In a Revenue Procedure, Internal Revenue Services (IRS) has waived the residency and presence tests that apply for purposes of the IRS Tax Code governing the foreign earned income and foreign housing cost exclusions with respect to certain U.S. individuals in Burundi due to adverse conditions in that country beginning on May 14, 2015.
The US State Department issued travel warnings to it citizen and urged immediate evacuation of U.S. citizen from the country leading to the waiver in the residency and presence test waiver.
Background. The US Tax Code governing foreign earned income allows a “qualified individual,” as defined in the tax code to be exempt from taxation on their individual's foreign earned income and the housing cost amount.
A qualified individual is an individual whose tax home is in a foreign country and who is either:
Under certain circumstances, the time requirements of the foreign residence test and the foreign presence test may be waived. If these requirements are waived, the taxpayer is treated as having met the foreign residence requirement for the period during which he was a bona fide resident of the foreign country, or he will be treated as having met the foreign presence requirement for the period during which he was present in the foreign country. He will be so treated even though the relevant time requirement has not been met.
Three conditions must be met for the waiver to apply:
Waiver of requirements for 2015.
Since war, civil unrest, or similar adverse conditions precluded the normal conduct of business in Burundi beginning on May 14, 2015. An individual who left Burundi on or after May 14, 2015 will be treated as a qualified individual with respect to the period during which that individual was present in, or was a bona fide resident of, Burundi, if the individual establishes a reasonable expectation of meeting the requirements of but for those conditions.
To qualify for the tax relief an individual must have established residency, or have been physically present, in Burundi on or before May 14, 2015 (i.e., the date that IRS determined that individuals were required to leave the country). Individuals who establish residency or the first physically present, in Burundi on or after May 14, 2015 will not be treated as qualified individuals.
Having foreign earn income can be a little tricky when filing your taxes, Kolen Services is available to assist and can be reached at 540-693-5881.
Rev. Proc. 2016-21, 2016FED ¶46,288
Code Sec. 911
CCH Reference – 2016FED ¶28,049.5775
Tax Research Consultant
CCH Reference – TRC EXPAT: 12,108
Consumer information and the privacy of American taxpayers is non-existence and in my opinion the leading cause of identity theft and scams including IRS tax scams. We are living in a new age where peoples personal information is stored on computers and now being transferred to what we know as the "the cloud". What is that? "the cloud". Who manages this so called cloud of information? Who is responsible for this cloud of information? Better yet who are we holding accountable for the gross violation of our 4th amendment right to privacy. Has the Freedom of Information Act opened the door to criminals to exploit the personal information of citizen or has "information" become the next economic "BOOM".
Just recently, the Treasury Department issued a warning to taxpayers of the largest phone fraud in IRS history, which has affected over a million people. One such victim is North Carolina pastor Al Cadenhead, who received a call from a woman claiming to be an IRS agent, leaving a message that if Cadenhead did not call back, he might end up in legal trouble. He did call back. The woman gave a name and a badge number and informed him, “they were filing a warrant for his arrest for tax fraud.” So for the next several hours, he made multiple withdrawals from his bank and sent the scammers money in the form of pre-paid debit cards for a total of $16,000. The IRS is estimating the total amount of money has now grown to $26 million, involving people from all walks of life, including doctors, engineers and lawyers. I ask how is this possible?
Failure to do so can result in the employer being liable for substantial penalties that the government refers to as shared responsibility payments.
Under the Affordable Care Act, certain employers – referred to as applicable large employers (ALEs) – are subject to the employer shared responsibility provisions, which require ALEs to offer affordable minimum essential coverage healthcare coverage that provides minimum value to full-time employees and their dependents (but not their spouses). Failure to do so can result in the employer being liable for substantial penalties that the government refers to as shared responsibility payments.
Note: Whether an employer is subject to employer shared responsibility provisions is based upon the number of equivalent full-time employees (EFTEs) employed by the employer, generally in the prior year. However, the rules that determine who is a full-time employee are complicated. Generally, anyone who works at least 30 hours per week (or 130 hours in a calendar month) is considered a full-time employee. Part-time employees are those who are not full-time employees. All the hours worked by part-time employees for the month are combined and divided by 120, and this result is added to the number of full-time employees. This sum is the number of EFTEs for the month.
Example – Equivalent Full-Time Employees - For his business, John has 45 full-time employees and 20 part-time employees. In January 2016, his part-time employees worked 960 hours. That is the equivalent of 8 (960/120) full-time employees. Thus, John employed 53 (45 + 8) EFTEs in January. In this case, John’s business is subject to the employer shared responsibility provisions, but it is only required to offer coverage to full-time employees and their dependents.
The employer shared responsibility provisions were first effective on January 1, 2015, but transition relief from certain requirements is available for 2015, including the following:
If you have questions related to your company’s employer shared responsibility Contact Us.
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