Uncategorized

7 Must-Know Tax Tips for Global Entrepreneurs in 2024

You’re living your best life abroad, but there’s a nagging question in the back of your mind: Do I still have to deal with U.S. taxes?

Well, strap in because I’ve got the lowdown for you—and trust me, it’s not as mind-boggling as it seems.

💡 Tax Residency

Where you rest your head matters for U.S. taxes. If you’ve got a U.S. Green Card or Passport, Uncle Sam wants to know about all your income, whether it’s from a cozy corner in the U.S. or halfway across the globe. But, if you’re living that free-spirited life without these, how you make your money will dictate your tax status.

Becoming a U.S. Resident

Want to join the tax-paying elite in the U.S.? You’ve got some options:

📌 Snag a Green Card (basically the VIP pass for foreigners).
📌 Rack up enough days in the U.S. to pass the “Spending Time” test.
📌 Make a first-year election and wave the tax flag early.

And if you’ve got a U.S. Passport, you’re a full-time tax resident no matter where in the world you’re sipping that latte.

💡 Tax Rules for Non-Resident Aliens

If you’re not in the resident club, you’ll only pay taxes on what you make in the U.S. Different types of income might have different tax rates. Let’s say you’re selling stuff on Amazon USA – that means you’ve got U.S. nexus and owe U.S. taxes, no matter where you’re calling home.

✅ Filing Requirements

When tax season rolls around, Green Card and Passport holders use Form 1040, just like the locals. Non-resident aliens have their own form, 1040-NR. And remember, if you’ve got tax ties to a state, their rules can be a bit like the rules of a board game – they change depending on how you’re earning your bucks.

✅ Taxpayer ID

To join the tax party, you’ll need a special ID known as a Taxpayer Identification Number. It’s like your VIP pass to the U.S. tax scene. Foreign citizens can apply for an ITIN, but keep in mind, the process might involve sending your passport by mail, and it can take a while. If you’re rocking a Green Card or Passport, you’re required to get an SSN (Social Security Number) for tax filings and financial business in the U.S.

✅ Taxes

Good news! There are deals in place to ensure you’re not taxed twice. Many countries have treaties in place that let you use credits from both the U.S. and your home tax residency so you avoid double taxation.

✅ Reporting Foreign Accounts

If you’ve got a Green Card or U.S. Passport and some savings tucked away in a foreign account, there’s extra paperwork beyond the standard tax return. Even if it’s just a name on a safe deposit box, Uncle Sam wants to know. Skip the reporting, and the penalties can hit harder than you’d expect.

Taxes may seem like an endless maze of forms and jargon, but don’t worry. Our stellar team at Insogna CPA is here to help you breeze through it. We specialize in making sense of U.S. taxes for global entrepreneurs like you. No more tax headaches, just clear, straightforward answers.

Ready to untangle your U.S. tax situation?

Partnership Compliance in 2024: What Your Business Must Know

One of the most important compliance requirements for partnerships is registering with the appropriate state agency. This involves filing a partnership agreement, which outlines the terms of the partnership, with the state. In addition to registering with the state, partnerships may also need to obtain business licenses or permits, depending on the type of business they operate and the location.

Partnerships are also required to obtain a federal employer identification number (EIN) from the Internal Revenue Service (IRS). This number is used to identify the partnership for tax purposes, and partnerships are required to file annual tax returns with the IRS. Partnerships are not taxed at the entity level; instead, the partners report their share of the partnership’s income or loss on their individual tax returns.

Another compliance requirement for partnerships is maintaining accurate records. Partnerships are required to keep track of their income and expenses, as well as maintain records of any loans or investments made in the business. Accurate record-keeping is not only a legal requirement, but it also helps partnerships manage their finances and make informed business decisions.

Partnerships may also be subject to industry-specific regulations and compliance requirements. For example, partnerships operating in the healthcare industry may be subject to HIPAA regulations, while those in the financial industry may need to comply with SEC or FINRA regulations.

