Frequently
Asked Questions (FAQ)
Why does the
The tax laws give each taxpayer
a credit of $1000 a year for tax years since 2003. Since
Who will
benefit from the "Make Work Pay Credit"?
Anyone who files a 2009 or 2010
return (generally filed in 2010/2011) where the taxpayer (and/or spouse
if a joint return) has a Social security number, and earned less than $150,000
(for joint returns), will generally receive a one-time credit of 6.2% of earned
income (or $400 per taxpayer/spouse), whichever is less. Because of this
credit, some couples where one is a
What is the
economic stimulus plan and who will benefit from the "Recovery Rebate
Credit"?
Anyone who files a 2008 return
(generally filed in 2009) where the taxpayer (and spouse if a joint
return) has a Social security number, and earned over $3,000 of regular income
or social security, and earned less than $75,000 (for separate returns) will generally receive a one-time payment of
$300 per filer and $300 per child who is eligible for child tax credit. If
taxes were owed in 2008, the payment may by higher. The amount is reduced by
any stimulus payment received during 2008. For details, see the article
on IRS website .
When is a child
eligible for Child Tax Credit?
Your child is a qualifying child
for purposes of the Child Tax Credit if your child meets the age, residency,
dependency and relationship tests.
Age: The child must be under age 17 on December 31,
2006 (for the 2006 return-a.m).
Residency: The child must be a citizen or resident of the
Dependency: You must claim the child as a dependent on your
tax return.
Relationship: The child can be your son, daughter,
stepson, or stepdaughter, adopted child, grandchild, or eligible foster child.
Your brother, sister,
stepbrother, stepsister (or the child or grandchild of your brother, sister,
stepbrother, or stepsister) may also be a qualifying child if you care for the
child as if that child were your own. (courtesy of the
Why should I file a
According to American Law, all
If you and your spouse together
earn more than $11,750 (for year 2007) or $8,500 (for tax year 2008) or $3,000
(for tax years 2009 and 2010) or either of you is self-employed or pays social
security taxes, you are eligible for additional child tax credit.
In fact, many people have registered their children as US citizens in order to be able to include their children on their tax returns. Children who were registered as US citizens by a "Report of US citizen born abroad" are fully eligible to receive child tax credit, since they were effectively (or actually) US citizens before the forms were filed.
Example: If you and your spouse earned combined salaries of
168,000 shekels in 2007 and you have four eligible children, you should receive
about $4,000 after your return is processed.
Who are we?
Should I use a US based accountant?
We have been preparing US tax
returns in
The tax laws are complicated to
the extent that we have found many clients whose US-based accountants were
unaware of many legal intricacies and filed returns which caused our clients to
pay large sums (which we were able to recover).
We do not generally charge for
examining old returns; in fact we file returns only when the client benefits
from filing.
We can also help you with
information about Israeli tax ramifications of your
Are you
available in the
The Maleks were in the
Can I fix an
old return which I filed without requesting the Child Tax Credit?
A return can be filed up to
three years after its due date (so, a 2006 return could only be filed until
April(or June) 15, 2010)*. If a return was filed on time or with a valid
extension, it can generally be amended until three years have passed from the actual
filing date (or due date, whichever is later). Filing an amended return is more
complicated than filing an original return, but we can generally obtain the
refunds when necessary. *Should I
amend my 2006 return?
If I have not
filed for years, what will the IRS do when they see my return?
(Will I get
into trouble?)
· Failure to file a return
or filing late can be costly. If taxes are owed, a delay in filing may result
in penalty and interest charges that could increase a tax bill by 25 percent,
or more.
·
There is no
penalty for failure to file if a refund is due.
See the entire article at the IRS
website.
Analysis: If you do not owe
taxes, the IRS will generally not penalize you for not filing. If you were NOT
self-employed outside the
The IRS policy is not to
prosecute those who voluntarily file. See the IRS Filing
Late Returns FAQ.
If you will be required to file old
tax returns, we can help you. Forms for prior years are available at the IRS website .
What about Foreign Bank Account Reports which I never filed? (There were news reports of an amnesty and a crackdown!)
All US citizens, all green card
holders, and spouses of citrizens(spouses only if they are required to file tax
returns) are also required to report their financial accounts if the total
value of their financial accounts outside the US is over $10,000. It is possible
that penalties will be assessed for willfully not reporting
"overseas" financial accounts. As far as we have been able to
determine, until this date, anyone who did not owe taxes and mistakenly missed
reporting these accounts was not fined. Various recent news reports about an
amnesty with an associated fine were useful only for those who owed Uncle Sam
large amounts of money on unreported accounts. If, in the past, had you
properly reported all foreign accounts, you would not have owed taxes to the
What if I
worked in the
If you paid social security for
at least 40 “quarters”, you are eligible to receive Social Security benefits at
retirement. It is a good idea to file US tax returns, since the Social Security
Administration may refuse to pay benefits to those who did not file tax
returns. See the SSA website for a benefits
calculator. Note that benefits may be reduced if you are eligible for a pension
based on income for which social security was not paid.
What if I am
self-employed (atzma’i)?
You are required to pay Social
Security taxes to the
Social Security payments are tax free for all residents of
What if I learn
in Kollel?
If you are a clergyman (an
ordained Rabbi is defined as a clergyman), your Kollel earnings may be considered
as self-employment income, which would make you eligible to pay social security
on these earnings (see answer to the previous question). Note that scholarships
are generally not considered earned income, and that income received for
studies does not count for child tax benefits.
If my spouse is
not a
A non-citizen spouse is not
required to report their income to the
In order to report the income of
your non-citizen spouse, you must obtain a Social Security number for them, or,
if they are ineligible for a Social Security number, a TIN (Taxpayer Identification Number).
We can help file a TIN application when you file your first US tax return.
If you have additional
questions, you are welcome to send them via email
with your name and phone number (no attachments please, only text) .
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