Posts Tagged CPA

Finance: 2014 Taxes For Contractors, By CPA Luke Fairfield

It is that time again and Luke Fairfield has put out his yearly newsletter for contractors. This stuff is extremely informative and Luke specializes in all the particulars unique to our industry. For your convenience I will also put this in the Taxes For Contractors page if you need to find it quickly. Check it out. –matt

 

Greetings!

For all you ex-pats, foreign contractors and overseas residents out there I hope this letter finds you well. In an attempt to keep you current with your tax filings I am sending out this letter as a year-end reminder that 2014 is almost over. As always feel free to pass this email on to anyone in your situation who could use the help or anyone that I missed on this email. As always, I will do my best to minimize your tax bill and provide relevant advice for your situation.

Important Updates for 2014:
1) Please visit our website at www.fairfieldhughes.com. The website includes a learning center with answers to frequently asked questions. We hope you find it to be an excellent resource.
2) Our in house attorney Zac Silides can assist with the preparation, revision or updating of a trust or will and can also assist with other business related legal needs such as the creation of new business entities. Fees for these services are very reasonable based on a comparison to other options.
3) Information update related to IRS audits of the foreign income exclusion:
a. It is critically important that you retain copies of your Diplomatic passport and regular passport, overseas orders, LOAs, overseas expense receipts, VISAs and anything else that can prove you were overseas in a combat zone. Keep these for at least 5 years. Do not turn in your passports without making a scanned, color copy of them.
b. Should they choose to do so under audit, the IRS now has the ability to obtain an entry report from CBP and Homeland Security to verify your time in the US.
c. If you are claiming the exclusion under the physical presence test (330 day rule), some IRS offices are now requiring that your “abode” be outside the US to qualify. Unfortunately this term is not defined in the tax code and the IRS is using some very old court case ruling to say that it is where you maintain your social and economic ties. For those of you with family in the US, this can raise an issue.
d. In short, the foreign income exclusion has become a riskier claim as the IRS does not issue specific enough guidelines on many foreign income exclusion issues. We do not know with any degree of certainty how any audit will conclude as results vary widely by auditor.
4) FATCA. The IRS has enacted many regulations regarding foreign bank accounts and foreign financial instruments. If you have a foreign bank account with a value in excess of $10k or foreign financial holdings in excess of $50k, you may have a filing requirement to be compliant and avoid possible penalties.
5) Afghanistan Tax.
a. In 2014 Aegis was withholding a tax on income earned in Afghanistan by foreign personnel. Several other companies withhold Afghanistan tax on the employee’s behalf as well. If you are aware of foreign tax being withheld, please inform us of this fact so we can ensure you get proper credit.
b. Triple Canopy and Global withhold Iraq tax on income earned in Iraq.
c. Tax paid to a foreign country can be claimed as a credit on your US tax return (Form 1116).
d. The credit can be combined with the foreign income exclusion if you qualify but the foreign tax credit is partially reduced when both are used, making this a complex calculation.
6) Indonesian Tax. Triple Canopy employees in Indonesia present for more than 183 days have a whole new set of issues to be aware of.
a. You are currently having something called “Hypo” or hypothetical tax withheld from your paycheck. This amount will cover your US and Indonesian tax obligation in most cases.
b. TC has provided a description of how your tax obligation to each country will be calculated and handled but it is not easy reading and is complex as it varies by situation.
c. The CPA firm KPMG has been retained to prepare both your Indonesian and US returns. If you plan to use this service, I am happy to look over your returns before they are filed to make sure you received all the benefits available to you. KPMG is a huge worldwide firm who may not be overly familiar with the contract security work profession. Secondly, they will not be as responsive to each of you and your individual questions which concerns me as I have always made a point of getting each of you the answers needed immediately.

Based on the most common questions I was asked last year, let me briefly cover the points most relevant to your situation. The following is a rundown of how your tax situation differs from someone working in the states.

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Finance: 2013 Taxes For Contractors, By CPA Luke Fairfield

This is the annual letter that Luke sends out, that is filled with excellent tips for this year’s tax season. What is new this year is that Luke has a website you can go to for your own research. When he gets a Facebook or any other social network stuff up, I will post that as well.

For tax news, Luke is up on the whole tax thing going on in Iraq and how that is playing out for contractors. Also he has some valuable tips for how to deal with audits–meaning use a professional to deal with the IRS! Check it out and please contact Fairfield Hughes at their website if you want services. I am not working at this office and I am not the guy to ask if you have tax questions.

Also, I have posted the 2013 newsletter under the Taxes For Contractors tab up top so you can find it easily. A quick search and you will find my past postings on taxes as well. –Matt

 

 Greetings!

For all you ex-teams, ex-pats, ex Special Forces, security contractors and operators out there I hope this letter finds you well.  In an attempt to keep you current with your tax filings I am sending out this letter as a year-end reminder that 2013 is almost over.  There are some very important changes this year that could impact many of you as it relates to the IRS’s continued, heavy audit interest in the foreign income exclusion.  If you read nothing else, read the section below updating you on this topic.  As always feel free to pass this email on to anyone in your situation who could use the help or anyone that I missed on this email. As always, I will do my best to minimize your tax bill and provide relevant advice for your situation.

