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Expatriate Tax Returns

Expat Tax Help

Things to Know When Considering an Early Withdrawal from Retirement

Unexpected events happen to everyone. Unfortunately, some people must make necessary financial sacrifices to withstand such circumstances. One of the sacrifices people make is withdrawing from their retirement early. This quick-cash method can produce significant tax penalties if enacted. Consider the following information before pulling from your retirement early:

  • Flexibility Within 401(k), 403(b), and 457(b) Plans

Taxpayers can withdraw from these plans only if an event of hardship occurs. A Hardship Distribution is when a taxpayer withdraws from their retirement savings earlier than their declared withdrawal date. The date is normally set to sometime after the taxpayer turns 70. Support needed for spouses or dependents is included in these policies.

The withdrawal is limited to the financial need of the taxpayer. Repayments for hardships are not permitted. The eligibility for early distribution should be accurately stated within the plan description. Withdrawals made before the set age or date are subject to an early withdrawal penalty.

  • Distribution Related to Divorce

If a taxpayer is experiencing a divorce, they may be eligible for early distribution. If a withdrawal from a traditional IRA is made early to supplement divorce requirements, the amount is subject to a 10% early withdrawal penalty. Exceptions on this income tax can be made according to the case.

The options listed in this article are not exhaustive for taxpayers. The IRS provides many helpful alternatives for hardships. If you want to learn more about what to do when considering withdrawing early from retirement, contact us by visiting www.expatriatetaxreturns.com. We are excited to give you the help you need.

Tax Day 2022

Monday, April 18, is Tax Day 2022. Tax Day is the deadline to file your taxes or file for an extension. Don’t let this day approach without a plan to file. Expatriate Tax Services is here to assist you with your tax filing. No matter how complex your situation may be, we can complete taxes on your half with just a few forms and pieces of information. Visit our website to determine what documents we will need based on your needs. If you have a unique tax situation, give us a call, and we will help you choose the best process to move forward. Don’t delay your taxes any further. April 18 is fast approaching.

Child Tax Credit

Earlier this year, Congress approved the Child Tax Credit (CTC) to assist millions of families who have been financially affected by the pandemic.
As of September 15th, those who qualify for the CTC can expect to receive their September payment. Those who have requested paper checks should allow for a few more days, although some recipients have reported delays. The payment is the third installment of the CTC, and additional payments are scheduled for October and November.
Those who qualify will receive $300 for each child under age 6 and $250 for those ages 6 to 17.
If you think you may qualify but have not yet signed up, it is not too late. If you have not filed a 2020 tax return or are not required to do so, you may use IRS.gov to sign up. Visit the Child Tax Credit Update Portal for additional information.  (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal)
Users can utilize the portal to view payments, update mailing addresses, unenroll from the payments, and locate all information related to the Child Tax Credit.

Bona Fide Residency Test

Have you heard of the Bona Fide Residence Test? Meeting the bona fide residence test will allow an expatriate to qualify for the foreign earned income exclusion. If you are a resident of a foreign country for an entire tax year, from January 1st to December 31st, you may meet qualifications for the Bona Fide Residency Test. Note, however, that simply living in a foreign country does not automatically qualify you for such status.

You must first, of course, establish residency. If you are in a foreign location for an extended time and have secured permanent living space, you have likely established residency. You may leave the country temporarily for business or vacations, so long as you intend to return to your permanent foreign residence without an extended delay.

Additional factors determine whether you are a bona fide resident of a foreign country. Both the length and nature of the stay are taken into consideration. The IRS uses information from Form 2555, Foreign Earned Income. This form will help allow ex-pats to claim the foreign earned income exclusion, and therefore must be filed.

Should your stay in the foreign country not include an entire tax year, you may qualify for the foreign earned income exclusion under the physical presence test. This test requires you to be physically present 330 full days during 12 consecutive months. Should you leave the country regardless of the reason, you will not meet the physical presence test.

U.S. Expat Tax Deadline Is June 15th

Expatriate Tax Returns 2020 Tax Deadlines

The tax filing deadline for expats is June 15th, 2021. Expats receive an automatic extension on U.S. filings. The IRS has not issued any changes to this deadline this year. Any payments owed for 2020 are overdue to the IRS. If you inadvertently forgot or didn’t know you owed, contact us as soon as possible to speak with one of our tax experts. We can help. The vast majority of our expats do not owe money. Extensions for tax filing (not payment) can be pushed from June 15th to October 15th, contact us to learn more. Please know that even if you don’t owe money, you must file!

IRS Amnesty Program: Streamlined Filing and How It Helps Expats Pay Taxes

Expatriate Tax Returns IRS Amnesty Program 2018

Moving to a foreign country can be exciting. During a time when many expats are learning a new way of life, they may forget about old responsibilities. This can lead to overdue taxes. The IRS’s Streamlined Filing Procedures may be able to help.

How Does Streamlined Filing Work?

Today’s Streamlined Filing Procedures were introduced in 2012. The new system was intended to provide an alternative to previous programs, which missed the mark by excluding many of the expats who needed them.

Streamlined Filing Procedures encourage expats to catch up on their taxes. To do this, the program reduced the number of previous years’ returns that are required. In order to use the new procedures, you will need:

  • Federal Returns – You must submit three years’ worth of returns. These must be the most recent three years and can include amended returns.
  • FBAR Forms – Six years of FBAR forms are required. The FBAR is usually only needed if your non-U.S. bank accounts total $10,000 or more. Streamlined Filing Procedures require FBAR forms even if you have less than $10,000.
  • Signed Form 14653 – You must submit a Certification by U.S. Person Residing Outside of the U.S. statement that is signed. This will certify that you are eligible, have filed all FBAR forms, and that your failure to file taxes was not intentional.

Do I Qualify for Streamlined Tax Filing?

Restrictions were removed in 2014, which means that you may be eligible now even if you weren’t over five years ago. If you can produce the items listed above, you may qualify. You must show that you did not file because you were not aware that it was required.

If you have questions about using Streamlined Filing Procedures, let us know. Expatriate Tax Returns can help you navigate the U.S. tax system and get caught up on your financial responsibility.