February 2025
Exit Tax Form 8854 Changes and Common Procedural Errors
In Part 1 of our series on the final Exit Tax regulations issued by the IRS on January 14, 2025, we looked at §2801 tax implications for US individuals who receive certain gifts or bequests (either directly or indirectly) from someone who has expatriated and been subject to the Exit Tax. In Part 2 of our series, we looked at how long US recipients and their tax preparers should maintain records substantiating the §2801 tax reporting. We also examined tax preparer liability related to filing Form 708. In this last part of the series, Part 3, we will highlight changes to the Form 8854, Initial and Annual Expatriation Statement, and other miscellaneous items related to the US Exit Tax. A Notable Change on the 2024 Form 8854 Expatriation Statement The IRS has updated IRS Form 8854 to include new Question #3. Here is a snip: This new question may present challenges to individuals who plan to expatriate and hoped to use gifting strategies to reduce their net worth below $2 million so that they can pass the “Net Worth Test” and avoid paying the Exit Tax. The instructions to Form 8854, Part II, Question 3, say the following: “Check the “Yes” box if there have been significant changes in your assets and liabilities during the 5 years preceding your expatriation date. If your net worth was $2 million or more at any point during the 5 years preceding your expatriation date but was less than $2 million on your expatriation date, there have been significant changes in your assets and liabilities. You must attach a statement to Form 8854 that explains the changes. Example. During the 5 years preceding her expatriation date, Maria’s net worth exceeded $2 million. However, after Maria made a gift of real property to her child on October 31, 2024, Maria’s net worth decreased such that it was less than $2 million on her expatriation date. Maria reported the gift on a federal gift tax return. Maria must check the “Yes” box. Maria must also attach a statement that explains that her net worth decreased because she made a gift of real property to her child on October 31, 2024, and that she reported the gift on a federal gift tax return.” The IRS’s intentions for introducing this question are unclear, but there are a couple of likely explanations. Explanation 1. The IRS may be seeking to clarify the ambiguous terminology found in the law—and specify that gifts in the 5 years prior to expatriation will be included in the Net Worth Test calculation. Internal Revenue Code Chapter 12, Subtitle B, defines which gifts can be pulled back in to calculations of net worth when determining whether an expatriator’s net worth is below the $2 million threshold. Under this section, for purposes of the “Net Worth Test,” a taxable gift is includable in net worth calculations if the individual was a citizen or resident of the United States and transferred the interest immediately prior to expatriation. [...]
Risk and Recordkeeping Requirements for Form 708 Filing To Report Receipt of a Covered Gift or Bequest
In Part 1 of our series on the final Exit Tax regulations issued by the IRS on January 14, 2025, we looked at §2801 tax implications for US individuals who receive certain gifts or bequests (either directly or indirectly) from someone who has expatriated and been subject to the Exit Tax. In this post, Part 2 of our series, we look at how long US recipients and their tax preparers should maintain records substantiating the §2801 tax reporting. We also examine tax preparer liability related to filing Form 708. Recordkeeping Requirements for US Recipients The recordkeeping requirements in the final regulations (§28.6001-1) do not provide an exact number of years that records must be kept. The requirements say the following: “Retain permanent books of account or records as are necessary to establish the amount of that person’s aggregate covered gifts and covered bequests, and the other information required to be shown on Form 708.” “So long as the contents thereof may become material in the administration of any internal revenue law.” The question then becomes, “under what standard of materiality do we apply the retention of records for the effective administration of any internal revenue law?” Three years? Six years? Nine years? Forever? An ultra-conservative reading this regulation would mean forever. However, given the timeline for filing (18 to 24 months), a good rule of thumb would be 8 years total, which would cover the usual 6 years (extended statute of limitations for assessment for most US tax returns), plus the 2 years for the filing. Recordkeeping & Other Requirements for Tax Preparers The requirement for recordkeeping (§28.6060-1) applies to both the US recipient and the tax preparer, if a tax preparer was employed to prepare the Form 708. There are several other regulations that impose tax preparer liability at the very end of the final regulations. They are as follows: If a tax preparer prepares Form 708 (including a protective Form 708) or a claim of refund related to Form 708 (meaning Form 843), then the tax preparer must provide a copy of the final Form 708 (including a protective Form 708 or Form 843) to the client. If a tax preparer prepares Form 708 (including a protective Form 708) or a claim of refund related to Form 708 (meaning Form 843), then the tax preparer must also include their preparer tax identification number (PTIN). Tax preparers are subject to IRC §6694 for significantly miscalculating, undercalculating, and/or improperly calculating the Section 2801 tax by taking an “unreasonable position” on IRS Form 708. An IRC §6694 penalty is the greater of $1,000 or 50 percent of the income derived (or to be derived) by the tax return preparer with respect to the return or claim. Tax preparers are subject to IRC §6695 and a maximum penalty not to exceed $25,000 for failing to do the following: Failure to sign the return Failure to furnish an identification number (see above) Failure to retain records (see above) Failure to furnish a copy [...]