Finally, partnerships may also be subject to employment laws and regulations if they have employees. This includes complying with minimum wage laws, overtime laws, and anti-discrimination laws. Partnerships may also be required to provide certain benefits, such as workers’ compensation insurance, to their employees.

To sum it up, partnerships need to meet a wide range of compliance requirements, including:

✅ Registering with the state and filing Partnership Agreements
✅ Getting an EIN
✅ Keeping accurate financial records
✅ Complying with industry-specific regulations
✅ Following employment laws

Nailing these requirements not only keeps your partnership legal but also helps it thrive ethically and responsibly.

Got Partnership Compliance Questions?

Don’t stress over compliance or tax complexities! Whether you’re forming a new partnership or reviewing your current setup, we’re here to help. Reach out to us today, and let’s make sure your partnership requirements are squared away for 2024.

Made a Mistake on Your Tax Return. Now What?

Mistakes on tax returns are more common than you might think. Taxes can be tricky, and the paperwork? Well, it’s not winning any “simplified process” awards. If you’re filing taxes on your own, the chances of making a mistake can feel even higher. And that’s assuming you’re dealing with a regular year, IRS-wise.

Now, 2024 might seem like a smoother ride compared to the upheaval of the Tax Cuts and Jobs Act years ago, but things still get complex fast. If you’ve just realized you made a BIG mistake on your tax return this year, take a deep breath. It happens more often than you’d think. The good news? There are clear steps to take, and you’ve got time to sort things out.

💡 Fixing Tax Return Mistakes: Your Game Plan

All told, you have three years from the date that you originally filed your tax return (or two years from the date you paid the tax bill in question) to make any corrections necessary to fix your mistakes. If nothing about your return ultimately changes, you probably don’t have anything to worry about — in fact, there’s a good chance that the IRS will catch the mistake and fix it themselves. This is especially true in terms of math errors, or if you’ve left out an important document. The IRS will probably send you a letter letting you know what happened and what you need to do to correct it.

If fixing the mistake ultimately results in you owing more taxes, you should pay that difference as quickly as possible. Penalties and interest will keep accruing on that unpaid portion of your bill for as long as it takes for you to pay it, so it’s in your best interest to take care of this as soon as you can afford to do so.

If you’ve made a much larger mistake (like if you understated or overstated your income, for example), you’ll need to file what is called an amended tax return. This is essentially your “second chance” at getting things right, and the timetable above still applies. Understand, however, that ALL errors must be corrected in the amended return. This means that if you find three errors that will reduce your tax liability and two that actually increase it, you are legally required to correct all five. You can’t correct only the mistakes that benefit you.

An amended return can be used to correct a variety of issues, including but not limited to ones like:

📌 Overstating or understating your income
📌 Choosing the wrong filing status
📌 Fixing errors related to dependents
📌 Adjusting deductions or tax credits

If these issues apply, don’t hesitate — file that amended return and get back on track.

While an increase in your tax bill can be stressful, it’s crucial to understand that even major tax return mistakes don’t have to be a disaster. The IRS knows mistakes happen, and they’ve put processes in place to help taxpayers like you make corrections.

❓ Why a CPA Can Be Your Best Ally

This experience shows how invaluable it is to work with a financial professional when filing your taxes. Let’s be honest — your life is busy, and staying on top of every little tax law change isn’t exactly a top priority. But for a CPA, it’s the job. With their help, you can avoid future mistakes, saving you time, stress, and possibly more tax-related headaches.

Don’t let tax return mistakes keep you up at night!

At Insogna CPA, we specialize in helping taxpayers like you avoid these issues altogether. Want to make tax season smoother next year? Reach out today, and let us take care of the details so you can focus on what matters most — your life, your business, and your peace of mind.

Business partnerships: What is a partnership?

Navigating the complexities of business partnership taxes is crucial for every partnership entity. Staying compliant while optimizing your tax strategy can make a world of difference for your business’s bottom line.

Here’s a quick guide to help you better understand your tax obligations as a business partner in 2024.

