Clients Letter

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Assignment 1: Foreign Source Income Rules (Client Letter) Ditanyan Patterson Beth Hewitt Strayer University ACC.568 April 16, 2016 Abstract I’m a CPA whom in which is working as a tax professional engaged to provide tax advice to my client with operations in the United States and internationally. My client has specifically requested information on strategies that she can use to minimize tax effects of foreign sourced income. First and foremost I must explain to my client the meaning of foreign sourced income. Foreign sourced income is, "...income earned from investments made outside of the domiciled country of the investing entity such as mutual fund and that is typically taxed at the foreign source."…show more content…
The IRS and their international partners have begun to crack down on pursuing those whom in which hides income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions. The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax. Also, in addition to reporting your worldwide income you must reort on your tax return if you have a foreign bank or investment account. Evading taxes on foreign source income can lead to major consequences. These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment. Being a U.S. citizen or a resident of the United States, you will be taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation. If my client were to be self-employed, she would be categorized as self-employment income. Qualified individuals may claim the foreign earned income exclusion on foreign earned self-employment income. The excluded amount will reduce the individual’s regular income tax, but will not reduce the individual’s self-employment tax. Conclusion To my client I gave you as much information that I could to help direct tyou in path hecess. Yto

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