, Maryland. "This is why a penalty often occurs," said Dearden, who is also a certified public accountant. You can avoid an underpayment penalty by following the safe harbor guidelines, according to Dearden. To satisfy the rule, you must pay at least 90% of your 2025 tax liability or 100% of your 2024 taxes, whichever is smaller. That threshold increases to 110% if your 2024 adjusted gross income was $150,000 or more, which you can find on line 11 of Form 1040 from your 2024 tax return. However, the safe harbor protects you only from underpayment penalties. If you don't pay enough, you could still owe taxes for 2025, experts say.
Forbes
23-05-2025
- Business
- Forbes
IRS Says To Disclose Aggressive Tax Positions, Is It An Audit Trigger?
A stock photo of a Red Audit stamp on a 1040 US individual income tax return. Photographed at 50mp ... More with the Canon EOS 5DSR and the 100mm 2.8 L lens. The IRS wants you to 'disclose' if you do not have at least ''substantial authority'' for your tax position. Disclosure is more than the usual listing of income or expense. It is simply an extra explanation. How much extra varies considerably, not only in legal requirements but also in practice. Sometimes, the IRS says disclosure is required. You might be claiming legal expenses for a fight with your siblings over an heirloom. Or you might be claiming that you had an ordinary loss rather than a capital one when stock became worthless. There are almost infinite circumstances in which disclosure could be required, yet many people do not want to draw attention to their tax returns. Disclosure sounds like it exposes you to extra audit risk, and no one wants a tax audit, since extra audit attention is the last thing anyone wants. Ironically, though, disclosure can actually reduce risk in some cases. So what is disclosure anyway? Suppose that you are writing off the cost of getting your law degree. Almost all case law is against that deduction because a law degree qualifies you for a new profession. So, if you claim it and you want to avoid penalties if the IRS disallows it, you must disclose it. You do so because your position is weak, and you are pointing out to the IRS that you are claiming it nevertheless. Yes, that sounds like you are asking for the IRS to audit you or to disallow the deduction. Technically, you do not have to disclose. But disclosing is a way to get out of penalties, and it can also prevent the IRS from extending the usual three-year limitations period for assessment of income tax. No one wants to be audited, and it pays to know the rules. The IRS audit period is usually three years, but it can be six or more in some cases. If you omit more than 25 percent of the gross income from your tax return, the normal IRS three-year statute of limitations is extended to six years. However, in determining whether you omitted income from your return, the IRS counts what you disclosed too, even if you say it isn't taxable. So, you help yourself by disclosing. There is also a penalty for a substantial understatement of income tax. An individual who understates his tax by more than 10 percent or $5,000, whichever is greater, can end up with this penalty. One way to avoid the penalty is to adequately disclose the item. All you need is disclosure plus a reasonable basis for your tax position. How do you disclose a tax position to be sure you aren't hit with a substantial understatement penalty? The classic way, which the IRS clearly prefers, is by form. There are two disclosure forms, IRS Form 8275 and IRS Form 8275-R. Form 8275-R is for positions that contradict the law, so it is best avoided. Form 8275 (without the R) is a common form and is commonly filed. Most tax returns attaching Form 8275 are not audited, so the form does not automatically trigger an audit. Check out the IRS views about Form 8275. But how much detail to provide is another matter. Some people go on for pages on Form 8275, and even send attachments. Some proposed Forms 8275 are long-winded arguments about the law, sometimes all in capital letters, citing many legal authorities. That is not appropriate material for a disclosure, nor are attachments. If the IRS wants your legal agreement or contract, the IRS will ask for it. In short, going overboard in a disclosure seems unwise. You are required to disclose enough detail to tell the IRS what you are doing. But keep it short and succinct.
