Expat Tax Services
In most instances, the IRS requires overseas U.S. taxpayers to file tax returns every year as well as FBARs if they meet the minimum threshold for filing. Filing Federal expat tax returns and schedules is not determined by residency but rather by citizenship or other circumstance such as a Green-card holder.
The IRS will review whether any tax is due where either income tax has not been paid, or the tax rates between countries differ. Sometimes U.S. expats qualify for exclusions, which avoid double taxation on income earned. These include the Foreign Earned Income Exclusion (FEIE), the Foreign Housing Exclusion or Deduction, and the Foreign Tax Credit (FTC). To qualify for the Foreign Housing Exclusion, the expat must be eligible for the FEIE.
The U.S. has tax treaties with over 51 countries. Each country will determine the tax you owe based on worldwide earnings. The method and rate of taxation will differ from country to country, including exemptions. Tax and accounting firms who specializes in expat tax services are best suited to guide you and prepare your 1040 and business tax returns.
What are the FBAR and FATCA Requirements for Expats?
Congress legislated "The Foreign Bank Accounts Report (FBAR)," requiring U.S. citizens and U.S. taxpayers to report their foreign bank account balances to the US Department of Treasury if their foreign cumulative bank balances are $10,000 or more. If you sign as director, partner, or other signatory power such as "power of attorney," even if you have no financial interest, you must file FBARs by the stated deadline. Expats who file late, could face fines or even potential criminal charges. If you are not sure whether you are in tax compliance or need to file FBARs, contact us.
Are U.S. and Foreign Dividends, Foreign Investment Income, Foreign Royalties, and Capital Gains Taxed?
The short answer is "yes." These are familiar sources of income. What is more complicated is how this information is reported on both sides of the border. If you own 10% or more of a foreign company, have cash equivalents in insurance policies, are a director of a foreign company, have bought or sold foreign real estate, have an overseas retirement or savings account, trade foreign stocks, etc. then you must report this on your U.S. tax return and when appropriate use IRS forms applicable to business reporting.
I Travel Frequently. How Can I Determine My Residency Status for The U.S. or The Country I Live In for Tax Filing Purposes?
The IRS residency test is used to determine if you are considered a foreign resident and can qualify for tax relief as an U.S. expat when filing your expat tax returns. If the U.S. has a tax treaty, where you might be classified as a "dual resident" and come under a "tie-breaker" rule, you could be treated as a non-US resident. Some companies could qualify as a foreign entity for tax reporting purposes.
U.S. companies doing business overseas might want to look into incorporating in the country they provide services.
Even though the reporting process can be complicated, there are times when the tax savings far out-way the additional tax filings. As part of your research, you should look into shareholder and partner laws, reporting requirements, capital restrictions, employee compensation and taxes, dissolution, debt, bank loans and guarantees, government taxes both personally and for the business, etc.
When Do I Need to Speak to a Expat Tax Professional?
Our clients, most of whom live overseas, travel, and own foreign businesses, consult with us and rely on our knowledge, expertise, and sound advice to solve, prepare and file their tax returns, provide tax opinions, international tax structuring, tax treaty positions and to handle their most urgent and confidential tax and financial matters.
In most instances, we suggest that if you are a U.S. Expat who files a 1040EZ, do it online with the IRS. But, if even filing the 1040EZ is not your thing, reach out to us. Most of our U.S. expat clients usually have concerns or questions such as:
- I am retired with a US pension and social security. I trade stocks in the US and also have an offshore trading account. Do I need to file, and how do I report my foreign income, capital gains, stock trades, and banking information?
- I have a home in a foreign country, travel extensively between the U.S. and my home, and own a U.S. company and a foreign one as well. How do I structure my businesses in the future, and I need someone to review my current and past tax filings?
- How do I report my foreign income to the IRS when I never knew I had to file U.S. Federal and in some instances state expat tax returns?
- I have been self-filing for years. I am a partner in a foreign business but did not know I had to file several IRS forms 5741 and form 8938. I only declared my foreign income on my U.S. 1040 tax return. How do I become compliant? What are the potential penalties and how can they be mitigated?
- My U.S. business has been growing globally. I want to explore the most strategic way to operate overseas.
- I am moving overseas for a few years as a consultant or fulltime employment for an American or Foreign company. I want to know how to plan my taxes and what my employer is responsible for?
- I earn foreign income and need someone to handle my tax returns using the Foreign Earned Income Exclusion (FEIE), the Foreign Housing Exclusion, and the Foreign Tax Credit (FTC) and to provide me with the best tax structure before my U.S. taxes are filed.
- I need a tax opinion from a U.S. tax attorney.
- I am in arrears filing my U.S. tax returns and FBARs. How can I get current?
- I need to file several amended U.S. tax returns. Can you review what I've already submitted to the IRS and file the amendments?
- I received a letter from the IRS, asking me to provide more information. Should I call?
- Do I need a tax attorney with whom I can speak in confidentiality to discuss the IRS's Streamlined Filing Compliance Procedures?
- I am being accused of tax evasion but have not willfully done anything wrong. I need an experienced tax attorney who knows U.S. tax regulations, can represent me to the IRS, and provide client-attorney privileges.
- How do I handle cross-border business transactions?
- I live and work overseas. My wife is not a U.S. citizen. We have two small children, and we just purchased our first home with a mortgage. I use one of the rooms as a home office. My father-in-law moved in with us, and we support him. My wife just went back into the work-force. Up until now, I have filed my U.S. taxes as a single filer. How do I report my wife's income? Can I deduct the support I am providing to my father-in-law? Are my children U.S. citizens for tax purposes, and can I deduct my mortgage payments and home office expenses?
Tax Law Expats is one of a few globally positioned U.S. tax law firms with expertise in tax law and tax structures for US Expats.
Jason Kovan is our Managing Partner, with over 26 years of expat tax expertise. Before founding Tax Law Expats and Expat Tax Partners LLC, Jason served as Executive Tax Director with KPMG, focusing on the needs of international clients, both individual and corporate.
Jason is a member of the Florida Bar, South Carolina Board of Accountancy, IRS EA, and is also a Florida licensed private investigator. To learn more, click here.
Jason represents clients throughout the world and travels internationally to meet with clients and to give seminars on US Expat Tax issues. Jason has prepared and reviewed tens of thousands of individual, corporate, and partnership tax returns. During his career, he has been stationed in the United States and in global markets, including London, Zurich, and the Middle East, where he represented individuals and businesses in their US tax compliance and consulting needs.
Jason is both an experienced tax attorney and CPA, who understands the importance of confidentiality and mitigating criminal exposure to clients. Jay can bring together the unusual talents of understanding both the tax laws and their application and the financial impact on a client's facts and circumstances. Jason believes that it is vital that an expat tax adviser has been just that - an expat at some point in his or her career!
Our in-house professionals include US Tax Attorneys, CPA's, and EAs. Our firm is built around demanding global clients who need practical tax strategies, solutions, and results, individually, for their businesses, employees, and in certain situations, their customers.
Our expat tax team has the most current tax regulations, rulings, and strategies, which we use to provide expertise, and resolution from issues affecting you, your family, and business.
If you would like to speak with Jason Kovan, call +1 (305) 600-5924 or go to www.TaxLawExpat.com and request a callback.