Temporary IRS Tax Debt Relief For US Taxpayers With A Balance Due

Learn how US taxpayers have had a temporary pass on their outstanding IRS tax debt since the end of August.

Relief from your IRS tax debt is on the way, but for an unknown period.  

If you owe the IRS, then you’ll want to shout this IRS tax debt relief from the rooftops.  

In a time when the IRS has ramped up resources in every which way but loose to hone in on owners of virtual currency, they have temporarily loosened up on those taxpayers who need some IRS tax debt relief.

If you are a taxpayer who currently has an outstanding balance with the IRS, you can take a deep breath.

Why do US taxpayers currently have some IRS tax debt relief?

On August 21, 2020, the IRS announced that they temporarily halted the mailing of three notifications typically sent out to taxpayers with balances due to reduce the backlog of unopened mail that mounted while most IRS operations were closed due to COVID-19.

How can I expect to receive this temporary IRS tax debt relief?

The announcement read like this:

“The IRS has temporarily suspended the mailing of three notices to taxpayers who have a balance due on their taxes. The suspended notices are (1) CP501; (2) CP503; and (3) CP504. However, the IRS has informed taxpayers and tax professionals that some of them might still receive these notices during the next few weeks due to the delivery of existing mailings. The IRS is working to stop these mailings at their processing centers.”

What are these three IRS tax debt notices all about?

IRS tax debt

They are a series of letters sent to taxpayers who have debt with the IRS.  

These letters are sent in sequential order with escalating threats for those who have failed to pay back what they owe to the IRS. 

The first letter sent is called a CP501 Notice. The taxpayer is informed that they have a balance due (money owed to the IRS) on one of their tax accounts.

If there is no action taken, a second letter is sent called a CP503 Notice. The taxpayer is informed that the IRS has not heard from them with a reminder that they still have an unpaid balance on their tax accounts.  

The third and most threatening notice is called the CP504 Notice. The taxpayer is once again told they have an amount due to their account. This time they are told if they do not pay the amount due immediately, the IRS will seize (levy) their state income tax refund and apply it to pay the amount still owed to the IRS.

Which tax debt relief letter am I happiest not to receive?

IRS tax debt

This third, most threatening letter is of particular interest. CP504 is the biggie. It is the threat of a levy in 30 days.

If you fall into this category and have been worried about having to take immediate action on your tax debt, you can breathe a temporary sigh of relief.  

While there has been no timeframe set for these three letters’ temporary suspension, I think this is an effort by the Dept of Treasury to stop the escalation of debt issues, especially since this is an election year.

Nonetheless, it is excellent news for the millions of taxpayers who have 2019 debt that they can’t pay because of the lousy economy.

What can I do if I have a question about IRS tax debt?

If you have a tax question, you can schedule a call on our Donnelly Tax Law website.   

If you are a crypto owner worried about getting a crypto tax audit, we have put together three exciting monthly memberships to put your mind at ease so you can sleep again.

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International Crypto Tax Competition – Stephan Livera Podcast: Part Four

Learn from tax experts about international crypto tax competition and determine if making a move is worthwhile.

Dennis Wohlfarth of Accointing and Clinton Donnelly of Donnelly Tax Law join Stephan Livera to talk about Bitcoin tax recordkeeping, and strategies to minimize tax. In the full podcast, we chat about:

  • Current Bitcoin tax treatment
  • Capital gains Bitcoin tax treatment
  • Bitcoin tax recordkeeping
  • Bitcoin tax strategies locally
  • Bitcoin tax strategies for those willing to go overseas
  • International crypto tax competition

In part one, we talked about Bitcoin tax treatment and Austrian economics on Stephan Livera Podcast, episode 183, and our guests were from the company Accointing and Donnelly Tax Law

In part two, we talked about Bitcoin tax recordkeeping.

In part three, we talked about how various crypto tax situations should be treated locally and internationally from a crypto tax law perspective.  

Today, our podcast show notes are about international crypto tax competition and determining if moving is worthwhile.

International Crypto Tax Competition

international crypto tax

What are the ways that people could explore if moving is worthwhile?

Clinton Donnelly: Let’s take the situation with someone who’s not an American.  

I’d propose that the best place for your money is to invest in the United States. 

It is the largest tax Haven in the world because the financial industry is an essential part of the US economy, and they’ve created powerful incentives to attract foreign money. 

Notably, there are zero capital gains on your crypto assets in the US if you’re a foreigner.

If you go to Bank of America, Citibank, or Wells Fargo, or any of these major banks as a foreigner, you can easily open up a bank account. But you’ll have to go there physically and open one up. 

It’s not going to be a question as to why somebody from Australia or Switzerland is coming to the US to open up a bank account because the US wants to be the world’s marketplace.

Opening a bank is not going to be a problem, and you’ll want to do it with these major banks because they’re accustomed to international wire transfers. 

Suppose you have an account at a US bank. In that case, nobody will question it from an anti-money laundering perspective if you are trying to transfer money back to Australia. As you know, it’s widely respected as opposed to a BVI (British Virgin Islands) bank or credit card. 

The US does information sharing between countries regarding how much money citizens have in foreign bank accounts.  

The US has FATCA Law. 

All the world’s banks have to tell the US (the IRS) twice a year about American bank accounts in foreign countries. In response to that, the OACD countries created common reporting standards, CRS

I think about a hundred countries have signed up to where once a year, they will report back the total amount of each citizen’s bank account to their home country.

And the US didn’t sign that. The US did not sign the common reporting standards. 

