Kogan Financial Group, LLC.

07/12/2015

Tax Designer, Inc. Lyubim Kogan

22/11/2015

On the second anniversary of the Euromaidan, the U.S. Embassy in Kyiv has released a special video message reminding viewers around the world about what brought thousands onto Kyiv’s Maidan: the Ukrainian people’s conviction that Ukraine is Europe.

На відзначення другої річниці початку Євромайдану посольство США в Україні створило свій відеоролик аби оживити той дивовижний дух спільності, цілеспрямовано...

10/11/2015

It's easy being an American, but not when you live outside the US.
It's been a very busy 2 weeks of traveling around US embassies in Europe, in search of governmental officials who would be willing to help us organize educational town-halls and focus groups to get tax compliance education out to Americans living in abroad. Anywhere we go, I constantly run into people who share the same story of how hard the daily life has become (and we don't even talk tax reporting before they want to give up the US passport). The message is loud and clear- it is becoming practically impossible to get basic banking and insurance needs met and Americans are consonantly asked to provide more information, bring more papers, and get more stamps in our documents. To open a bank account is such hustle that we just continue using our US ATM cards and "gladly" pay the 3% transaction fee, a $5 ATM (on both ends) fee and accept the worst possible exchange rates, whenever we need cash. Many European banks that do not clear in the US dollar , and only work with Euro and other European currencies, cannot justify the compliance cost associated with reporting to the US government, when and if they have only 1 American customer. Many foreign banks will not only not open new accounts for Americans, they also are closing out the existing accounts. And that of course violates anti-discrimination laws of many countries, but in reality they don't really care when it comes to their bottom line. Now, if we think it is wrong for the foreign financial institutions to refuse our business, how should we feel when our own government agents (rightfully so) direct us to "take a trip to France (the last IRS office in Europe), or visit IRS.gov" so we can resolve our complex tax compliance issues. Same issues that may carry criminal penalties for violating them.
Yet, in my opinion, all the hustle of compliance and difficulties with all the daily living abroad is not a good reason to consider giving up your US citizenship. We may not use the benefits that America has to offer, but we sure have the access to them any time we want. Our compliance nightmare is a (small) price we all have to pay.
As always, I leave you with a reminder that starting October 2, 2015 foreign banks and financial institutions have begun submitting information on accounts held by Americans directly to the IRS. Now it is easy to cross check with the US treasury department and find out all your unreported bank accounts. The time to get all your late FBARs in is now.

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Successonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

26/10/2015

"General speaking, you have 3 main options to get FATCA and FBAR compliant"
In the past few weeks i had a privilege to travel to several US embassies, American Chambers of Commerce and US companies located in the European Union. Every single meeting i had, points out to the fact that every US taxpayer is confused about their reporting requirements. No matter where they work, who does their taxes, or how much studies they did on their own, 100% of those who i met with do not understand what they must do to stay tax compliant while living abroad. In three quarters of my meetings i got "what do you think about giving up the US citizenship" followed by a "deer in the headlight" stare. Yes, Americans living abroad are scared, and we are not the nation that gets scared easily. My answer is always the same- giving up the citizenship the worst idea, and it will land you hot waters with the US government. Even if you did not cheat they look and question everything as you were a criminal!
Back in the US, when getting ready for my speech at the UN headquarters in NYC, I discovered that over 80% of Americans living abroad are not filling the required reports on their banking accounts with the Financial Crimes Enforcement Network (FinCen), which is the part of the US Department of Treasury. Endless conversations with CPAs, Tax Attorneys and governmental officials pointed to the fact that they all unanimously agree that the US taxpayers living abroad and tax professionals who advise them, need to be more educated on reporting requirements. You see, it is possible for the US taxpayer to file all their tax returns and pay taxes on time, and still have potential civil and criminal liabilities with the US government. In order to alleviate the panic spreading among Americans lining abroad, I decided to put together the Unofficial short guide on what options the US government offers at this time. This by no means should be taken as instructions to take any action, except getting more information and talking to a qualified tax professional. Because if you make 1 wrong move you will disqualify yourself from available options.
Generally speaking: ~ Most important point-- a VOLUNTARY disclosure of all required information, via appropriate program offered and BEFORE you are found out by the IRS, may get you out of trouble without serving time in a Federal prison. Even if you cheated, or intentionally hid your money! Yes, you read it right,
there is a temporary program that gets even those who cheated out of prison (it's option 3).
Here are 3 main options that Americans have to get tax compliant. All require VOLUNTARY filing on FATCA back to 2010, FBAR 6 years and unlimited years on unfilled tax returns (ouch, I know)