If You Expatriated from the US, Be Careful in Making Gifts to US Individuals
Individuals who gave up their US citizenship or long-term tax residency (or will do so) and are deemed to be covered expatriates subject to the US Exit Tax (or will be in the near future), should take great care when making gifts or bequests to US citizens or US resident individuals, including family members, either directly or indirectly, through a US or foreign trust. When the IRS published final Exit Tax regulations on January 14, 2025, it provided additional detail on when a related tax (the “Section 2801 tax”) applies and does not apply, as well as how it is calculated, reported, and submitted to the IRS. Whereas the Exit Tax applies to the person expatriating, the related §2801 tax applies to US individuals who receive certain gifts or bequests from someone who has expatriated and been subject to the Exit Tax. In this post, Part 1 of our series on the final Exit Tax regulations, we cover details that the final regulations provided on the applicability, calculation, and reporting of the §2801 tax. Individuals Subject to §2801 Tax The §2801 tax applies to any “US recipient” of a “covered gift or bequest” from a “covered expatriate.” A “covered expatriate” is defined as an individual who relinquished their US citizenship—or a long-term lawful permanent resident who relinquished their green card—and who, at the time of expatriation: Had a net worth of more than $2 million, or Had an average US income tax liability exceeding $206,000 (2025 inflation-adjusted amount) over the past 3 years, or Was not fully in compliance with tax return filing and reporting requirements for one or more of the last 5 years, or Was subject to the US Exit Tax in any way, shape, or form. Per the regulations, “US recipients” include: A US citizen or resident, a domestic trust, or an electing foreign trust that receives a covered gift or covered bequest, whether directly or indirectly, during the calendar year. A US citizen or resident receiving a distribution from a non-electing foreign trust if the distribution is attributable (in whole or in part) to one or more covered gifts or covered bequests received by the non-electing foreign trust. A US citizen or resident shareholder, partner, or other interest-holder (if any) of a business entity that receives a covered gift or covered bequest. Many of these terms have special definitions. “Domestic trust” and “foreign trust” are defined in §7701(a)(30)(E) and §7701(a)(31)(B), respectively. “Electing foreign trust” is a foreign trust that made a valid election, still in effect, to be treated as a domestic trust for purposes of §2801. A “non-electing foreign trust” is any foreign trust that has (a) not made an election to be an electing foreign trust, or (b) has not migrated into the US and become a US domestic trust, or (c) was an electing foreign trust that had its status revoked by facts and circumstances detailed in the final regulations or by the IRS via written notice. “Covered Bequests” and “Covered Gifts” A [...]