What that means if you have a bank account in the US, the US doesn’t tell any other country about it. So, it’s kind of ironic. 

I guess maybe that’s like being the bully. 

The U.S. demands that everybody gives information to them, but they won’t share it with anyone else. This is because the US is the most prominent financial player out there. 

So they can have this, and whereas it is considered a bit of a tax haven or a low tax jurisdiction, but for everybody who’s not a United States citizen.  Thus making it a great place to put your money because it’s a rich investment area. 

You can move your money out of cryptos when you want to put it into some of the world’s safest banks and invest in some of the best real estate in the country and Wall Street. 

There’s a lot of affluent financial areas with powerful incentives. 

You’ve just got to use a US credit card, like a Bank of America credit card that you can use buying things all over the world for the rest of your life, and your local jurisdiction would have no visibility to it unless you disclosed it to them. So that’s a very attractive thing to do without having to change residents.

Stephan Livera: That could be one idea if you don’t even want to become a US citizen. All of that by just opening an account in the US.

Then there are the other options for moving or getting residents in BVI (British Virgin Islands) or multiple places. I presume that’s also an option that some of your clients might explore.  For some of them it might be worthwhile to consider that.

Clinton Donnelly: I do a lot of consulting in this area. For virtually every country, the principle of taxation is that you’re subject to taxation if you’re in the country for more than six months. 

Typically, you’re subject to taxation on your worldwide income in that jurisdiction where you’ve lived for six months. 

Now, the US has a different tax law. They tax their citizens on their worldwide income, regardless of where they live in the world. So it’s a little different wrinkle for Americans, but a common underlying theme in international taxation is that it is based on residency. 

Residency is typically defined six-months or approximately 183 or 185 days. It varies how you define it, but roughly the six-month thing. 

This creates a massive international tax loophole, which I would call a three-country shuffle, where if you’re never more than six months in one country in a given period, you can keep moving around. It’s kind of like the digital nomad strategy. 

You keep moving around, and you’re not going to have to report taxes to anyone. So, again that’s not for a US citizen. It is assuming you’re not a US citizen. 

Now US citizens have a different problem. US citizens are taxed under income worldwide. However, two massive tax breaks are given to US citizens:

One is, for every dollar they pay in taxes to a foreign country. They get about a dollar to dollar credit back on their tax bill, which is nice. 

The US taxes are lower than most other developed countries. I have clients living in Germany, and their German tax bill is higher than their US tax bill. We still do a US return. They take the German credit, and then they don’t owe anything back to the US. 

That’s if you’re an American citizen living in a low jurisdiction where you are still going to have to report back to the US, and you’ll probably end up paying taxes back to the US.

Now for American citizens, there is a fantastic loophole called Puerto Rico. Puerto Rico is a little country South of Florida next to Cuba, and this area is a possession of the United States. It’s not a state, although there’s always talk about statehood. It’s a possession now in the US tax law. 

Puerto Rico is treated as a possession, kind of like as though you’re living in a foreign country of all of US possessions, and they’ve negotiated the right to tax their citizens. 

If you’re a Puerto Rican citizen, all your income comes from being in Puerto Rico. You do not file a US tax return. Puerto Rico pays its share to the US government on your behalf. So this creates an interesting loophole. Puerto Rico is a Caribbean country, not a lot of indigenous resources. Earthquakes, tsunamis, hurricanes have crushed them.

I mean, the country is bankrupt. However, they created an incentive called act 60 formerly, act 22, where it’s a 0% tax on your capital gains. 

So if you’re an American whale and want to do this, you can move to Puerto Rico, which does mean actually moving there. 

It’s not like, visit for a day and then go back to California. No, you are moving to Puerto Rico for at least six months of the year, in which case, 0% tax on your capital gains on the Bitcoin that you sell when you’re in Puerto Rico. This is a fantastic thing. 

Now, there are some costs.  You have to make a $10,000 donation to Puerto Rican charities. There’s a $5,000 annual fee you pay. And you’ve got to buy a house or apartment in Puerto Rico, and you can’t rent it out. There are some serious out-of-pocket costs, but it’s probably worth it for that extra 15% savings. If you were a whale Bitcoin holder in the US, that’d be the movement for you.

Stephan Livera: Fantastic. So that’s a very nice breakdown there. 

So if you’re a non-US person, it might make sense for you to do this whole three different countries, different residencies, etc. But if you’re in the US potentially, one idea is moving to Puerto Rico. 

One other idea I was interested in discussing related to what we were just saying is what it takes to break your nexus with your home country. 

So, as I understand, it’s like you have to break that six months or 180 days aspect.  

Are there any other things there that people have to think about when breaking that connection so that they can access the lower tax rate?

Clinton Donnelly: Usually, getting a divorce helps. 

I’m just being silly. 

Usually, it is the “Let me go back to visit mother” and that sort of thing, you know.  There is a bit of travel to it. If you take that strategy, you’re at least saying I’m going to be outside. 

Depending on which country you’re from, staying outside that home country for, you know, 9 to 11 months of the year, at least to break the connection.

A couple of things to think about are think of the cost of living. 

You can think about creating awareness of other cultures for your family and speaking other languages. 

There are several websites where you plug in two cities, and they’ll tell you the comparative cost of living. 

And I will tell you, it’s the cost of living that changes a lot between different countries. I just think it’s a great thing to do is once you start traveling, you get the bug. 

What I find is I’ve worked with digital nomads as they travel a bit, and then they decided to have a home base, and they stay there, you know, five months a year, and then they move around or that sort of thing.