Essential insights into the key aspects of business partnership taxes:

💡 Definition of a Business Partnership for Tax Purposes:

Clarification on what constitutes a business partnership under IRS rules.
Differentiating between general partnerships, limited partnerships, and limited liability partnerships.

💡 Tax Filing Requirements for Partnerships:

Overview of IRS Form 1065, the standard tax return for partnerships.
Explanation of the annual filing deadline and requirements.
Guidance on quarterly estimated tax payments.

💡 Understanding Partnership Income Distribution:

How partnership income is reported and taxed.
The concept of “pass-through” taxation and its implications for partners.
Distribution of profits and losses among partners.

💡 Deductible Business Expenses for Partnerships:

Identification of common deductible expenses for partnerships.
Understanding limitations and special considerations for deductions.
The impact of deductions on partnership taxable income.

💡 Partnership Agreements and Tax Implications:

The role of partnership agreements in defining tax responsibilities.
How different partnership structures can affect tax liabilities.
Legal considerations and the importance of professional advice.

💡 Audits and Compliance for Partnerships:

The IRS Targets the Big Fish – Are You on the Radar?
Navigating Partnership Compliance Requirements: What You Need to Know
Risk factors and triggers for IRS audits of partnerships.
Best practices for maintaining compliance and record-keeping.
Handling audits and disputes with tax authorities.

Stay Informed

Keeping up with partnership taxes in 2024 requires consistent attention. Business partnership tax laws can evolve, and staying informed is crucial for your success. Whether you’re a new partnership or a seasoned one, it’s always wise to seek professional advice to navigate the intricacies and stay ahead of potential challenges.

Feeling overwhelmed with business partnership taxes?

Don’t worry—you’re not alone. We specialize in helping partnerships like yours navigate the complexities of tax compliance. Let’s chat about how we can simplify your tax strategy, so you can focus on growing your business. Contact us today for personalized advice that fits your unique partnership!

2024 Tax Preparation Checklist: Documents To Gather Before Filing

Before you dive into preparing your income tax return, check out our updated 2024 Tax Preparation Checklist. It’s a simple guide to help you streamline the process. Not every section will apply to you, so feel free to skip what doesn’t. By organizing your tax documents ahead of time, you’ll save yourself time (and stress) when it’s time to file.

Before You Start Tax Preparation:

1️⃣ Download and print the checklist.
2️⃣File it—either place it inside a folder or attach it to the outside.
3️⃣ Organize your tax documents as they come in. Check them off the list as you go.
4️⃣Scratch off irrelevant items from the checklist—it’s laid out by the most common tax documents first.
5️⃣ Add missing information, like bank routing/account numbers for direct deposit.
Use Quicken® or another financial tracker? Print out your annual report—it’s a game-changer for simplifying your tax prep.

Having a financial summary in hand beats digging through your bank statements for hours. Highlight key details in the report that you’ll need or jot down notes for reminders.

Personal Information:

The IRS needs to know exactly who’s filing and who is covered in your tax return. To do this, you will need Social Security numbers and dates of birth for you, your spouse, and your dependents.

Information About Your Income:

💡 Income from jobs: Forms W-2 for you and your spouse
💡 Investment income: Forms 1099 (-INT, -DIV, -B), K-1s, stock option details
💡 Refunds/unemployment income: Forms 1099-G
💡 Business/farming income: Profit/loss statement, capital equipment info
💡 Rental property income: Profit/loss statements, expense details, rental property tax info

Adjustments to Your Income:

Certain deductions can lower your taxable income, possibly leading to a higher refund (or a smaller bill). Keep documentation for:

📌 IRA contributions
📌 Student loan interest
📌 Health Savings Account contributions (HSA)

Itemized Deductions & Credits:

Make sure you get every deduction and credit you’re eligible for. Here’s what you’ll need:

✅ Child care costs: Provider’s tax ID, address, and amount paid
✅ Education costs: Form 1098-T and receipts for expenses
✅ Charitable donations: Cash contributions, value of property donated, and mileage driven
✅ Medical and dental expenses: These can often be overlooked, so make sure you track them.

