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July 2016


by Michael Bohigian CPA

As if domestic taxes weren’t challenging enough, foreign tax issues can lead a taxpayer down many complicated paths. Here is a quick overview of four of the major reporting requirements and thresholds for taxpayers with foreign accounts:

Schedule B Questions:

Anyone who has either a financial interest or signature authority in a foreign account needs to be careful to check the boxes on the bottom of the Schedule B which is submitted to the IRS as part of one's personal income tax return. This requirement applies no matter how small the balance in the applicable foreign accounts.

The form asks these two questions:

  • At any time during the year, did you have a financial interest or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country?

  • During the year, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If “Yes,” you may have to file Form 3520.

Foreign Accounts over $10K

If you have foreign financial account(s) with an aggregate value exceeding $10,000 at any time during the calendar year, you need to file a Foreign Bank Account Reporting, or FBAR for short, enumerating your foreign accounts and the maximum value in each account.  This is an information-only return; no tax is due for merely owning foreign assets. (US taxes are owed on any income earned within these accounts.)

Due Date and Filing: The 2015 deadline just passed, with a June 30 deadline and no extension.  If you haven’t filed an FBAR for 2015 yet, please do so right away.  Penalties for a failure to file can be steep. Starting next year (for 2016), the FBAR due date will mirror the due date of your 1040, with an April 15th deadline and an extension that allows you to file until October 15

Foreign Assets over $50k

The IRS imposes another filing requirement – a Form 8938 – for single US taxpayers who have foreign assets with a value exceeding $50k at the end of the year (or $75k at any time of the year). The reporting threshold is doubled for Married Filing Jointly to $100k on the last day of the year (or $150k at any time of the year). Higher thresholds apply to US taxpayers living abroad.

Similar to the FBAR, the Form 8938 is an information-only filing.

Due Date and Filing: The Form 8938 is filed as part of your 1040, with a deadline of April 15, or October 15 if extended. Please refer to the Instructions of the Form 8938 for more info.  

Receipt of Foreign Gifts in Excess of $100k

Generally, a recipient of a gift has no obligation to report on or pay a tax due for receiving a gift. However, if you receive a gift from a nonresident alien, a foreign estate, a foreign partnership, or a foreign corporation, you may need to file a Form 3520, an Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.

The Form 3520 is another informational return with no tax due.  It is required for gifts or bequests valued at more than $100k from a nonresident alien or foreign estate, or gifts valued at more than $15,601 for 2015 (adjusted for inflation) from foreign corporations or foreign partnerships. While there are no taxes due with this form, the Failure to File penalties can be substantial.

Due Date and Filing: The Form 3520 is filed separately from the 1040 but has the same deadline of April 15, or October 15 if extended.  Please refer to the Instructions of the Form 3520 for more info.

Follow These Rules

The federal government has really focused on making sure taxpayers comply with these filing requirements.  Please determine which rules apply to you and what steps you need to take on an continual basis to comply with those rules.



IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”

IR-2016-81, May 27, 2016

WASHINGTON — The Internal Revenue Service today issued a warning to taxpayers about bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.”

Even though the tax deadline has come and gone, scammers continue to use varied strategies to trick people, in this case students. In this newest twist, they try to convince people to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.

“These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,” said IRS Commissioner John Koskinen. “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Some examples of the varied tactics seen this year are:

  • Demanding immediate tax payment for taxes owed on an iTunes gift card.
  • Soliciting W-2 information from payroll and human resources professionals (IR-2016-34
  • “Verifying” tax return information over the phone (IR-2016-40
  • Pretending to be from the tax preparation industry (IR-2016-28

The IRS urges taxpayers to stay vigilant against these calls and to know the telltale signs of a scam demanding payment.

The IRS Will Never:

  • Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their IRS Impersonation Scam Reporting web page or call 800-366-4484.
  • Report it to the Federal Trade Commission by visiting and clicking on “File a Consumer Complaint.” Please add “IRS Telephone Scam” in the notes.
  • If you think you might owe taxes, call the IRS directly at 1-800-829-1040.

More information on how to report phishing or phone scams is available on



By Axial Financial Group: Brad McMillan

Recently, several people have asked me what investors should do in their portfolios to prepare for the presidential election. One went so far as to contemplate going to cash around August, just in case.

