Daily Tax Update - April 9, 2013: President to Release FY 2014 Budget Tomorrow - Tax Reform Will Be Included

PRESIDENT TO RELEASE FY 2014 BUDGET TOMORROW – TAX REFORM WILL BE INCLUDED:  President Obama plans to release his fiscal year 2014 budget blueprint tomorrow. The White House had delayed release of the budget due to the fiscal cliff negotiations at the end of 2012.  According to reports, the President’s budget would reduce the debt by $1.8 trillion over 10 years.

Today, White House Press Secretary Jay Carney said that the budget would include tax reform.  Carney said, “[T]he fact is the President’s balanced approach to deficit reduction does include revenues through tax reform, closing of loopholes, and capping of deductions -- very much in the manner that Speaker Boehner proposed late last year.  The difference being that, at least now anyway, the President believes we need to take the savings from that, the revenue generated from tax reform, and apply it to deficit reduction rather than turning it into tax cuts for the wealthy and well-connected. So that is tax reform, and that will be part of our budget.  But for the details of that I would urge you to wait until tomorrow.”

MISCELLANEOUS GUIDANCE RELEASED:
Revenue Procedure 2013-23 provides information to any individual who failed to meet the eligibility requirements of section 911(d)(1) of the Internal Revenue Code because adverse conditions in a foreign country precluded the individual from meeting those requirements for taxable year 2012.  Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income.  However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income ($91,500 for 2012). Both the bona fide residence test and the physical presence test contain minimum time requirements.  The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country.  Revenue Procedure 2013-23 provides the list of countries for tax year 2012 for which the minimum time requirements are waived.