If you are not a US citizen, if you're willing to do a three-country shuffle, put your investments in US crypto exchanges, have crypto or at least in wallets, and then use US banks. You can move towards a pretty close to zero tax situation and see the world simultaneously.

Stephan Livera: That’s very impressive.

Exploring The Dynamic Between Different Countries Of The World And International Crypto Tax

Stephan Livera: I think another area that you were touching on as well, Clinton was just around the dynamic between the different countries of the world.

So as you said, it’s almost like there are specific pressures where some countries try to push reporting taxation levels onto others. 

But then there’s also this dynamic where you said that it’s almost like the richer countries allow individual nations to keep lower taxes and have relatively fewer rules around that. 

Could you explain that dynamic a little for us?

Do richer countries allow individual nations to keep lower taxes?

Clinton Donnelly: There was a real concern right before globalization in the eighties.  

Starting in the eighties, we had issues with international drug trafficking. We had, people like Ferdinand Marcos in the Philippines, who pretty much alluded his own country and took the proceeds and took them to Swiss and Lichtenstein banks and trusts. 

The creation of anti-money laundering laws through FATF

The international community got together and said, we have to stop this. So they created anti-money laundering laws coordinated through the financial action task force (FATF).  

The International Monetary Fund (IMF) and the (OECD) are the Organization of Economic Co-operation and Development of about 34 countries that did not like tax havens. 

For example, tax havens, like Seychelles and the British Virgin Islands (BVI), believed these little countries were siphoning off a lot of money and bringing no value to their area. So they clamped down on those using the same anti-money laundering laws, and what that ended up doing was it forced people back to the OECD countries that made it a club of the halves.

The OECD countries treat themselves as plus countries. So, that crushed the small island tax haven network. 

But at the same time, in Europe, we have rich countries like Germany and France, and we also have tiny countries, Luxembourg, Netherlands, who have tiny revenue streams. They need to allow them to have more latitude to have incentives or lower tax options to bring business there. 

The EU is excellent about that, but other countries of the world have to fend for themselves. 

This is a massive issue, by which countries compete with each other. There’s massive competition. 

The US used to have some of the highest corporate tax rates.

It was at 35%; I think France was higher. But then, the UK and Ireland slashed their corporate tax rates significantly. The UK slashed down to 20% on a phase method. Ireland brought it down for foreign countries working in Ireland down to 12.5% corporate tax. This is a big incentive and part of why Google, Facebook, and Apple all move their call centers to Ireland. 

So what the US did to change its international competitiveness is they slashed their corporate tax rates down to 21% and made it exceptionally aggressive. So it is designed to bring big companies who might have been in other countries back home to the US. There is a real war going on for multinational corporations’ tax revenues by countries that are lowering their tax rates to bring them in.

So this will only get more competitive, as people in countries start to do that, they’re going to have to fund it by putting more of the tax burden back on the individual. 

In the US, I looked at a pie chart, and individuals pay roughly 80% of all the US taxes to the IRS. The rest of it is corporate taxes. 

The argument would be, if they put a tax on companies that make sure you buy a shirt in Australia, then your shirt will be more expensive because you’re paying the company’s tax, right? 

Company taxes are indirectly taxed back on the individual. As individuals, we can vote with our feet and move just as I talked about with the three-country shuffle and keep our assets in the US. 

We see the same struggle in the US. 

We have some high tax states like California, New York, and because of remote offices and this sort of thing, people are starting to flee from big states like New York and California.

They’re not willing to pay high property taxes, high sales taxes, high-income taxes anymore.

We're in a period of transition where we as individuals have a lot of power to change our life's tax dimension and make sure we're getting as much value as we can out of the money we have to pay.

Stephan Livera: That was an incredible breakdown. Great information there, Clinton. One of the exciting things there is that dynamic that you were teasing out: there’s this kind of competition between different countries, and for some smaller ones, like say the BVI or Vanuatu, part of the way they compete is they have low tax, etc. 

And for some of them, the offshore investment or the citizenship by investment programs that they offer a part of a good part of their taxation is part of their revenue, that’s part of how they kind of make money.

Clinton Donnelly: An interesting country in South America is a country called Panama. It’s still country, but everybody knows that if anything gets unstable, the US will invade it in a heartbeat because of the Panama Canal. 

Now, what happened is Panama has a tax regime where if a company or an individual drives their income from outside of Panama, then it’s not taxed in Panama. Okay. So it’s a true territorial system. 

What’s happened is that multinationals who want to do business all over Latin America set up their headquarters in Panama. They take all their money in Latin America back to Panama, Panama doesn’t tax it because it’s a drive from outside of Panama.

This is just a unique arrangement that has enabled Panama to attract incredible amounts of business because almost all the Latin American countries are unstable Argentina, Brazil, Colombia, and Venezuela. 

I mean, it’s a volatile mess there, but Panama has the most reliable banking system in all of Latin America. The problem is it was a bit of a shady tax haven and was blacklisted once. It’s got many issues, but it’s moving to progress and improve things, so I would keep an eye on it. 

If you were an individual living in Panama, you’re not American citizens.

So any other country, they’re not going to tax your income. 

If you’re a remote worker, because you’re getting your income from outside of Panama. It’s a lovely tropical country where they speak Spanish and a bit of English, and it’s got a great airport.

Stephan Livera: Right. And, so I guess the other thing there is, the question of getting residency, citizenship and so on. You might not necessarily need citizenship, but you might need the right to live and work there. 

