Expat Tax Help
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.
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!
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.
The Tax Fairness for Americans Abroad Act of 2018 (H.R. 7358) was introduced last December. This legislation applies to anyone with a non-resident citizen status. Ending citizenship-based taxation would require rewriting almost all the current tax code. Instead, steps are being taken to help address issues for expats who live overseas.
What Does the Tax Fairness for Americans Abroad Act of 2018 Change?
If you qualify as a non-resident citizen, you are still expected to pay based on the core tax code. The Tax Fairness for Americans Abroad Act of 2018 changes the way your financial responsibility is calculated.
The Act adds Sec. 911A which amends the code to allow non-resident citizens to be taxed based on their United States-sourced income only. That means any income coming from foreign countries can be excluded.
Do I Qualify for Non-Resident Citizen Status?
You may qualify as a non-resident citizen if you meet the following requirements:
- You are a citizen of the United States
- You live in a foreign country which is your “tax home”
- You are fully compliant through the previous three tax years
- You are not a U.S. federal employee
You must also meet all requirements outlined by the bona fide residence or physical presence tests. If you meet the criteria, you can elect to receive non-resident citizen status. It’s important to remember that you must be in a non-resident citizen status to exclude the sale of personal property.
If you have questions about your status, let us know. Expatriate Tax Returns can help you learn more about your financial responsibility and U.S. taxes.
2019 marks the twentieth year anniversary of this exuberant holiday, so get ready to put that smile on your face!
This holiday is based on the premise that happiness is unlimited and contagious. It can bring a lot of joy to you and others.
While being happy can mean different things to different people, Happiness Happens Day encourages people to take stock of their lives and try to do or think about things that make them happy.
Here ‘s a few ways to celebrate this happy day:
- Do something nice for yourself. Happiness begins at home.
- Do something nice for others such as donating your time or money to your favorite charity.
- Do something that is helpful to your community like volunteering to pick up trash, weeding, or mowing lawns.
During this time of strong political differences and a world of unrest, join us at Expatriate Tax Returns celebrating happiness every day. As we all know, a smile is worth a thousand words!