January 2025
Proposed Regulations Issued in 2024 Affect Your Options for Foreign Pension Reporting
The IRS issued proposed foreign trust regulations on May 7, 2024, which offer certain taxpayers additional relief from burdensome foreign pension reporting requirements. But they don’t come without risk. On the positive side, if you have an interest in a foreign pension, and your foreign pension(s) meet certain criteria, you may: Be able to skip annual in-depth reporting of your foreign pension details on IRS Forms 3520 and 3520-A, sparing you from the annual headaches of gathering difficult-to-obtain information, as well as from the hefty tax preparation costs related to annual filings. This could result in thousands of dollars’ worth of savings per year. On the negative side, taking advantage of the relief in the proposed regulations carries risks: The proposed regulations do not bear the force of law, yet opting to use them locks you in to certain positions. The proposed regulations are subject to change or revocation by political parties or figures who do not agree with their provisions. Changes in your pension balances may mean your pensions qualify for relief one year but not the next, and the proposed regulations are silent as to how to handle the intervening periods. If you need to resume reporting (either because the regulations are revoked or superseded, or because your pension no longer falls within the value limits), it is unclear whether you will need to go back and reconstruct data and calculations for the intervening periods and possibly be left to fight the typical $10,000 penalties that Forms 3520 and 3520-A carry for failure to file (or for late or incomplete filing). In this blog post, we will delve into these matters to give you a better understanding of the proposed changes to the US classification, reporting, and taxation of foreign pensions in the context of the proposed foreign trust regulations. Background on Foreign Pension Reporting and Earlier Relief If you have an interest in a foreign pension, the US tax treatments and reporting requirements are burdensome (even if you don’t currently receive distributions). For an explanation of why this is the case, see Part 1 of our August 2020 blog post series on US Taxpayers with Pensions and Retirement Accounts outside the US. In March 2020, the IRS issued Revenue Procedure 2020-17, which offered rare relief to taxpayers whose foreign pensions met certain requirements. It was the first attempt by the IRS to provide relief to taxpayers who had to file Forms 3520 and 3520-A to report certain foreign pensions (not just a specific pension or pensions in a singular foreign country – see Rev. Proc. 2014-55). See Part 2 of our August 2020 blog post series on foreign pensions, Do Your Foreign Retirement Accounts Qualify for Better US Tax Treatment? Although Rev. Proc. 2020-17 offered relief, it also generated confusion. In addition, the IRS later clarified that its scope was narrower than taxpayers and practitioners understood. The Proposed Foreign Trust Regulations Issued in 2024 Give Taxpayers More Options On May 7, 2024, the IRS issued proposed foreign [...]
2024 Individual Tax Return Engagement Letter (NP)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
IRS Increases Scrutiny on Non-Residents Who File Joint Tax Returns with Their US Resident Spouse
US non-residents (for tax purposes) must make a special election in order to file joint tax returns with their US tax resident spouses. Changes to individual income tax forms for 2024 indicate that the IRS may be taking a closer look at the returns of such couples, to ensure that certain items are properly reported. What Changed? The IRS has updated the 2024 US Individual Income Tax Return (Form 1040) to include additional information related to individuals filing under an Internal Revenue Code (IRC) §6013(g) or §6013(h) election. The update can be found on page 1 of Form 1040 in the “Filing Status” section. Here is a snip: Form 1040 The additional line indicates that if a non-resident alien is filing “married filing jointly” with a US tax resident spouse under either IRC §6013(g) or §6013(h), then the box must be checked, and the name of that person must be provided. Background IRC §6013(g) is a one time, once-in-a-lifetime election. It occurs when a non-resident is married to a US tax resident, i.e., an individual satisfying the substantial presence test or the green card test or a US citizen. The general rule is that the married couple cannot file a joint US Individual Income Tax Return (Form 1040) or use the married filing jointly status. Rather, the US tax resident must file “married filing separately” on the Form 1040, and if the non-resident alien has a US tax return filing requirement (such as when they have effectively connected income or non-effectively connected income with improper withholding tax), then the nonresident would file “married filing separately” on US Non-Resident Income Tax Return (Form 1040NR). The §6013(g) election enables the non-resident to file “married filing jointly” with their US tax resident spouse on Form 1040. Further, the election treats the non-resident spouse as US tax resident for purposes of Internal Revenue Code Chapter 1, Chapter 24, and Sections 6012, 6013, 6072, and 6091 for the entire taxable year and for all subsequent tax years that the election is in place. The general advantages of making the election include: Better tax rates—The filing status of married filing jointly has better tax brackets than married filing separately. Greater access to deductions—The married filing jointly standard deduction is double the married filing separately standard deduction, and filing jointly can also provide greater access to certain other deductions and credits. The general downside is that both spouses would now be subject to US taxation on their worldwide income and mandatory International Informational Reporting of their worldwide foreign financial assets (whereas without the election, only the resident spouse would be subject to these requirements, and the non-resident would only file to report their US-sourced income). Examples of mandatory International Information Reporting that may apply include, but are not limited to, IRS Forms 8938, 8621, 5471, 926, 8992, 3520, 3520-A, 8858. Example 1 A is a US citizen and B is a non-resident alien and citizen of Foreign Country 1 or FC1. FC1 has a tax [...]