Forbes
24-04-2025
- Business
- Forbes
Experts Reveal 3 CommonTax Mistakes That Could Cost You Big
Frustrated shocked african man having problems, feel confused looking at laptop screen at office As tax season comes to a close each year, many Americans rush to meet the April 15 deadline and celebrate when they received a big refund. But according to tax experts, these popular strategies might actually be costing you money. Mark J. Kohler, C.P.A., J.D.,Founding and Senior Partner at KKOS Lawyers, specializing in tax, legal, wealth, estate, and asset protection planning and Timothy Wingate Jr., an IRS-certified tax specialist and founder of G+F Business & Financial Consulting, say taxpayers often fall for three common traps — and correcting them can lead to smarter financial decisions all year long. Here's what people get wrong about taxes and how you can take a more strategic approach. While the April 15 deadline is real, filing your return on that day isn't always required — or even wise. 'Contrary to popular opinion, it's not the end of the world if you don't file your personal 1040 tax return by April 15,' Kohler said. 'In fact, it can be very strategic to not file and instead submit an extension. Getting an extension gives you time to get all your records in order.' Timothy Wingate Jr., an IRS-certified tax specialist and founder of G+F Business & Financial Consulting, agrees—and offers practical advice for how to do it right. Here's how to file an extension the smart way, according to Wingate: Filing an extension gives you until October 15 to submit your return—but remember, it doesn't delay the deadline to pay any taxes owed. To avoid penalties or interest, it's smart to send a payment by April 15, even if your paperwork isn't ready. Most people celebrate a large refund check — but Kohler says that mindset needs to change. 'Our number one cost in life is taxes,' he said. 'If we can minimize that, we can deploy that money in other areas that make us money. That's the concept of tax planning.' Rather than aiming for a big refund, aim to owe nothing — and keep more of your paycheck throughout the year. Talk to a tax advisor about adjusting your withholdings, contributing to retirement accounts, or making strategic investments to reduce your taxable income. With nearly 40% of Americans working a side hustle, treating that income seriously is more important than ever. 'Side hustles aren't just income streams — they're tax planning opportunities,' Kohler said. 'But too many people miss out because they don't keep records or claim expenses.' 'Keep separate accounts, track all expenses, and consult a tax professional,' he said. 'That way, you can legally deduct business expenses and potentially lower your overall tax bill.' Accurate record-keeping is essential to claim these deductions — and to protect yourself in case of an audit. Don't wait until tax season to think about your tax strategy. Avoiding these common mistakes — filing blindly by April 15, celebrating big refunds, and ignoring your side hustle's business status — can help you keep more of your money. Instead, work with a trusted tax advisor, file smarter (not faster), and take full advantage of deductions and planning strategies year-round. Your future finances will thank you.
Forbes
26-03-2025
- Business
- Forbes
Crypto Tax Season: 5 Must-Know Tips And 3 Smart Moves For Next Year
Bitcoin resting on a calculator beside IRS Form 1040, symbolizing cryptocurrency trading and ... More individual income tax obligations. Concept: it's time to pay taxes on crypto transactions. Tax season is in full swing, and if you've touched crypto—whether through buying, selling, staking, or trading NFTs—you need to know: the IRS is watching. In recent years, the Internal Revenue Service (IRS) has increased its scrutiny of digital asset activity. It classifies cryptocurrencies and other digital assets, including non-fungible tokens (NFTs), as property—not currency—for tax purposes. This distinction carries significant implications: property is subject to capital gains taxation when sold or exchanged, unlike traditional currencies. So even though 'currency' is in the name, crypto is treated more like stocks or real estate than dollars or euros in the eyes of the IRS. For anyone who owns or transacts in digital assets, proper tax reporting is no longer optional. Let's break down the five key things you must do before the filing deadline of April 15, 2025, and explore three proactive steps you can take now to make tax time next year significantly easier. If you are a bookkeeper, CPA, or enrolled agent preparing returns or advising clients who touch crypto in any capacity, you must get up to speed—immediately. Digital assets are no longer a fringe topic; they are increasingly mainstream financial instruments with complex and unique tax implications. Failure to ask the right questions, understand the mechanics of digital asset transactions, or properly classify and report these events can expose your client to penalties, audits, and unnecessary scrutiny. More importantly, it may expose you to professional liability. Some exchanges issue Forms 1099-B, 1099-K, or newer iterations like 1099-DA, while others do not issue tax forms at all. Inconsistent reporting standards mean that relying solely on client-provided tax documents from platforms like Coinbase, Binance, or Kraken may lead to major gaps in reporting. In 