Clinton Donnelly: It is easy. Go to Panama. You put down money, and you open up a bank account. 

You put $20,000 in the bank account and, you get a lawyer about $3,000. 

They can get you, what’s called a friendly nations visa, and this would be 45 countries that Panama likes. Australia is one of them, you know, all of Europe, pretty much, you get a friendly nation visa. You are now a permanent resident of Panama. 

You need to visit for two weeks every two years. But otherwise, you can set up bank accounts, and you have residency there, and you can travel all the world, still say your Panama citizen, keep your business operating out of Panama. You know, so you’re not going to be taxed cause it comes from outside of Panama. 

Stephan Livera: Yeah. It’s interesting because I’m thinking back through Bitcoin people or people who’ve famously attacked Bitcoin people like Peter Schiff, he’s in Puerto Rico, as I understand.

I think even Eric Vorhees has talked about it and went to. I think, but I’m not sure. Correct me if I’m wrong, but I think he might’ve gone to Panama. But the other point I wanted to raise is everyone’s got their different view on the justice of taxation and AML laws. 

You might be against them, but I think one factor that is potentially playing in favor of the individual.  A typical book a lot of people read is called The Sovereign Individual

And part of that is this idea of going to better countries or going to better jurisdictions for better tax laws or other laws. 

I think most people grow up and have this inertia– I grew up here, so I’m going to live here, and I’m going to die here. But perhaps we’re moving more into a world where people can work remotely. 

They can then start accessing some of these overseas tax planning and overseas tax structuring to improve the level of competition between the different countries. And ideally, keep it a bit lower for the individual. What do you guys think?

Dennis Wohlfarth: Yeah. I think that’s one big part. Clinton also said you have to think about where you want to spend like the next years, right? 

I moved to Zug, Switzerland, to the Crypto Valley or at least what they call it because we started our company there. 

It’s a tax Haven for people from Europe because you can easily move there. It’s just; you have to think about all the consequences, right? 

For example, you’re not allowed to keep a key to your parents’ home when they live in Germany, because you’re just not allowed to have a residence in another country. 

If so, the other country would tax you on your group to income, and there are also the 185 days you have to be there in this other country. 

So you need to be aware of the cultural differences. You need to be aware if you speak a different language. You need to think about the costs of living, especially in Switzerland.

And Switzerland, for example, is entirely different from area to area. So it’s not just, I moved to the border of Switzerland. If you come from France or Italy or Germany, you have different areas, and they are small, like Zug, and have excellent taxation law on crypto because you don’t pay any crypto taxes. 

You just pay a wealth tax at the end of the year. It would be easy for a European citizen to move there. You just have to keep in mind that you kind of give up your home or where you grew up. 

You can move back in the future pretty quickly. It depends on your situation. If you have a family, it’s maybe even harder to move there.

“As Clinton said before, the future of all these taxation laws, especially for crypto, will be another five or ten years until they figure out the correct regulations there.”

- Dennis Wohfarth, Accointing Tweet

My team and I are encouraging everyone to accept these regulations because it also brings grip to the next stage, right? 

It’s not just a bad thing. If new regulations are coming in, you have better guidelines. 

You would know exactly how to behave. And with those guidelines, you can find loopholes to go around these taxes. 

If you don’t have any guidelines, it’s tough to decide what to do, because it’s just not defined yet. Right? That’s a big part to consider for the future.

Stephan Livera: Yeah. Clinton, anything to add?

Clinton Donnelly: I talked to a client, from Serbia, and said he had lived through the time when it was broken up, it became very lawless, and there was no real central government. 

And, the criminal element kind of dominated law and order. So there was a real breakdown. 

And when I was talking to him, he said, “I want to pay taxes! I’ve lived in a country where we didn’t pay taxes, and it was chaos. I want to pay taxes, and I want a stable government.” 

And I thought, wow. It was refreshing because so many people think that even paying a dime to a government or some crime is a value that governments give to you. 

And as you were saying Stephan, we should become shoppers to a certain extent. We can make choices about the tax impacts on our lives. The governments generally like you to stay put in one spot and never move, like everybody who has a hand on you can tax you there. They don’t like you moving around because it’s tougher for them, basically changing your residency.

Tax burdens are outrageous, worldwide and it has to do with the number of services we expect governments to give us.

We want the governments to give us social insurance, that if we get old, they’re taking care of us. 

We want the roads to have no potholes. 

We think that the government ought to do stuff to make things better and regulate and define what it means to be organic, all these sorts of things. Let’s have the government do it.

Every time you say the government ought to, you have to rephrase it and say, I want to pay more taxes so that the government ought to do this.

Governments never shrink themselves, so the only way you can sometimes vote is with your feet and move somewhere else, and the grass isn’t always greener on the other side. 

Suppose you have substantial family ties that you love going visit, you know, the big family on Sunday, and having a pasta dinner. In that case, you know, you’re going to miss that if you take off and go live somewhere else.   

But you might replace it with something more exciting and adventurous in your life. So you have to look at the whole picture. It’s not just the tax issue.

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TAX DEADLINE: The IRS Finalizes The July 15 Deadline

The IRS will not consider auto-extending the tax deadline beyond July 15 this tax season, but options are still available.

Many have been calling it the never-ending tax season. 

The changing tax deadline, along with a variety of potential tax incentives resulting from the COVID-19 pandemic, remains at the point of conversation during this tax season.

Until now, it has been unclear whether this tax season’s deadline would change yet again to help US citizens cope with the financial setbacks brought about by the coronavirus this year.