Nabeeha Imran
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Tax Specialist Coming Soon!
Teresa Espinosa
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Tax Specialist Coming Soon!
Stacy Joseph
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Tax Specialist Coming Soon!
Amber Moore
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Tax Senior Coming Soon!
Pamela Clements
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Senior Tax Manager Coming Soon!
December 2024
Kristie Valenzuela
Areas of Expertise Client Relations Database Management Education Associates Degree, Accounting Languages Spoken English Client Communications Manager Kristie is a Client Communications Manager (CCM) at The Wolf Group, with more than 25 years of experience in financial services firms. As the CCM for new clients at the firm, Kristie is often the first point of contact for clients, taking new client calls and coordinating discovery meetings or consultations. She assembles and sends customized tax packages to new and prospective tax clients and creates and maintains their office records. Since joining The Wolf Group in 2017, Kristie has assisted numerous new clients with the onboarding process, helping them understand the information needed to start on their tax services, and identifying which specialized team within the firm best fits their needs. She has also supported a range of operational functions within the firm. Prior to joining The Wolf Group, Kristie worked in financial services as a commercial loan analyst and commercial loan processor. Outside of work, Kristie enjoys spending time with her family and going to the movies.
Jacque Stadler
Areas of Expertise Client service Tax operations Administrative support Certifications/Credentials Notary Public - TX Education AA, Paralegal Studies Languages Spoken English Client Communication Manager Jacque is a Client Communications Manager (CCM) at The Wolf Group, with more than 30 years of experience in client service and administrative support at public accounting firms. At The Wolf Group, Jacque is responsible for overseeing the client experience for both US and foreign national clients. She works closely with tax technical professionals and reaches out to clients to ensure the smooth flow of information and high-quality services. As the CCM for the firm’s Teams Waya, Susi, and Lykos, Jacque supports business owners, trustees and fiduciaries, US citizens abroad, foreign nationals residing in the US, and high-net-worth individuals with foreign assets. Previously at The Wolf Group, Jacque processed and delivered all types of annual tax returns and tax forms, including those for individual taxpayers, partnerships, corporations, S corporations, fiduciaries, estates, and trusts. Prior to joining The Wolf Group, Jacque worked in public accounting firms in several states, where she handled client service and operational matters, processed tax returns, and prepared various tax forms. Outside of work, Jacque enjoys gardening, traveling, riding dirt bikes, camping, and spending time with family.
Lina Sidorenko
Areas of Expertise Client Services Interpersonal Communication Certifications/Credentials Accounting Assistant Certification Education BS, Purdue University Languages Spoken English Russian Client Communications Manager Lina is a Client Communications Manager (CCM) at The Wolf Group, responsible for overseeing the client experience for both US and foreign national clients. She works closely with tax technical professionals and reaches out to clients to ensure the smooth flow of information and high-quality services. As the CCM for the firm’s Teams Lobo and Okami, Lina supports clients who are international organization employees, G-4 visa holders, non-resident filers, retirees, and high-net-worth individuals whose tax planning and tax returns involve significant international complexities (Forms 5471, 5472, 8865, 8621, 3520/3520-A, etc.). She keeps clients abreast of new developments, facilitates communications, and helps those who are new to the US tax system to understand the filing process and what to expect. Prior to joining The Wolf Group, Lina moved to the US from Ukraine and worked for US employers in teaching, customer service, and accounting roles. Outside of work, Lina enjoys reading, practicing taekwondo, drinking coffee, and exploring new countries with her family.