I understand the concern, and in many respects, I share it. In my opinion, this election has more policy uncertainty baked into it than any other in my lifetime. With Bernie Sanders still out there pulling Hillary Clinton to the left, and with Donald Trump embracing ideas well outside the normal political spectrum, we really don’t know what the next president, whomever it might be, is going to do.

It really is different this election, and investors have reason to pause and evaluate the situation.

That said, it's much too early to panic. The primary season isn’t even finished, and it’s quite likely that much of what has been said and done will be quickly forgotten as candidates, particularly Clinton, pivot toward the general election. Putting it in movie terms, the introductory cartoons are just about over, and the main feature is about to start.

That’s not to say the general campaign won’t be an action thriller, full of twists and cliffhangers. It probably will. Even though Clinton is widely favored to win, there are many reasons to suspect the race will be closer—and that Trump might even have an advantage. The final outcome, in my opinion, is very much up in the air.

So what should investors be doing to prepare? In short, nothing. Here’s why.

First, were Clinton to be elected, the policies she'd likely introduce are pretty well understood and already priced into the market. In any case, she would probably be facing a Republican-controlled Congress, constraining what she could do. There are no immediate or unknown problems with that scenario, from an investor perspective.

If Trump were elected, the situation is not so simple. He has already announced that he would make significant changes in the realms of both economics and foreign affairs, which could very well affect our portfolios. His positions on trade, for example, could end up damaging U.S. exports, affecting the markets in much the same way as the recent strong dollar. Regardless of specifics, he plans—and this is both his point and his appeal—to do things differently. Markets hate that.

At the same time, he would run into the same institutional constraints that Clinton would face, and possibly even more. Although he is running as a Republican, Trump is facing substantial resistance from large elements in the party. House Speaker Paul Ryan, for example, has until recently refused to endorse him over concern about his policies. Many of his ideas are, by design, outside the current political consensus. With Democrats likely to be hostile and Republicans mixed, Trump’s chances of enacting significant changes, particularly in the short term, aren’t high.

Put simply, quite a bit would have to happen to bring about the kind of changes that might affect the market over the long-term. We can certainly expect more turbulence as the race evolves, but that would happen anyway. 

The financial advisors of Axial Financial Group are located at 5 Burlington Woods, Suite 102, Burlington MA 01803, Phone: 781-273-1400.  Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered by Axial Financial Group or Axial-Foy Insurance.  Axial Financial Group and Axial-Foy Insurance are separate and unrelated to Commonwealth Financial Network.  E-mail: Matt Metraw, Wealth Management Consultant, Axial Financial Group for more info about Axial Financial Group. 




Income Taxes

Saving and Investing




  • If you changed jobs, give one of our CPAs a call to discuss filling out new W-4 Forms
  • Now's the time to work through your 2016 income tax projection
  • Update your monthly cash flow budget
  • If your Keogh or Solo 401(k) accounts are worth more than $250,000, or if you have employees in your plan, Form 5500-EZ due by 7/31/16
  • Review, update or create your healthcare proxy.  Need Help?.


2015 & 2016 TAX FACTS

  • For 2015, the standard deduction for a single individual is $6,300 and for a married couple is $12,600. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2015, the personal exemption is $4,000. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $118,500 for 2015 and 2016, up from $117,000 in 2014.
  • The standard mileage rate is $.54 per business mile as of January 1, 2016, down from $.575 for 2015.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $18,000 in 2015 and 2016, up from $17.5k in 2014.  And if you'll be 50 or older by December 31st, you can contribute an extra $6,000 into your 401(k) or 403(b) account this year.
  • The maximum annual contribution to your IRA is $5,500 for 2015 and 2016.  And if you turn 50 by December 31st, you can contribute an extra $1,000 that year.  You have until April 15, 2017 to make your 2016 IRA contributions.


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This Month's Topics

Basics for Reporting Your Foreign Accounts

IRS Warns Parents to Warn Kids About Newest Scam

Worried About The Election? Axial Financial Group Explains, "Don't Revamp Your Portfolio Yet"

The FICA Refund for Medical Residents 

2015 & 2016 Tax Facts

Tax and Financial Planning Calendar for July 2016


Browse our index of previous months' newsletter topics

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In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors.  The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break.  Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.


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