Do you want to do some undercover work for the IRS? The IRS is encouraging you to report promoters of off-shore tax avoidance schemes. Whistle-blowers who provide allegations of fraud to the IRS may be eligible for a reward.

With that said, the IRS is reminding United States citizens and resident aliens that income received from foreign sources must be reported on your Federal tax return. Lately there has been interest in of IRS in taxpayers with accounts in Liechtenstein. The interest of the IRS extends beyond accounts in Liechtenstein to accounts anywhere in the world. So make sure to report your worldwide income on your U.S. tax return.

U.S. citizens and residents alient must report all income whether or not you receive a W-2 Wage and Tax Statement, a Form 1099 or foreign equivalents. This is true whether you reside inside or outside the United States. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties).

If you reside outside the US, you may be able to exclude part or all of your foreign source income. For details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad).

Hiding Income Offshore
Not reporting income from foreign sources may be a crime. The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions. The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax.

Foreign Financial Accounts
In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts. The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

• You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
• The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

Consequences for Evading Taxes on Foreign Source Income
You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts. These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

If you have a tax question, check the information on www.irs.gov or call 1-800-829-1040

source: www.irs.gov

The IRS is noticing that there is some confusion about the the Recovery Rebate Credit and whether or not you have to pay taxes on the stimulus check from last year.

“About 15 percent of the returns have errors involving that credit,” said Clay Sanford, a spokesman for the IRS in Dallas.

The Recovery Rebate Credit is a one-time benefit for people who did not receive a stimulus check in 2008 or who did not receive a full economic stimulus payment. These people may have seen their economic circumstances change, making them eligible for the credit.

You may qualify for a Recovery Rebate Credit if:

• Your financial situation changed dramatically from 2007 to 2008
• You did not file a 2007 tax return
• Your family gained an additional qualifying child in 2008
• You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as a dependent by someone else in 2008.

Under certain circumstances, individuals filing a return can receive a $600 credit, while married couples filing jointly can receive $1,200. People under age 17 may fetch a $300 credit.

LAST YEAR’S STIMULUS PAYMENT IS NOT TAXABLE. But taxpayers need to know how much their stimulus check was so their income tax returns can be properly processed.

The Stimulus checks received last year and the Recovery Rebate Credit available to some this year are completed different. But, they are related when filing tax returns.

People filing paper returns will need to include the size of their stimulus checks when completing a work sheet. For people using tax software, the stimulus payment amount will be needed as well, but the software will figure whether a Recovery Rebate Credit is due.

DO I HAVE TO TAXES ON MY STIMULUS CHECK FROM LAST YEAR? The answer is No, No, No!

For most taxpayers, the correct entry for the Recovery Rebate Credit will either be blank or zero. If there is any question as to the amount that should be reported for that credit, the taxpayer or preparer should enter a zero on the appropriate line. The IRS will determine from records whether a rebate credit is due and for how much.

If you have a specific question about your Federal Tax return you can call the IRS and receive Live Telephone Assistance. Here are the particulars:

Telephone Assistance for Individuals:
Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Telephone Assistance for Businesses:
Toll-Free, 1-800-829-4933
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

source: irs.gov