2024 Entity Tax Return Engagement Letter (CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state income tax returns, with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the scope of tax return preparation. As such, in most cases, we will provide you with referrals to bookkeepers. In limited cases, we may provide you with such assistance directly. In those cases, these services are intended to be nominal, are not a separate accounting or bookkeeping service, will fall under the scope of this engagement letter, and will be performed solely in accordance with the AICPA Code of Professional Conduct. In the event we conclude that such services are necessary to prepare your tax returns, we will bill you for the required services. You agree to pay for those required services. What Services Are Not Covered under This Engagement? (Most Are Offered as a Separate Engagement.) The following services are examples of services that are outside the scope of this engagement. However, we regularly assist clients with many of these matters. Should [...]
2024 Entity Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state income tax returns, with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the scope of tax return preparation. As such, in most cases, we will provide you with referrals to bookkeepers. In limited cases, we may provide you with such assistance directly. In those cases, these services are intended to be nominal, are not a separate accounting or bookkeeping service, will fall under the scope of this engagement letter, and will be performed solely in accordance with the AICPA Code of Professional Conduct. In the event we conclude that such services are necessary to prepare your tax returns, we will bill you for the required services. You agree to pay for those required services. What Services Are Not Covered under This Engagement? (Most Are Offered as a Separate Engagement.) The following services are examples of services that are outside the scope of this engagement. However, we regularly assist clients with many of these matters. Should [...]
2024 Individual Tax Return Engagement Letter – WGCA
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
2024 Individual Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
2024 Individual Tax Return Engagement Letter (CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2024 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2024 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
2024 Gift Tax Return Engagement Letter
Dear Client: The Wolf Group, P.C. is pleased to provide you with the professional services described below. This letter confirms our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. The engagement between you and our firm will be governed by the terms of this agreement. What Is the Scope of This Engagement? We will prepare the following federal gift tax return for the year ended December 31, 2024: Form 709: United States Gift (and Generation-Skipping Transfer) Tax Return Federal and state law governs your obligation to file a gift tax return and pay gift tax. The Internal Revenue Service (IRS) considers a gift to be any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return. Under federal tax law, certain gifts are taxable and subject to an annual exclusion amount, which, for 2024, is $18,000 per taxpayer. In addition, a lifetime gift exclusion amount applies, which for 2024, is $13,610,000. State law governing gift taxes may vary. A gift tax return is an individual filing; there is no joint gift tax return. Under certain circumstances spouses may elect to “split” gifts. If you are eligible for, and elect gift-splitting, we will also prepare your spouse’s gift tax return. We will not prepare any tax returns except those identified above, without your written request, and our written consent to do so. We will prepare your gift tax return based upon information and representations that you provide to us. We will not prepare financial statements or valuations of any kind. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify certain information. We will prepare the above-referenced gift tax return solely to assist you with your filing obligations with the IRS and state and local tax authorities as identified above. Our services are not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless from any and all claims arising from the use of the tax returns for any purpose other than complying with your tax filing obligations regardless of the nature of the claim, excepting claims arising from our gross negligence or intentional wrongful acts. The scope of our engagement is limited to the preparation of the gift tax returns listed above. It includes tax advice provided to you, as donor, regarding elections that can be made on gift tax returns. What Services Are Not Covered under This Engagement? (Some Are Offered as a Separate Engagement.) Tax planning services Our engagement does not include income, gift/transfer, or estate tax planning services. During the course of preparing the gift tax return identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have [...]
