It's that time of year again...
Friday, February 08 2008 @ 11:09 PM UTC
Contributed by: Anonymous
For exPats in Panamá they may also have Panamanian taxes to file as well: individual returns are due 15 March, corporations (SAs) are due 31 March. A recent study of international taxes by the World Bank ranked Panamá among the worst in the Western hemisphere for ease of filing and clarity of the tax rules.
We’ve summarized some of the more important pieces to the complex rules for Panama returns -- which were changed by Resolution 201-2969 on 7 August 2007 for 2007 and beyond returns – and the filing deadlines for various USA taxes too. Go to www.panusatsvc.com and click on the FAQ button on the left hand side of the home page for more details.
Automatic extensions of 60-days for Panama returns and six months for USA taxes can be requested and are the best choice but only delay the filing of the returns, not the payment of any taxes due.
There is some good news about US taxes.
The best news for USA taxpayers who may have been dreading a 1099 from the bank if they let a property go for less than the balance on the mortgage, is the passage of the Mortgage Forgiveness Debt Relief Act of 2007. HR 3648 became Public Law 110-142 after President Bush signed it on 20 December. It amends the IRC to exclude from gross income amounts attributable to a discharge, prior to 1 January 2010, of indebtedness incurred to acquire a principal residence. Previously any debt forgiveness was treated as ordinary income. Under the new law it reduces the basis of the residence ‘sold’.
The Alternative Minimum Tax, which has been derided as a good idea badly executed for many years, was also amended but in late December. The effect of the changes has been overstated by the politicians, but some help is better than letting the exclusions revert to the 2001 levels which is what would have happened. There are some problems with the late effort. The IRS won’t have the related forms adapted until mid February. Even the tax preparers guides printed in late 2007 don’t have the revised numbers yet. Taxpayers who might be subject to the AMT should simply plan on filing a 6-month extension to wait for the tax rules and regulations and related forms to get sorted out.
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Tom Rowley is a US CPA and Certified QuickBooks Pro Advisor who consults with PanUS Accounting & Tax Services here in Panamá. He can be contacted at firstname.lastname@example.org