To help these taxpayers, the IRS offered the new procedures that will allow taxpayers who are low compliance risks to get current with their tax requirements without facing penalties or additional enforcement action. These people generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years. The
new procedure will go into effect on Sept. 1, 2012.To qualify, individuals must submit three years of back taxes, six years of bank reporting forms – so-called Report of Foreign Bank and Financial Accounts, or FBARs – and a signed letter explaining why they haven’t filed.
The IRS defines low risk as people who have “simple” returns and owe less than $1,500 a year in taxes, based on the past three tax years. To owe less than $1,500 in US Tax, assuming a Single Filing Status and 1 Personal Exemption, your combined income would have to be less than $22,650.
Example: A US Citizen can earn interest of between 1% – 3%, on principle of between $755,000 – $2,265,000 and still qualify for this US amnesty (see chart below); even where this income may not have be subject to Canadian taxation.
|
Rate of Interest
|
Principle
|
Income
|
|
0.01
|
$2,265,000
|
$22,650
|
|
0.015
|
$1,510,000
|
$22,650
|
|
0.02
|
$1,132,500
|
$22,650
|
|
0.025
|
$906,000
|
$22,650
|
|
0.03
|
$755,000
|
$22,650
|
The United States is unique among developed countries in requiring all citizens, including dual Mexican-Americans, to file taxes with the IRS every year, regardless of where they live.
Without the amnesty, Americans who haven’t filed their taxes and other IRS forms face penalties totalling tens of thousands of dollars per year and risk criminal prosecution. See IR-2012-64for more details.
Read more at: Tax Times blog