Important Updates for 2013:
1) Please check our website at www.fairfieldhughes.com.  It has some valuable info and answers to many frequent questions.
2) It is critically important that you retain copies of your Diplomatic passport and regular passport, overseas orders, LOAs, overseas expense receipts, VISAs and anything else that can prove you were overseas in a combat zone.  Keep these for at least 5 years.  Do not turn in your passports without making a scanned, color copy of them.
3) Should they choose to do so under audit, the IRS now has the ability to obtain an entry report from CBP and Homeland Security to verify your time in the US.
4) Zac Silides has joined our firm and is a licensed attorney.  He is able to assist with many business tax issues such as starting business entities as well as preparing family and living trusts.
5) Iraqi tax withholding.  Employees of Triple Canopy as well as Global have had Iraqi tax withheld on their salary in 2013.  Your company facilitated this by reducing the amount of federal withholding.
a. You are allowed to claim a credit for the Iraqi tax paid which directly offsets federal income tax.
b. Be aware that if you claim the foreign income exclusion, you are not allowed as large of a foreign tax credit.
6) Audits on the foreign income exclusion have greatly increased.  If you worked for Blackwater in 2009 chances are you were audited.  With Triple Canopy taking over the Blackwater contract, IRS audits followed this change and 90% of all audits on our clients were current or ex TC employees. If you have not heard of a teammate or fellow employee who has been through an audit I would be surprised.  These audits continue to spread from ex-Blackwater and TC employees to nearly anyone filing for the foreign income exclusion.  As a result, I would recommend being even more cautious in claiming the foreign income exclusion in 2013.  After a year of dealing with these audits, the below points stand out as noteworthy and important.
a. It is EXTREMELY important that you contact me in the event that you receive an audit notice.  Do not make contact with the auditor for the same reason that you do not file your own tax return.  Leave it to professionals with experience dealing with these situations; the results will almost certainly be better with less risk to you.

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Cool Stuff: Taxes For Contractors 2012

Here it is folks. Every year Luke Fairfield puts out these excellent letters that detail all the specific tax issues related to our profession for that tax year. So read through it and contact him or his partner Chris if you have any questions.

The stuff to watch out for this year are audits. Like Luke mentioned below, I have heard of more and more audits happening in our industry. The government is looking for any ‘loose change’ and taxes owed, so it pays to get prepared with this stuff. If you do get audited, contact Luke immediately and let him work the problem. I will keep this letter posted in my Taxes For Contractors page up top in the blue bar. –Matt

 

Greetings!

For all you ex-teams, ex-pats, ex special forces, security contractors and operators out there I hope this letter finds you well. In an attempt to keep you current with your tax filings I am sending out this letter as a year-end reminder that 2012 is almost over. There are some very important changes this year that could impact many of you as it relates to the IRS’s new audit interest in the foreign income exclusion. If you read nothing else, read the section below updating you on this topic. As always feel free to pass this email on to anyone in your situation who could use the help or anyone that I missed on this email. As always, I will do my best to minimize your tax bill and provide relevant advice for your situation.

Important Updates for 2012:
1) Audits on the foreign income exclusion have greatly increased. If you worked for Blackwater in 2009 chances are you were audited. Count yourself lucky if you were not as you are in the minority. If you have not heard of a teammate or fellow employee who has been through an audit I would be surprised. These audits have spread from ex-Blackwater employees to nearly anyone filing for the foreign income exclusion. As a result, I would recommend being more cautious in claiming the Foreign Income Exclusion in 2012. After a year of dealing with these audits, the below points stand out as noteworthy and important.
a.It is EXTREMELY important that you contact me in the event that you receive an audit notice. Do not make contact with the auditor for the same reason that you do not file your own tax return. Leave it to professionals with experience dealing with these situations; the results will almost certainly be better with less risk to you.
b.If you filed for the foreign income exclusion under the bona fide residency method and your location was Iraq or Afghanistan, under audit, the IRS will likely take the position that you were not a bona fide resident for tax purposes and will disallow the claim. A residency VISA from your host country is not enough to qualify. Yes, I am quite aware that everyone around you tells you they file as bona fide residents and have never had a problem. To that I can only ask if you have ever been fishing and if you have, did you catch all the fish?

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Finance: Taxes For Contractors 2011, By Luke Fairfield CPA

These newsletters come out about this time every year and they are a wealth of information. Probably the big one here is Luke’s suggestion of setting up a S Corp. Especially with the increased scrutiny by the IRS on those who have been claiming the foreign income exclusion.

Check it out below and definitely email him and his team if you have questions or are looking for a CPA. As you can see, he is a busy guy and Luke has partnered with another CPA to keep up. I also put his newsletter in the blue bar up top under Taxes For Contractors if you need to find it again. –Matt

 

Greetings!

For all you ex-teams, ex-pats, ex special forces, security contractors and operators out there I hope this letter finds you well.  In an attempt to keep you current with your tax filings I am sending out this letter as a year end reminder that 2011 is almost over.  There are some important new tax law changes this year such as the foreign tax being withheld in Afghanistan and increased IRS scrutiny of the foreign income exclusion and on Schedule C filers which I will address below.  Feel free to pass this email on to anyone in your situation who could use the help or anyone that I missed on this email. As always, I will do my best to minimize your tax bill and provide relevant advice for your situation.

Important Updates for 2011:
1) Audits on the foreign income exclusion have greatly increased. Those of you filing a Schedule C as an IC seem to be of particular interest.  This is due to the IRS opening a new office specifically dealing with this type of tax return.  In a typical audit, you are asked to provide some or all of the following:
a. A letter from your employer stating your work location and job duties for the year.
b. Letter of Authorization from the DOD stating your qualification to work overseas.
c. Copy of your passport to include any visa stamps.
d. A schedule of days outside the US for the period in question.
e. A copy of receipts for expenses claimed as deductions.
f. A copy of your work contract.
g. If claiming bona fide residency, they want to know where you lived, for how long and if it was your intention to remain overseas for a certain period.
2) Based on these audits, I strongly recommend starting an S Corporation for anyone who is an IC getting a 1099.  This appears to greatly reduce audit risk.  Additionally, if you do not think you could provide the above information or prove your qualification think twice about claiming it as you will most likely incur a 10 – 20% penalty on the additional tax due.

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