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You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars.

How you do this depends on your functional currency. Your functional currency generally is the U.S. dollar unless you are required to use the currency of a foreign country.

Note: Payments of U.S. tax must be remitted to the U.S. Internal Revenue Service (IRS) in U.S. dollars.

You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records.

Even if you have a QBU, your functional currency is the dollar if any of the following apply.

• You conduct the business in dollars.
• The principal place of business is located in the United States.
• You choose to or are required to use the dollar as your functional currency.
• The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted.

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax.

Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.

If your functional currency is not the U.S. dollar, make all income tax determinations in your functional currency. At the end of the year, translate the results, such as income or loss, into U.S. dollars to report on your income tax return.

What Currency Exchange Rate Do I Use When Preparing my Tax Return?
Where you are a US expat, green card holder or a US resident who received income or paid any expenses in a foreign currency, you must translate the foreign currency into US dollars when preparing your tax return. The only exception relates to some qualified business units (QBUs) which are generally allowed to use the currency of a foreign country.

Allowable Currency Exchange Rates
What is important to remember is that the Internal Revenue Service has no official exchange rate. The IRS will normally accept any posted exchange rate that is used consistently. When preparing your Form 1040, Form 2555, Form 1116 or any other necessary tax form use the rate that applies to your specific facts and circumstances.

What exchange rate do I use if I received income such as interest or dividends in a single transaction in a foreign currency? If you have a single transaction such as interest income, dividend income or the sale of a business that occurred on a single day, use the exchange rate for that day.

What exchange rate do I use if I earned income or paid expenses in a foreign currency evenly throughout the year? You can translate the foreign currency to U.S. dollars using the yearly average currency exchange rate for the tax year.

Yearly average currency exchange rates
The table published on the IRS website at http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates includes yearly average exchange rates for prior years. For additional exchange rates, refer to Foreign Currency and Currency Exchange Rates.

How do I use the table? To convert from foreign currency to U.S. dollars, divide the foreign currency amount by the applicable yearly average exchange rate in the table. To convert from U.S. dollars to foreign currency, multiply the U.S. dollar amount by the applicable yearly average exchange rate in the table.

 Contact the Tax Lawyers at 
Marini& Associates, P.A. 

 

 for a FREE Tax HELP ... Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Officials at the Internal Revenue Service are looking to hire more employees to handle tax enforcement, compliance and administration of the tax code, even as more of the IRS’s older workers retire and leave the agency, particularly after the month-long government shutdown last December and January.

“For those of you who have always wondered what it might be like to work at the Internal Revenue Service if you’ve not been there, come on board,” said IRS Commissioner Chuck Rettig.

He noted that the IRS Chief Counsel’s office is hiring, the Large Business and International division is hiring, as are the Small Business/Self-Employed, Criminal Investigation and information technology units.

“It can be a tremendous experience,” Rettig added. “It can be an experience that you find tremendously rewarding, and I think it's an experience that you should reach out for.”

IRS Chief Counsel Michael Desmond acknowledged that recruitment of staff is one of his highest priorities. “I think one of the biggest challenges, and this isn’t unique to Chief Counsel, it’s shared on the commissioner’s side as well, is legacy planning, both at the leadership level and also for just bringing in younger attorneys,” he said.

We’ve got some excellent young lawyers who have come in, particularly in the last year under the TCJA [Tax Cuts and Jobs Act], and we’ve been able to do a little bit of hiring for the last five or 10 years, but it’s by no means filling the attrition that we’ve had.”

One of the other major priorities is helping develop guidance for the Tax Cuts and Jobs Act. Desmond said there has been a steep learning curve, though, in developing guidance for brand new provisions such as FDII (foreign derived intangible income) and GILTI (global intangible low-taxed income).

Douglas O’Donnell, commissioner of the IRS’s Large Business and International division, said the LB&I group is hiring hundreds more people, while also losing hundreds to retirement.

