There is good news for foreign financial institutions – the IRS is reconsidering the Foreign Account Tax Compliance Act (FATCA). The FATCA requires all financial institutions to declare details of their American clients to the IRS for tax purposes. If any financial institution does not comply with the FATCA regulations, they are liable to a 30% penalty withholding tax that will be levied on the gross proceeds of any US assets. But upon reviewing the regulation, it was brought up that such a requirement may contravene privacy laws.

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The Earned Income Tax Credit (EITC) is for you if you earn $49,078 or less per year. Every year, the IRS gives publicity to the EITC and encourages those who are eligible to make their claims. According to IRS Commissioner Doug Shulman, “The EITC provides a financial boost for millions of hard-working Americans. But people can easily overlook this important credit, especially if their financial situation has changed”.

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Are you a hobbyist? In my previous article I shared some ways you can turn your hobby into a tax-deductible business. The four ways were:

1. Keep accurate records
2. Three in five profit ratio
3. Plan when you spend and get paid
4. Draw up a business plan
Here are some other things you ought to do:

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Can you claim deductible expenses from your hobby? You can if you make your hobby become your business. If you are spending a substantial amount of money on your hobby, you might as well turn it into a business. Look at it this way – suppose you spend $20,000 a year in your hobby, then you can report that loss on a Schedule C and write if off against your salary on your Form 1040. Assuming your combined state and federal income tax rate is 40%, maintaining your hobby will really only cost you $12,000, and the federal and state governments would have subsidized your hobby. Doesn’t that sound appealing?

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Having children can help you to save on your taxes. The IRS has just revealed the ten tax benefits you can have when you have kids.

1. The most obvious tax benefit in having children is being able to claim dependency deductions. Most of the time, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

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