IRS to Waive Tax Penalty for U.S. Citizens Working Abroad


The Internal Revenue Service and U.S. Treasury have released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad.

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), enacted in May 2006, changed the maximum amount of foreign earned income and housing costs that may be excluded from gross income under section 911 of the Internal Revenue Code.

TIPRA increased the maximum amount of foreign earned income that may be excluded from gross income to $82,400. The law also limited the amount of housing costs that may be excluded or deducted under section 911. TIPRA further provides that the tax applicable to income not covered by the foreign income exclusion will now be calculated as though the exclusion had not been elected. These changes are effective for taxable years beginning after December 31, 2005.

Because these changes are retroactive to the beginning of the taxable year, persons relying on the law as it existed prior to the enactment of TIPRA may have underpaid their estimated tax liabilities for 2006 and may be liable for an addition to tax under section 6654(a). The IRS will waive additions to tax under section 6654(a) to the extent that the underpayment is attributable to the changes enacted under TIPRA.

This waiver is only available to qualified individuals who file a Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, with their timely filed Form 1040, U.S. Individual Income Tax Return, or Form 1040X, Amended U.S. Individual Income Tax Return.

About 300,000 individual taxpayers filed Form 2555 and Form 2555-EZ for tax year 2004, the latest year for which data is available.

Links

Sphere: Related Content

1 comment:

Seo Link Master said...

You need us if you have any of these tax problems: Back
Taxes
, Unfiled Returns, Missing Records, Threat of Levy, or, if you need an Installment Agreement or an Offer in Compromise A tax levy or garnishment or attachment are all the
same thing. The terms may be used interchangeably. A wage garnishment or levy may be against any asset. In the enforcement of tax collections. We prepare all Federal and State Unfiled tax Returns The Fair Tax Act (HR
25/S 1025) is a bill in the United States Congress for changing Tax Solutions laws to replace the Internal Revenue Service (IRS) and all federal income taxes (including Alternative Minimum Tax), Past due tax returns, Past due tax returns, Past due returns, Past due taxes, Unpaid tax, Tax negotiation, Wage levy, Robert M. Adams, Bob Adams, Try to Be Happy, Search Engine Optimization,