Taxes You’ve Paid:

Make sure you don’t pay more than necessary by documenting:

📌 State and local income taxes paid
📌 Real estate taxes paid
📌 Personal property taxes (like vehicle license fees)

Other Important Info:

💡 Estimated tax payments made throughout the year
💡 Direct deposit info (routing/account numbers)
💡 Foreign bank account info if applicable

Getting organized with your tax preparation checklist isn’t just about avoiding last-minute panic—it’s about saving time and making the process as painless as possible. Plus, it increases the chances of maximizing your return.

Need a hand with this year’s taxes?

Let’s chat! We can guide you through every step and make sure nothing falls through the cracks. Let’s make 2025 the year of stress-free filing.

What triggers an audit by the IRS?

With tax season behind us, many are finding unexpected IRS notices in their mailboxes. While seeing the IRS letterhead can cause a spike in anxiety, the good news is that most of these notices are routine. In fact, many are computer-generated, alerting you to unpaid taxes or simple mistakes on your return that can be easily fixed. Just because you’ve received an IRS notice doesn’t necessarily mean you’re facing an audit.

In reality, fewer than 1 percent of individual tax returns are selected for an audit. That’s about a 1-in-160 chance. However, according to the Taxpayer Advocate Service, 6.2 percent of tax returns—or a 1-in-16 chance—are flagged for closer examination. Some of these “audit flags” don’t result in a full audit but may still require extra documentation to clear up.

Given the millions of tax returns filed each year, the chance of facing an IRS tax audit is slim. However, if you’re curious about why your return may have been selected or what raises the likelihood of being audited, here’s a breakdown of the common risk factors involved in the IRS audit process.

❗ These Risk Factors Increase Audit Chances:

1️⃣ You were randomly selected.
The IRS always audits an incredibly tiny sample of tax returns, but the likelihood is still extremely low. But if you are low or middle-income with a relatively simple tax filing situation and wondering why you’ve been audited, you were part of that tiny random selection.

2️⃣ Common audit flags on your return.
Even if you have legitimate deductions, credits, and income substantiation, there are certain lines on your tax return that are rife with errors and fraud across the board. These include the:

Specific tax benefits prone to error and fraud like the Earned Income Tax Credit have their own separate due diligence process. But the above three items are the most common triggers for an audit, even just partial audits, given the vast propensity people have in underestimating these items and not have them properly documented. People tend to overestimate the value of non-cash charitable contributions and frequently lack the substantiation for these deductions. Adoption is an incredibly long and expensive process, and even though it is a legitimate tax benefit in which the adoptive parents will have substantiation, it also equates to a tax credit that can spread out over numerous years and result in paying little or no tax. Because of this, the IRS flags these tax returns frequently.

The home office deduction is another area where people tend to overestimate both eligible expenses and the percentage or square footage of the home being used for the deduction. This deduction can also generate a business loss, resulting in paying little or no taxes. Because of this, the IRS is likely to flag tax returns that have suspiciously large home office deductions.

3️⃣ Someone reported you to the IRS.
The IRS has a whistleblower programthat awards up to 30 percent of the taxes collected and resultant penalties. If your ex-spouse suspects that you fudged your Goodwill donations or that co-worker who doesn’t like you overheard you say, “They never check!” with respect to that side hustle you didn’t report, it’s possible they could’ve anonymously tipped you off to get a quick payday.

4️⃣ You’re a small business owner or freelancer connected to someone being audited.
Even if your client, supplier, or other business associate was not committing tax fraud or malfeasance but simply got audited, people and companies that they paid or received money from are likely to be next. If they didn’t correctly report payments made, the IRS will want to see how the payers’ or recipients’ tax returns also match up.

Add Your Heading Text Here

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Need Help?

If you’ve received an IRS audit notice or are worried about one, don’t stress. Our tax experts can guide you through the process and resolve it as quickly as possible. Call us today for personalized assistance in handling your IRS tax audit.