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
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.