Background On This Tax Deadline

tax deadline COVID-19

Due to economic downturns created by the coronavirus, the IRS and US Treasury officials changed the tax deadline from April 15 to July 15 back in March.  

Until last week, the further postponement of the US tax deadline has remained a topic of discussion.

On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic (Emergency Declaration). The Emergency Declaration instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency”.

On March 18, 2020, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) issued Notice 2020-17 providing relief under section 7508A(a), which postponed the due date for certain Federal income tax payments from April 15, 2020, until July 15, 2020. 

For an affected taxpayer concerning specified filing and payment obligations, the due date for filing specified forms and making specified payments was automatically postponed to July 15, 2020. 

This relief was automatic; affected taxpayers did not have to call the IRS or file any extension forms, or send letters or other documents to receive this relief. Footnote 1

IRS Keeps July 15 Tax Deadline

tax deadline

Treasury Secretary Steven Mnuchin announced the change in the tax return deadline back in March and continued to discuss the possibility of pushing the tax deadline beyond July 15 until recently.

The IRS has now confirmed that the deadline will not automatically extend to October 15.

The US Treasury department has drawn the line at the administration’s consideration of such a move.

The IRS won’t extend the deadline, but they will provide payment options to help taxpayers in need as stated below:

“The IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers,” IRS Commissioner Chuck Rettig said in a statement. Footnote 2

How do I file an extension for my tax deadline to October 15?

tax deadline

If you need extra time beyond the IRS deadline of July 15, you can file an IRS extension.  

Taxpayers who may continue to need additional time to file could choose to submit the appropriate extension form by July 15, 2020, to obtain an extension to file their return. The extension date will not go beyond the original statutory or regulatory extension date of October 15, 2020.

Here is information on how to apply for an extension of time to file. 

Please be aware that:

  • An extension of time to file your return does not grant you any extension time to pay your taxes. 
  • You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties.
  • You must file your extension request no later than the regular due date of your return.

READ MORE: 5 Reasons Why Your Best Crypto Tax Firm Choice Is Donnelly Tax Law

How may we help you?

At Donnelly Tax Law, we take care of filing an extension for our clients, just to make sure we always have plenty of time. 

Let us help you meet your tax needs. Talk with us today. 

Or do-it-yourself with our resources for doing your taxes, from e-books to online courses.

Be sure to join our conversation on Twitter and follow us @CryptoTaxFixer.

What Clients Are Saying About Donnelly Tax Law

Clients of Donnelly Tax Law are reporting top-notch crypto and expat tax reporting results with Clinton Donnelly and his expert staff of Enrolled Agents.

At Donnelly Tax Law, we believe every crypto taxpayer can have a “Bulletproof Crypto Tax Return.” Our website offers powerful do-it-yourself resources and full-service crypto tax preparation services. 

We’ve helped taxpayers owning cryptocurrencies:

  • Avoid over $40 million in gains by using Like-Kind Exchange calculations. 
  • Prepared over 850 anti-money laundering reports required for many crypto traders. 
  • Prepared over 1025 tax amnesty returns needed by crypto traders correcting back filings. (Our acceptance rate is 100% success.)
  • Moreover, we’re one of the few firms with experience defending crypto returns at an IRS audit.
  • We are experts at filing returns for expats and foreign corporations.
  • We have clients in 48 countries. 

But don’t just take our word for it.

Here’s what clients are saying about Donnelly Tax Law:

