On January 17, 2013, the IRS released final regulations for the Foreign Account Tax Compliance Act (“FATCA”) to be effective on January 28, 2013. Enacted by Congress in 2010, FATCA targets non-compliant U.S. taxpayers using foreign accounts and requires foreign financial institutions (“FFIs”) to report information and withhold on some payments to FFIs and other foreign entities. The final regulations adopt and modify the proposed regulations that had been released in February 2012.

The preamble to the final regulations states that a FATCA Registration Portal will be created, and that it will be the primary means for financial institutions to interact with the IRS to complete and maintain their FATCA-related registrations, agreements and certifications. It should be accessible by July 15, 2013. The IRS will begin issuing a Global Intermediary Identification Number (GIIN) to participating FFIs and deemed-compliant FFIs by October 15, 2013. FFIs will use their GIINs to satisfy reporting requirements and to identify their status to withholding agents.

The Treasury added a $50,000 exception for cash value insurance contracts in response to requests for additional exceptions for low-value accounts. The final regulations also clarify the types of financial accounts subject to FATCA and the persons that qualify as account holders.

In order to implement FATCA reporting, the IRS will revise existing forms and issue new forms, including new Form 8966 “FATCA Report.” Final versions of the revised and new forms are expected by late 2013 or early 2014.

For more information visit our website at www.dncpas.com, or call our office at 239-261-8337, Davidson and Nick CPAs has been serving Southwest Florida in helping individuals and businesses as CPAs and most trusted advisor since 1989.

Congress enacts 2012 American Taxpayer Relief Act –Today’s Blog- Tax rates

 The recently enacted 2012 American Taxpayer Relief Act is a sweeping tax package that included, among many other items revised tax rates on ordinary and capital gain income for 2013. The changes are significant and subsequent blogs will address estate taxes AMT relief, write-offs etc and the other items that Congress has enacted. However, I will not be able to explain in this blog the “relief” part of the relief Act.

•  Tax rates. For tax years beginning after 2012, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets from the Bush tax cuts will remain in place and are made permanent. This means that, for most Americans, the tax rates will stay the same. However, there will be a new 39.6% rate, which will begin at the following thresholds: $400,000 (single), $425,000 (head of household), $450,000 (joint filers and qualifying widow(er)s), and $225,000 (married filing separately). These dollar amounts will be inflation-adjusted for tax years after 2013.
• Capital gains and qualified dividends rates. The new law retains the 0% tax rate on long-term capital gains and qualified dividends, modifies the 15% rate, and establishes a new 20% rate. Beginning in 2013, the rate will be 0% if income falls below the 25% tax bracket; 15% if income falls at or above the 25% tax bracket but below the new 39.6% rate; and 20% if income falls in the 39.6% tax bracket. It should be noted that the 20% top rate does not include the new 3.8% surtax on investment-type income and gains for tax years beginning after 2012, which applies on investment income above $200,000 (single) and $250,000 (joint filers) in adjusted gross income. So actually, the top rate for capital gains and dividends beginning in 2013 will be 23.8% if income falls in the 39.6% tax bracket. For lower income levels, the tax will be 0%, 15%, or 18.8%.

For more information visit our website at www.dncpas.com Davidson and Nick CPAs has been serving Southwest Florida in helping individuals and businesses as CPAs and most trusted advisor since 1989.