1. "Quiet filling" maybe the way to go if you paid all your taxes and filled all your tax returns, but did not know you had reporting obligations with the Department of Treasury's FinCen. This is the least expensive way, and the IRS has been very vocal about people abusing it. You must know that you qualify for this option before using it, or the "get out of jail" card may become unavailable to you.
2."Streamlined Filing" maybe available if you have minor compliance issues and underpayments, and your non disclosure was due to the fact that you had no idea, never heard of the requirements, and never intended to not comply. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth by the IRS that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. This option carries small penalties, and allows to avoid criminal prosecution ONLY if you qualified before taking this rout. I personally met many CPAs and tax attorneys who do not have the guts to tell their clients that this is NOT the option they qualify for. Those "professionals" do it because they are afraid of loosing the business. So they send their clients down an irreversible road of loosing the ability to avoid prison time. Please remember, as a tax payer, it is your responsibility to get educated and make decisions, because your tax advisor is NOT going to serve the time for you, and you will.
3. "Offshore Voluntary Disclosure Program" - you knew you had to pay and report, yet for some reason you did not. In other (technical) words your violation was Willful, and now to avoid being found out by the IRS and spending time wearing the striped pajamas you will have to write a FAT check of minimum 27,5% plus all other penalties and interest accumulated to date. If your money was with Foreign Financial Institutions or Facilitators on the IRS "hot" list (link provided below), your penalty will be 50% (ouch again). Just to be clear, the 27.5% or the 50% penalty is your fee to "get out of prison". All other penalties go on top. YES it will be expensive, but when this program ends, they will find you, take all your money and put you away. So please DO NOT blame your banker or advisor, you knew you were cheating so be grateful there is a way to keep your freedom by coming forward VOLUNTARILY before the IRS find you. Do it now, before it is too late!!

October 2nd 2015 was the date when the world Tax authorities and financial institutions started complying with FATCA and forwarding financial information of all Americans directly to the IRS. If you have not reported your FATCA or FBAR required information, the IRS manuals mandate to
1. collect more information
2. forward cases to the Department of Justice for criminal prosecution.
We have no idea on how practical it is for the government to deal with 7+million non compliant Americans abroad, but we sure know that you do not want to find that out on your own.
I hope this gives you some clarity,

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Successonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

http://1.usa.gov/1O0PuDT

swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG

23/10/2015

IRS Announces 2016 Pension Plan Limitations for 2016 (IR-2015-118)- kind of boring, but important.

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2016. In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjustment. However, other limitations will change because the increase in the index did meet the statutory thresholds.

The highlights of limitations that changed from 2015 to 2016 include the following:

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $184,000 and $194,000, up from $183,000 and $193,000.
The AGI (if you filed Form 1040, your AGI will be listed on line 37, or if you filed Form 1040A your AGI will be listed on line 21) phase-out range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly, up from $183,000 to $193,000. For singles and heads of household, the income phase-out range is $117,000 to $132,000, up from $116,000 to $131,000.

The highlights of limitations that remain unchanged from 2015 include the following:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains thi$1,000 (clearly this is not enough to enough).
The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI). For singles and heads of household who are covered by a workplace retirement plan, the income phase-out range remains unchanged at $61,000 to $71,000. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range remains unchanged at $98,000 to $118,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The AGI phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Effective January 1, 2016, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $210,000.

The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged in 2016 at $53,000.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $265,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period remains unchanged at $1,070,000, while the dollar amount used to determine the lengthening of the 5 year distribution period remains unchanged at $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $120,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, remains unchanged at $395,000.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Section 1.61 21(f)(5)(iii) remains unchanged at $215,000.

