If you're planning a move abroad, or you're already an expatriate, you have more to think about than adjusting to a new culture. Although it may be tempting, you must not ignore your U.S. taxes.
Every U.S. citizen - regardless of whether they are living in the U.S. - must file a tax return with the federal government.
The tax situation for expatriates is often complicated and frustrating. Many variables affect how much expatriates pay Uncle Sam - from whether you deduct your foreign taxes, to your host country, to your employment situation.
Fortunately, we can help.
U.S. Taxes for Expatriates - Pitfalls and Traps
To ensure a smooth tax-filing process, you must be well informed. If you take up residence in a foreign country without exploring the tax ramifications, you may find yourself paying more than you expect to the U.S. government or your home state - as well as penalties and interest.
Some of the important considerations include…
- Amount of foreign earned income. You can deduct a substantial amount in earned foreign income from your U.S. taxes.
- Your host country. Many countries have tax treaties or conventions with the United States, which will dictate how you file your U.S. taxes.
- Which state you most recently lived in. Some states do not have income taxes; others make it difficult to sever your ties with that state.
- Rental income and dividends/interest from assets in the U.S. You must pay taxes on these exactly as if you were living in the U.S.
- Whether you are self-employed. You must pay self-employment tax on your income, even if you can exclude it as foreign earned income on your income taxes.
- Your holdings in a foreign bank account. Any interest in or authority over a foreign financial account over a certain amount must be reported to the U.S. Treasury Department.
Our Expat Tax Services
Although the IRS offers numerous deductions, credits, and exclusions to expats, taking advantage of them is not straightforward.
Some exclusions vary by country, while others can only be claimed for a portion of the year. In addition, each requires supporting forms and worksheets, which can be more than cumbersome to prepare.
For people who are either planning a move or have already settled abroad, we offer the following tax services:
- U.S. Tax Returns - We prepare your U.S. income tax return, including the most common schedules and forms.
- State Tax Returns - Depending on which state you most recently lived in, you may need to file a state return.
- Small Business Tax Returns - We assist small business owners, self-employed individuals, or folks with significant rental property with their returns.
- Online Filing - When you're living in a foreign country, it's not practical to send forms and documents back and forth through the mail. Our highly secure, fully encrypted Client Portal enables the quick, free, and safe transfer of files between our office and yours.
- Foreign Bank Account Reporting - We file the FBAR form for individuals who had above a certain threshold in a foreign account.
- Compliance - It's not uncommon for expats to fall behind on their taxes. We help you sort through the paperwork, forms, and rules, and get you back in compliance with the IRS.
- Consulting - If you're unsure of your need to file federal or state tax returns, give us a call. We help you get clear on your situation.
These are the most common expat tax services we offer - but it's not our full list. Please contact us to discuss your needs if you don't see them reflected here.