Clinton's expert advice helped me utilize international tax treaties to avoid double-taxation by the IRS. I will continue using Clinton as my tax professional for the years ahead and would recommend him to any US citizen living abroad as well as any US citizen who is involved in trading cryptocurrency.
Donnelly Tax Law Client
David
Sweden
The process was very easy. I feel confident my taxes have been done correctly and would like to thank him for the peace of mind this brings me.
Donnelly Tax Law Testimonial
Claire
Spain
Clinton took the bottomless headache of the crypto [currency] documentation required for taxes, and condensed it to a simple set of instructions.
US crypto tax services
Nathan
Saudi Arabia
Clinton assisted me in handling a complex cryptocurrency filing, for several digital currencies including Bitcoin, Ethereum, and Litecoin. His support allowed me to benefit from the financial growth opportunity of cryptos while conforming with developing US tax laws. It pays to stay on the right side of the law, and Clinton made it as easy and straightforward as possible. Thanks, Clinton!
US crypto tax services
Marc
Nevada
[Clinton] demonstrated deep understanding in a specialized area of tax law and is helping me achieve a great result – we’ve been able to go back and fix 5 years of mistakes and errors made by previous advisors that created significant financial impact. He’s also taken less time to complete the same work previously done by a small group of professionals. I’d be happy to recommend him to any American living overseas.
Donnelly Tax Law Client
Aaron
Norway
Clinton is very knowledgeable and has hands-on experience in dealing with international taxation matters specifically related to Canada/US reporting. Clinton was able to identify several mistakes in a prior return that was actually prepared by one of the Big 4 accounting firms.
Donnelly Tax Law Client
Umair
Michigan
Clinton is very knowledgeable and saved me money with my tax return.
US crypto tax services
Julie
Puerto Rico
He resolved my tax needs quickly and found discrepancies my last tax guys completely missed and saved me thousands of dollars in taxes. I wish I had found Clinton Donnelly years ago. Can't recommend him enough!
US crypto tax services
Emran
Texas
I had no idea about how to sort out my American taxes as an ex-pat living in the UK. Clinton made it easy and painless to get caught up on filing back tax returns.
US crypto tax services
Skye
UK
As a US expat working in Europe, I highly recommend Clinton Donnelly to help you file/declare taxes!
US crypto tax services
Danielle
Spain
I really recommend him to any American who is looking forward to sleep in peace regarding Tax Return filing in the States while leaving abroad.
US crypto tax services
Rafael
Panama
Not only did he simplify the process immensely, but he was clear, fast and professional. If you're an expat looking tax help, I strongly recommend connecting with Clinton Donnelly.
US crypto tax services
Max
Spain
Clinton helped me a ton with cryptocurrency related matters on my tax filing this year. He works quickly and professionally and has a well-honed process every step of the way.
US crypto tax services
Matthew
New York
Clinton relieved the stress of figuring out the taxes due on my Bitcoin trading last year. He was efficient and timely. He answered all my questions related to my wallet and international tax laws on reporting.
US crypto tax services
Todd
Arizona
Clinton saved us money on our first encounter! 
US crypto tax services
Deanna
Mexico
Mr. Donnelly was extremely professional, answered any questions, and gives exceptional service. I appreciate the attention to details and the handling of my taxes in such timely manner.
US crypto tax services
Rachel
Panama
I highly recommend Clinton if folks have foreign businesses or accounts in a foreign land as he is well versed with these types of returns and masters them.
US crypto tax services
Siddharth
Texas
I highly recommend Clinton if folks have foreign businesses or accounts in a foreign land as he is well versed with these types of returns and masters them.
US crypto tax services
Tyler
New York
I highly recommend Clinton for preparing tax returns for anyone with international interests.
US crypto tax services
Stuart
Texas
I thought do-it-yourself tax online tax preparation was straight forward but working with Clinton has definitely opened a new door for me.
US crypto tax services
Erich
Singapore
Clinton is extremely clever and truly knows the law environment you are working in. In our case, he even reviewed international tax treaties to improve our tax report, which ended up saving us a lot of money in taxes.
US crypto tax services
Santiago
Venezuela
I went through a dozen accountants, CPAs, and accounting partners. None of them were able to get my taxes filed, and after much searching and frustration, I finally found Clinton.
US crypto tax services
Ashray
Portugal
If you are an American expat it is imperative that you speak with Clinton about your situation before the IRS gets ahold of you. The IRS wants your money. Clinton can show you how to keep the IRS off your back and put more money in your pocket. Highly recommended.
US crypto tax services
Chuck
Panama
If you are an American expat it is imperative that you speak with Clinton about your situation before the IRS gets ahold of you. The IRS wants your money. Clinton can show you how to keep the IRS off your back and put more money in your pocket. Highly recommended.
US crypto tax services
Rudi
Panama
If you have distributed assets and income or are concerned about succession planning, Clinton will accurately guide you through the legal minefield of international laws taking into consideration your country of residence, source of income, source location of income, citizenship, time in country as well as other factors to determine your tax status and I trust his guidance implicitly.
US crypto tax services
Jim
Columbia
I would highly recommend Clinton for anyone working overseas and specifically anyone looking to utilize the Foreign Earned Income Tax Exemption. I simply cannot say enough good things about Clinton and have recommended him to numerous people.
US crypto tax services
Michael
Hong Kong
For months I tried tracking down an accountant or anyone who had the experience and brain to be be willing to do the work and help me out with my situation. So I contacted [Clinton] - 15 minutes later he had the information I needed to sort everything out!
US crypto tax services
Pascal
Malaysia
Without any hesitation, I recommend that anyone with a US tax issue and who is “technologically and paperwork challenged”.
US crypto tax services
Mary
Panama
He's very professional, explains things in a clear manner and has a system set up which makes it far easier to communicate via the internet, which is important to us since we live in a different city than Mr. Donnelly does.
US crypto tax services
Karin
Panama
I went through a dozen accountants, CPAs, and accounting partners. None of them were able to get my taxes filed, and after much searching and frustration, I finally found Clinton.
US crypto tax services
Benedict
Germany
[Clinton] saved me thousands on my taxes this past year. He is wise beyond belief of the complexities of the tax code and he is also patient and concise in explaining it to the people who think the tax code is tangle of complexities.
US crypto tax services
Patty
Digital Nomad
Clinton took care of my tax return twice so far, and I’m glad he did. He provided excellent advises with a very smooth communication. He masters his area of expertise, I definitely recommend him.
US crypto tax services
Melissa
Panama
Clinton took care of my tax return twice so far, and I’m glad he did. He provided excellent advises with a very smooth communication. 
US crypto tax services
Mehdi
Switzerland
Clinton was extremely helpful at explaining with great detail all the peculiarities of my situation and was very timely at returning all of my emails.
US crypto tax services
Ignacio
New York
Clinton prepared all the paperwork required and represented me whenever required to the IRS. He is extremely knowledgeable and a pleasure to work with.
US crypto tax services
Sandy
Canada
Clinton has been handling my taxes for the past 3 or 4 years. He's been a godsend! He provides clear and concise answers, excellent advice and amazing service. In today's political climate it's best to have all your bases covered with the IRS and Clinton's amazingly good at making sure you do.
Rebecca
Panama

Be A Happy Tax Client With Donnelly Tax Law

Now that you’ve heard from others who have benefitted from Donnelly Tax Law, consider becoming a happy client as well. 

Schedule a consultation today. 