22/10/2015

Treasury Inspector General for Tax Administration (TIGTA) Office of Audit completed the audit to assess the IRS’s progress in implementing the Foreign Asset Tax compliance act. It identified some limitations with the processing of paper continuation statements (Forms 8938).
Specifically:
~ Transcribed data is not validated to ensure accuracy
~ Data used to report additional foreign accounts or other foreign assets is not transcribed
~ Losses reported by taxpayers cannot be input as negative amounts. TIGTA recommended that the IRS:
1) update the compliance activities in the FATCA Compliance Road-map for identifying noncompliance by foreign financial institutions;
2) initiate a periodic quality review process for the processing of paper Forms 8938 to ensure the accuracy of the data being transcribed; and
3) ensure that the transcription issues identified in this report are addressed in the newest version of the Form 8938 transcription program.
The IRS agreed with the first two recommendations. However, the IRS disagreed with the third recommendation due to "budgetary constraints, limited resources, and competing priorities". The accuracy of the data obtained from Forms 8938 is a critical component for the success of the IRS’s compliance activities with implementing the FATCA. As such, TIGTA believes that the IRS should make these programming changes a priority.
It is interesting to see how the scope of the governmental reach may be widened just by quoting "budgetary constraints".
For those who are looking for more concrete information, here are some general numbers that may make subject to reporting:

1. Report to the Department of Treasury if you are a U.S. person (which includes U.S. citizens, resident aliens, trusts, estates, and domestic entities) that have an interest in foreign financial accounts that reached $10,000 at any time during the calendar year.
2. Report to the IRS if you are a specified individual (which includes U.S citizens, resident aliens, and certain non-resident aliens) that have an interest in specified foreign financial assets and your assets reached following threshold(s)
a) If living in the United States -
Unmarried or married filing separately $ 50,000 or
Married filing jointly $ 100,000
b) If living outside the United States -
Unmarried or married filing separately $ 200,000
Married filing jointly $ 400,000

We have seen many issues with the implementation of FATCA. In the near future the IRS will detect those with unreported bank accounts, or missing FBAR fillings that were required to be reported under the old Bank Secrecy Act. Today the Canadian tax authorities reported that they are ready to submit 155,000 information slips on Americans to the IRS. Now, more than ever, it is undoubtedly most important for Americans abroad to stay tax Compliant and report their assets and foreign bank accounts with the IRS and the Department of Treasury, before they are found and are faced with penalties and possible criminal liabilities.

To your prosperity and freedom,

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Successonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

http://1.usa.gov/1Qr9exW

21/10/2015

Global Economic Initiative, NYC 2015

21/10/2015

Asset and Tax Snoops Around the World UNITE!!!
While doing my research for the Global Economic Initiative at the UN headquarters, I came across of what seemed to be a counter move of G20 countries to the US passed Foreign Asset Tax Compliance Act (FATCA). It is an attempt in which the G20, plus over other 70 countries, will know EVERYTHING about our assets, business ownership and investments around the world. In its “Standard for Automatic Exchange of Financial Account Information” the Organisation (yes, spelled with an “s”) for Economic Co-operation and Development (OECD) outlines the Common Reporting Standards:
“Under the standard, jurisdictions obtain financial information from their financial institutions and automatically exchange that information with other jurisdiction on annual basis…To prevent circumventing (the reporting) it is designed with a broad scope” across 3 dimensions:
1. The financial information to be reported with respect to reportable accounts includes ALL types of Investment Income.
~ what that means is that if you have interest, dividends, income from insurance or annuity contracts, or any other investment income, your Account Balances and Sales Proceeds will be AUTOMATICALLY exchanged across 90 countries. All those countries will later report it to the IRS FATCA, and cross checked for missing Foreign Bank Account Reports (FBAR). So if you have any unreported accounts, you MUST act NOW before you are found out and as per IRS manuals, referred to the Department of Justice for criminal prosecution.
2. The financial institutions that are required to report do NOT only include banks. They also include brokers, hedge funds, collective investment vehicles and insurance companies.
3. Reportable accounts include accounts held by Individuals and Entities including trusts, foundation and look through passive entities to report on the individuals that are ultimately control these entities (wow! Go wide snoops).
I am not an accountant or a tax attorney, I only understand the system and the "know how" to get people through compliance hurdles. My gut feel tells me that this baby will dwarf FATCA, and its ability to find all the assets outside the US is so much more effective and wider spread. My gut feel also tells me that any American living abroad with unreported accounts or assets in whatever places need to get educated on how to get into compliance with the US government. With OECD moving forward on the Automatic Exchange of Information, there is a very high probability for all foreign information to wash up (directly and indirectly) at the US shores. If I had to take a guess, based on the aggressiveness of the US government’s implementation of FATCA, it will be much sooner than later. Once again, the time to get compliant with the reporting in the US is NOW! Not tomorrow, not next week, and definitely not next year. It is NOW!
And oh, by the way, if we thought it was hard to open an account for an Americans abroad, it is about to get harder, because the US has NOT signed onto this agreement. YEP! We made them all sign FATCA, but flipped a birdie when they asked us to singe theirs. Way to go ~chanting USA! USA! USA!~
My girl always tells me that this world is “too serious” and that i need to lighten up. So if this feels too morbid, please go back to the start of this write up and read it with a smile.
Make it a great day, and remember that no one looks good in striped pajamas. Not even my idol Martha Stewart:)