We did get authority this year to hire 500-plus people new to the division, but we’re not growing by 500. We’re hiring 550, but we’ve been losing about 7 percent of our workforce a year to retirement, so the net increase in the division is roughly 200 to 250.

Among the new hires are revenue agents, appraisers and computer engineers, he noted. The LB&I division has been leveraging technology such as data analytics to make up for shortfalls in personnel and now has the ability to look across an entire filing population with its new enforcement and examination campaigns.

Our first class started June 10 for the revenue officers. We start to train the first wave of revenue agents in July, so we’re extremely excited about that. We still have our jobs open on USAJobs, so if you have any friends or family, we are a great organization.”

We’re hopefully going to bring in somewhere in the range of 500 or 600 revenue officers this year, but again we’re churning out a lot. We’re churning out about 250, so that attrition rate is a little bit higher for us.

However, the IRS is hiring more agents for the Criminal Investigation unit this year and next year. “By the time this fiscal year is over, we will have hired probably about 150 agents,” said Fort. Next year, we’ve got tentative approval for about 10 classes, which means anywhere from about 200 to 250 agents, so we’ll finally start to see an increase. That’s great news.”

 Contact the Tax Lawyers at 
Marini& Associates, P.A. 

 

 for a FREE Tax HELP ... Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Sources:

TaxProtoday

Some of the nation’s most privileged heirs and entrepreneurs, who have made spectacular fortunes in real estate, finance and Silicon Valley have collectively united on the need to tax more of the richest Americans’ assets.

In a letter published on June 24, 2019 on the website Medium.com calls for

George Soros, heiresses to the Pritzker fortune, Abigail Disney and Facebook Inc. co-founder Chris Hughes are among those calling for a wealth tax to help address income inequality and provide funding for climate change and public health initiatives.

“The next dollar of new tax revenue should come from the most financially fortunate, not from middle-income and lower-income Americans.”

In the short term, the group hopes the letter “sparks a debate with the 2020 candidates" and that a wealth tax, or alternatives to one, are discussed during the upcoming Presidential debates, said Pritzker Simmons, who supports Elizabeth Warren for the Democratic nomination. “These are conversations that have been had in the past, but now the time is right,” she said.

Warren, a senator from Massachusetts, as well as fellow Democratic presidential hopefuls Pete Buttigieg and Beto O’Rourke support the idea, according to the letter. Warren has proposed a 2% tax on assets of $50 million or more, and a further 1% on assets over $1 billion. It is estimated to generate nearly $3 trillion in tax revenue over 10 years.

The wealth tax isn’t embraced by all Democrats, though, with some arguing it would be difficult to objectively assess the value of wealth like artwork and jewels or illiquid assets.

European countries have experienced mixed results with a wealth tax. Of 15 nations in the Organization for Economic Cooperation and Development that had them in 1995, only four, Switzerland, Belgium, Norway and Spain, still do.

France, Sweden and Germany are among those that backed away from the levy because of the difficulties implementing them.

Some of those signing the letter have already expressed concerns about rising inequality.

• Hughes has evangelized for higher taxes on the rich in his book “Fair Shot.”
• Disney, whose grandfather and great-uncle founded Walt Disney Co., recently called Chief Executive Officer Bob Iger’s $65.6 million compensation package “insane.”
• Nick Hanauer, first warned his “fellow zillionaires” about the country’s growing wealth divide in 2014, writing that “there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out.”

Such inequality has only deepened. Last week, Bernard Arnault joined Jeff Bezos and Bill Gates as the third person with a fortune of at least $100 billion on the Bloomberg Billionaires Index, whose 500 members have a total net worth of $5.5 trillion, up from $4.9 trillion two years ago.

If we don’t do something like this, what are we doing, just hoarding this wealth in a country that’s falling apart at the seams?” Pritzker Simmons said. “That’s not the America we want to live in.”

Contact the Tax Lawyers at Marini& Associates, P.A. 
 

 

for a FREE Tax HELP ... Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

Sources:

Medium.com

The New York Times

AccountingToday