Or do-it-yourself with our resources for doing your taxes, from e-books to online courses.

Follow Donnelly Tax Law On Twitter

COVID-19 Alert: The Silver Linings This Tax Season

Learn about the COVID-19 precautions we’re taking and some of the latest news and tips for enduring the pandemic and saving you money on your taxes.

Right now, times are uncertain with the spread of COVID-19.  

Unpredictable emotions are running high, with massive changes forced on your everyday routines due to the Coronavirus. 

But the human race is resilient and we are in this together as a global community.  

In times like this, when things seem rather bleak, there is always a silver lining to be found.  

We look forward to doing our part at Donnelly Tax Law to help you see those good things this tax season.

We know this year will be like no other and the last thing we want to add to your worry is interruptions to completing your taxes.  

So, while we all learn to deal with this new COVID-19 pandemic together, we want to let you know you can continue to count on your tax family here at Donnelly Tax Law to get you through this trying time.

Practices That Make Us Strong During COVID-19

COVID-19 world map

We are putting your safety above all else in the upcoming weeks.

As the COVID-19 pandemic forces changes in our everyday routines, our priority at Donnelly Tax Law is to ensure the safety of our staff and to solve the tax concerns of our customers.

Donnelly Tax Law was built intentionally for a robust operation that is resilient to virus threats, both medical and electronic.

Our work will not be slowed down by the pandemic. Even in normal times, we automatically file extensions for our clients so that the April 15th deadline is extended until October 15th. Read further for more information about the filing and payment deadlines being extended by the IRS. 

Donnelly Tax Law is a team of remote workers and therefore we are not exposed to the health risks of a typical shared physical office. We will continue to work on your behalf, even with regional lockdowns.

Precautions We Are Taking During COVID-19

COVID-19 face masks

We are implementing quarantine procedures for deliveries we receive. This safety measure will add a couple of days to the paper return filing procedure, but it will keep us working happily and healthily on your returns.

  • All of our systems and data are cloud-based on highly-secure systems. 
  • All data is encrypted. 
  • All of our systems require two-factor authentication for extra security. 

We are in communication with our vendors to make sure all critical systems remain available. We do not expect any unplanned outages.

COVID-19 Resources and How to Save A Lot Of Money With Your Tax Returns

We are still working hard for you! Donnelly Tax Law has a staff of eight people. We have always worked remotely, so the pandemic has not disturbed our business processes.

We also have a staff backup strategy, so that if any team member, including myself, needs to take sick leave, we have a backup so the work can continue.

Save 20% By Paying Your Invoice With Bitcoin

Bitcoin

From now until April 15th, we are offering a 20% discount to current and future clients for any portion of your invoice that you pay or prepay with Bitcoin. 

Our team is standing by to get you more details on how to take advantage of that special pricing.  

Don’t have any Bitcoin? Start an account at Coinbase or Kraken.

Due To COVID-19, IRS Delay Filing And Paying By Three Months

anti-money laundering

To help cope with the COVID-19 Coronavirus, the IRS has delayed payments and filing by three months. July 15th is now the new due date for filing individual tax returns and making the final payment on 2019 taxes. There is no penalty for extra interest because of the three-month delay. We already automatically extend the filing deadline to October 15th for all of our customers. 

The good news is that now there is extra time to pay!

If you are a client and your tax payment is scheduled already for auto-debit and you want to delay it, you will need to cancel the debit following the instructions in this link.

READ MORE: Tax Filing Deadline Extended To July 15th Due To COVID-19

Making The Most Of The COVID-19 Isolation

don't give up sign

If you are part of our tax community, you can take advantage of the extra free time to finish gathering all your tax documents and crypto records. 

Once completed, upload them to your secure ShareFile folders and let our client manager know so we can proceed with preparing your taxes.  

You can also use this time to learn more about US expat taxes and cryptocurrency taxes with the various ebooks I’ve written about each topic. Visit our online ebook store and discover additional crypto tax tools at our site CryptoTaxAudit.com.  

Learn about other important COVID-19 news from our blog. If you haven’t already, you can subscribe to our newsletter so you get notified of our latest posts.

READ MORE: Coronavirus Relief Package Signed Into Law – More To Come

Clinton Donnelly In The News

One last note, we are excited to report that I’ve been staying at the top of crypto news this tax season. I’ve taken part in multiple interviews with several national and international crypto podcasters, such as crypto pioneer Charlie Shrem, Brad Kimes, Ivan on Tech and more.

WATCH NOW: Crypto Tax Amnesty? CPA Clinton Donnelly Shares Critical Insights on How to Talk to the IRS and File

Coronavirus Relief Package Signed Into Law – More to Come

The Families First Coronavirus Response Act (H.R. 6201) has been signed into law to provide Coronavirus relief to many. Read more to learn the latest.

The Families First Coronavirus Response Act (H.R. 6201) is now law, and attorneys, accountants, and other professionals are poring over it. What are its main provisions, and how might this coronavirus relief affect you?

The Society for Human Resource Management and other outlets have highlighted the following provisions:

Paid Family Leave From Coronavirus Relief

The law provides 12 weeks of qualifying family and medical leave at two-thirds of their salary when employees can’t work because their minor child’s school or child care service is closed due to a public health emergency.

Those on the payroll for at least 30 calendar days are eligible. Benefits are capped at $200 a day (or $10,000 total) and expire at the end of the year.