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Successonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

bit.ly/1pXp8Bg

21/10/2015

"The U.S. government has long created hardships for Americans who live abroad, and much of the problem relates to the tax code. ... and in 2010 Washington exacerbated that by passing the Foreign Account Tax Compliance Act, or FATCA. As this law comes into force, it is doing immense harm to Americans and American interests abroad", writes Colleen Graffy for Wall Street Journal. Her article titled " The Law That Makes U.S. Expats Toxic" is a great point of view from a former American Diplomat living abroad. Many banks, real estate, insurance or brokerage companies do not want to deal with the FATCA mandated compliance and are rejecting business that comes from Americans, making daily life and taking care of necessities very inconvenient. As FATCA implementation continues to impose higher cost on the whole world, it makes you wonder what will happen in the future. Will we, Americans living abroad, be forced to switch to all cash based existence? How will we purchase homes and cars while living away? And what about investing for our retirement? It seems that this law that was intended to catch the bad guys who cheated the system, is shutting the 8.7 million Americans living abroad from many opportunities and necessities that we took for granted back at home. One thing I believe is that this law is here to stay, and we all must comply with our reporting requirements with the US government.

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Successonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

http://on.wsj.com/1VHEQpL

In The Wall Street Journal, Colleen Graffy writes about a measure targeting tax evasion that pushes Americans out of bank accounts—and jobs—abroad.

21/10/2015

The cost of implementation of the Foreign Asset Tax Compliance Act (FATCA) by British businesses surpassed a £1 billion mark, according to article published by "The Telegraph".
Imagine getting a bill for $750 (£500) for a service you never wanted or asked for. How would you feel? Would you call the company that sent you that bill and express your outrage? Most of us probably would. However in the case reported by The Telegraph, many British citizens who were not born in the US or to an American person, who never lived or even visited the United State, and don't even have any assets there are being billed hundreds of pounds because FATCA requires foreign financial institutions to perform compliance tests to make sure that their customers do not have any reporting requirements with the US government. Ronnie Ludwig, of accountancy firm Saffery Champness, said: “These US regulations are a complete nightmare for trustees to get their heads around. We will be spending a lot of our time reviewing each of our client’s trusts between now and the end of October.” If this issue is becoming a "nightmare" for those who do not have any ties to the US, what should we call it when it is concerned American persons?
The age of ignorance for in regard to the foreign tax compliance is over. Americans living abroad need to get educated on what and when they must report to the US authorities. As of January 2015 the IRS launched International Data Exchange Service and now for the first time in history is able to collect financial data on millions of Americans with overseas assets. If you have unreported accounts, you will be found out, and per the IRS manuals your case should be referred to the Department of Justice for criminal prosecution. The good new is that the US government understands that there are many innocent people who are effected by the regulations, and has made provisions to avoid criminal prosecution for those who voluntarily come forward. For many, it is possible to receive reduced penalties, and in some cases avoid penalties all together. But it is up to the tax payer to make the first step. When your unreported accounts are found out by the IRS, it will be too late and there is not much you'll be able to do, except to get ready for a long and costly litigation process. Do not put this off until tomorrow, there is absolutely no benefit in waiting, only extra costs and heartache.

Lyubim Kogan.
US Foreign Tax Compliance Educator
Member of the Global Economic Initiative
Co-Author of "Succesonomics" with the 2 time presidential candidate and Chairman of "Forbes" magazine, Steve Forbes.

http://goo.gl/NRpF3l

New US tax measures, aimed at helping American authorities collect tax from their overseas citizens, are leaving innocent Britons out of pocket