2026, mandatory broker reporting requirements will further complicate the landscape; but they won't necessarily simplify it. That's why using crypto transaction tracking tools—especially those that integrate directly with professional tax preparation software like UltraTax, Drake, or Lacerte—is more than a convenience. It's a necessity. Tools like CoinTracker, Koinly, and TaxBit can aggregate wallet and exchange activity, classify transactions, and generate compliant tax reports that reduce the burden on your practice and improve audit resilience. If you haven't yet built crypto fluency into your tax prep workflow, now is the time. A new generation of clients is already there, and they are counting on you to be ready. Right near the top of your individual tax return (Form 1040), the IRS now includes a critical question: 'At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?' This question is not rhetorical. You are required to answer it, and accuracy is essential. You must check 'Yes' if you: If, however, you only purchased and held digital assets without using, trading, or selling them, you may check 'No.' But when in doubt, consult a tax professional who understands the nuances of digital assets. Taxable events involving digital assets are not limited to profitable trades. The IRS clearly states: 'If you have digital asset transactions, you must report them whether or not they result in a taxable gain or loss.' Key taxable events include: Capital gains or losses should be reported using Form 8949 and Schedule D, while income from crypto-related activities may appear on Schedule 1 (for supplemental income) or Schedule C (if you're self-employed). Importantly, even receiving a digital asset without selling it (as in the case of airdrops or staking rewards) can generate a tax liability because it is treated as ordinary income upon receipt. Non-fungible tokens, or NFTs, represent unique digital assets often associated with art, music, or digital media. IRS guidance (Notice 2023-27) clarifies that certain NFTs may qualify as "collectibles" under the tax code. This matters because gains from the sale of collectibles are subject to a maximum 28% capital gains tax rate, which is higher than the typical long-term capital gains rate for other assets. So, whether you're flipping a profile picture NFT or holding a tokenized piece of digital art, you must report any gain or loss. And if the underlying asset is considered a collectible, the tax rate may be higher. If 2024 was a difficult year in the markets for you, you may be able to reduce your tax bill through tax-loss harvesting. This strategy involves realizing losses to offset realized gains. You can: This applies to: The IRS also issued guidance in 2023 that may support claims of loss for worthless or abandoned assets, though you should speak with a tax advisor about how best to apply these rules. One of the most overlooked aspects of crypto taxation is recordkeeping. You, as the taxpayer, are responsible for tracking the following: This information is required to calculate your gains or losses and to determine your tax liability. 'Keep records. Calculate your capital gain or loss. Determine your basis. Report on the correct form.' IRS Digital Assets FAQ To make this easier, consider using digital tools such as CoinTracker, Koinly, or TaxBit to aggregate and reconcile your transactions across wallets, exchanges, NFTs, and decentralized finance (DeFi) platforms. Many tax preparation headaches can be avoided by syncing your wallets and exchanges with crypto tax software early and often. Most tax platforms allow you to: Choose software that supports: The goal is to eliminate year-end surprises and automate data entry to the greatest extent possible. Your method for calculating capital gains can significantly impact your tax liability. The IRS allows several options: For tax year 2025, Revenue Procedure 2024-28 clarifies how to assign basis across wallets and exchanges. Planning with your CPA or tax advisor can help you make the most of this flexibility. Beginning with the 2025 tax year, crypto "brokers" will be required to file Form 1099-DA or similar tax documents with the IRS. These reports will include: Although this requirement is not mandatory for the 2024 tax year, some platforms have already begun issuing 1099 forms voluntarily. Going forward, discrepancies between your self-reported transactions and third-party reports may trigger IRS inquiries. If you receive a 1099 form, make sure it matches your own records. If you don't receive one, you are still obligated to report your gains, losses, and income. Final Thoughts Crypto is no longer a niche corner of the financial system, and regulators have taken notice. The IRS has expanded its enforcement capabilities, hired experts, and built tools to monitor digital asset activity. If you're a: then, you are subject to tax rules that are growing in complexity and scope. Your best defense? Education, preparation, and (well informed!) professional guidance. All tax advisers are NOT created equally, so choose wisely. Start by keeping detailed records, staying updated on regulatory developments, and consulting tax professionals who understand the evolving crypto landscape. Visit the IRS Digital Asset Resource Page for the latest publications and FAQs. And remember: what you don't know can hurt you—but what you do now can save you next April.