Paid Sick Leave From Coronavirus Relief

sick leave

Employers have to provide 80 hours of paid-sick-leave benefits in various scenarios, including a situation in which an employee has been ordered by the government to quarantine or isolate or has been advised by a health care provider to self-quarantine. The payment is capped at $511 a day and expires at year-end.

Covered employers that are required to offer emergency FMLA or paid sick leave are eligible for refundable tax credits. Employers with fewer than 50 workers can apply for an exemption from providing paid family and medical leave and paid sick leave if it “would jeopardize the viability of the business.” According to the SHRM, “Gig-workers and other self-employed workers will be eligible for a tax credit to cover the benefits.”

A notable exemption is companies with more than 500 employees. The thinking on Capitol Hill was that such companies are capable of providing benefits without direct government help.

Part-Time Workers

Uber driver

They are also covered. According to the New York Times, such employees will receive the amount they typically earn in a two-week period. The self-employed — from freelance writers to Uber drivers — “should calculate their average daily self-employment income for the year, then claim the amount they take as a tax credit (they can reduce their estimated quarterly tax payments in the meantime).

LEARN MORE: The Families First Coronavirus Response Act (H.R. 6201)

Is everyone getting a check?

tax evading

There are a lot of rumors floating around about everyone getting a relief check. The government is still working on who gets a check and how much — and how to get the money to everyone who is eligible. As these proposals take a more solid form, we’ll have more details.

For now, keep in mind that the legal situation can change as quickly as the health situation, and ruling and reinterpretations of laws can change suddenly, modifying the advice in this article. We’ll be keeping an eye on authoritative sources in the coming days.

© 2020

READ MORE: Tax Filing Deadline Extended to July 15 Due to COVID-19

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US Expat Tax: What You Need to Know as an American Living Abroad

US expat tax doesn’t have to be confusing. Feel secure as an American living abroad with these exclusive excerpts from my book “Expat Tax Overview”.

Here I share exclusive excerpts of my book, Expat Tax Overview, to show you how to handle US expat tax, the problems that can arise, and how to get good tax advice when you need it.

There is a lot of confusion for American expats when it comes to reporting US taxes while living abroad.  

Most Americans living abroad aren’t aware that they must file US tax returns on their worldwide income and that they must report their foreign financial accounts and assets.

And it’s not their fault because even most domestic tax preparers are unaware of the requirements for US expat tax. 

So, where should Americans living abroad turn when filing their tax returns? We at Donnelly Tax Law are here to help.

I wrote the book Expat Tax Overview to help Americans living abroad understand how they are taxed, to understand US expat tax preparation risks, and to explain how to benefit from credits and exclusions. It comes from the years of experience I have filing complex tax returns for Americans living abroad.  

The following extractions came from the book “Expat Tax Overview”, by Clinton Donnelly of Donnelly Tax Law. It’s the handy overview that every American living abroad should have to understand how they are taxed.

Do I have to file my US tax return while living abroad?

backup withholding

Yes, The US is unique in this way from other countries.  

All US citizens and permanent residents are subject to taxation on their worldwide income regardless of where they live in the world, and even though they may be filing another tax return in a foreign country. 

It’s possible to have a foreign country tax your worldwide income if you are a resident or present for six months or more.  

However, tax havens do exist with special incentives.  

But each foreign country or US territory does it differently.

Puerto Rico is technically a territory of the US, but it has unique tax incentives that have been luring back American expats and crypto traders.

READ MORE: Why Crypto Traders Should Move to Puerto Rico by 2020

How can an American abroad survive paying US expat tax?

retirement

Congress implemented a couple of substantial tax breaks to offset the obligation of filing taxes when living abroad. 

The first one is the Foreign Tax Credit (FTC). 

The second one is the foreign earned income exclusion (FEIE). 

What is the Foreign Tax Credit?

The foreign tax credit provides a dollar for dollar credit on your US taxes for income taxes paid in a foreign country. 

What is the Foreign Earned Income Exclusion?

One of the most significant tax breaks in the tax code is the foreign earned income exclusion. 

For 2020, the first $107,2002 of earned income overseas can be excluded from income taxes. 

This exclusion can be used in any foreign country, whether or not you pay income taxes in that country. 

There are a lot of rules regarding qualifying for this exclusion, so they must be followed closely. 

I have written a 320-page book, Foreign Earned Income Exclusion, specifically on this exclusion.

If you think you might be eligible for the Foreign Earned Income Exclusion, you will find this book to be a real asset for you.

Your US Expat Tax Won’t File Itself

tax planning

It would be best if you were proactive in making sure your tax returns get done correctly with all the foreign elements reported. 

You cannot wait until the last minute to find a tax preparer. 

It is better to find a trustworthy and experienced tax preparer who can provide you with advice as you make financial decisions and help you document your tax return at the end of the year. 

Is your domestic tax preparer or CPA experienced with foreign information returns?

According to the IRS, less than 1% of all individual tax returns are international. 

Thus, domestic tax preparers and CPAs are unfamiliar with the filing requirements and penalty risks.

Does Consumer Tax Software Support US Expat Tax?

anti-money laundering

Because the US expat tax marketplace is so small, no commercial tax software adequately supports the requirements of Americans living abroad. 

We know that US expat tax filing requirements and the difficulty of finding qualified preparers may be overwhelming. 

But don’t panic. 

All you need is a plan and a qualified tax preparer to be on your team.

To get more information about US expat tax returns and the Foreign Earned Income Exclusion purchase my books below.

You can also schedule a consultation with me to discuss your particular situation and get a quote for services.

Get Our Newsletter

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You’ll also receive a special discount code for signing up!