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Expatriate Tax Returns

American Expats

10 Things Every Expat Should Know About Filing U.S. Taxes

U.S. expats are still required to file their taxes. If you have fallen behind, don’t worry, we can help.

Know Your Obligations – There are income thresholds and other factors that apply to expats.  Make sure you know what you are obligated to file to avoid an audit.

Note:  Most U.S. expats owe no money, but all are obligated to file.

  • Gather Your Documentation – Gather all your necessary documentation including prior tax returns, income records, interest records, benefits payments, and other tax materials. Having it all together will make it easier to prepare your taxes.
  • Understand Your Tax Forms – Research the process and make sure you are aware of all forms that apply to your situation.
  • Don’t Forget to File Your FBAR – If your aggregate account total is over $10,000 at any point, you will need to file Foreign Bank Account Reporting (FBAR), which is FinCEN Form 8938.
  • Know FATCA Requirements – You may need to report additional foreign accounts using the FinCEN form 114. Individuals with $200,000 on the last day of the tax year or $300,000 at any point during the year are required. For married couples filing jointly, the threshold is $400,000 and $600,000 respectively.
  • Catch Up with Streamlined Filing Procedures – Streamlined Filing Procedures are available to help those who failed to file their taxes for non-willful reasons.
  • File Your PFICs – Passive Foreign Investment Corporations (PFICs) include money market accounts, insurance products, and mutual funds. These may need to be filed using a Form 8621.
  • Avoid the Passport Revocation Law – If you owe over $50,000 to the IRS, you could be subject to the Passport Revocation Law.
  • Longer Audit Periods – The IRS increased the audit period from three to six years. Failure to file will increase your chances of an audit during this time frame.
  • Do Your State Tax Return – If you have connections to a U.S. state, know the filing requirements. You may have to file state taxes. Connections include possession of a mortgage, voter registration, or driver’s license.

If you have questions about filing your expat taxes, let us know. Expatriate Tax Returns provide solutions to help you stay legal, up-to-date, and make tax filing EASY for expats.

Expats 2019 Tax Filing Deadlines

Expats should plan to file on time to avoid tax-related headaches. Knowing when documents are due ahead of time will help you prepare. Don’t wait any longer. Instead, get acquainted with the 2019 U.S. tax deadlines for expats listed below.

  • Filing Deadline – Monday, April 15th, 2019

Most U.S. citizens recognize April 15th as Tax Day. This is the deadline for filing Federal Tax Returns. It’s also the deadline for filing your Foreign Bank Account Reports (FBAR). If you pay taxes in Maine or Massachusetts, then your filing deadline is April 17th because of the observation of Patriot’s Day and Emancipation Day.

  • Expat Extension Deadline – Monday, June 17th, 2019

It’s always recommended to plan to meet the earliest deadlines. However, if you are running behind, you can take advantage of an automatic extension available to expats. The extended deadline is June 17th. Interest will begin to accrue on any amount owed starting April 15th, so it is best to file sooner rather than later.

  • Final Expat Deadline – Tuesday, October 15th, 2019

If you filed for a final extension, then your expat taxes will be due by October 15th. You must have all forms including FATCA, FBAR, and other documents submitted by this date. You must submit your request by June 17th to utilize the final deadline.

With changes in tax law and a process that can be complicated, all expats are advised to prepare and file their taxes as early as possible. Don’t rely on extended deadlines. Expatriate Tax Services can help ensure that you file correctly and on time. Contact us today to learn more about filing your US taxes as an expat.

3 Major Myths About Expat Tax Filing

YOU DON’T HAVE TO FILE A US TAX RETURN BECAUSE YOU LIVE ABROAD

Not so!  US citizens and permanent residents must file a tax return no matter where they live or earn money, unless they do not meet the standard filing requirements.

IF YOUR FOREIGN INCOME IS BELOW THE FOREIGN EARNED INCOME EXCLUSION, FILING IN THE US IS NOT REQUIRED.

Totally false!  Although the FEIE (foreign earned income exclusion) allows expats to exclude $104,100 (2018) of their income, a return must be filed to claim this benefit.  Often times this exclusion is disallowed by the IRS if you wait too long to claim the benefit, so it makes good sense to file your return on time.

INCOME EARNED OFFSHORE IS NOT REPORTED ON YOUR US TAX RETURN.

Wrong!  US citizens and permanent residents must report their worldwide income on their annual filing which includes: compensation, business income, sale of assets, interest, dividends, and any other monies earned no matter how or where.

Contact us for complete answers to your expat tax questions!

TRUMPS TCJA (Tax Cuts and Jobs Act) and THE EXPAT

Expatriate Tax Returns Trumps TCIA and the Expat Tax Cuts and Jobs Act

Originally it was thought the tax relief was on the horizon for expats when President Trump’s new tax program was put into law, but the reality is that nothing is really different from the new rules that apply to all US taxpayers:

  • Tax Brackets
  • Standard Deduction
  • Personal Exemptions
  • Child Tax Credit
  • Mortgage Interest Deduction
  • State and Local Tax Deductions

The major change regarding international taxpayers is how Controlled Foreign Corporations are handled. Trump’s tax reform details a new category of corporate income called the Global Intangibles Low-Taxed Income (or GILTI), that requires recognition of a percentage of previously deferred foreign earnings and is now taxed as Subpart F income.

Current undistributed retained earnings are taxed at 15.5%, if held in liquid assets, and 8% if held in illiquid assets. This is a one-time tax and can be paid over 8 years.

Starting with your 2018 Corporate Tax Filing, everything is Subpart F Earnings.  Any income in excess of $102, 100 (or $204,200 if your spouse is active in the business) will be taxed at ordinary income rates.

Questions regarding your unique situation can be directed to Expatriatetaxreturns.com.

Number of Expatriates is Growing at Steady Rate

An article on the CNBC website, which appeared this past summer, shows that a steady stream of American citizens have chosen to live and work outside of the United States as expatriates. Some of these Americans have renounced their U.S. citizenship because of the implementation of stricter tax rules. However, most expats do not renounce their citizenship. The tax issues that American expats face are significant and can include facing higher tax bills, difficulty in obtaining and keeping financial accounts and complex retirement savings rules.

At Expatriate Tax Returns, we are happy to see such a notable rise in the rate of expatriates. We think it’s a wonderful experience for professionals to spend a few years abroad, but we also caution our clients that there are several important tax considerations to keep in mind as an American expat. Remember that Americans who reside in another country must file a Report of Foreign Bank and Financial Accounts, or FBAR. That form should disclose any accounts Americans have that hold an aggregate of more than $10,000. There are stiff penalties if you fail to file an FBAR. Additionally, the Foreign Account Tax Compliance Act (FATCA) requires foreign institutions to disclose the holdings U.S. citizens have. Americans also need to disclose any foreign mutual funds and insurance or pension products that they own. Those holdings may be viewed as passive foreign investment companies, or PFICs, by the IRS. There are also certain rules that can offset the tax bills that Americans living abroad face.

Many of these tax rules and policies could change in the coming years. It’s a lot to consider for expatriates and staying abreast of IRS changes is even more difficult to do. That’s where we come in. The experienced tax professionals at Expatriate Tax Returns have made it our mission to help expatriates like you and to follow all of the changes in the tax code for expats. Leave it to us to handle your tax returns and ensure that your experience as an expat is a stress-free one. All of us at Expatriate Tax Returns wish you and your family a happy new year. We hope 2019 is a successful and great year for you!