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Expatriate Tax Returns

Expatriate Taxes

The Top Tax Implications For Expatriate Taxpayers

As an expatriate taxpayer, you may be required to file taxes in both your host country and your home country. This can create a number of complications, especially if you are not aware of the tax regulations in both countries. To make things easier for you, we have compiled a list of the top tax implications for expatriate taxpayers.

Residency Status
The residency status of an expatriate taxpayer is an important factor to consider when filing taxes. Depending on the residency status, taxpayers may be subject to different tax laws. The two most common residency statuses are resident and non-resident. As a resident, you may be required to file taxes in the host country on your worldwide income. Whereas, as a non-resident, you may only be required to file taxes in the host country on income sourced from there. It is important to understand the residency status of each expatriate taxpayer in order to accurately file taxes. Depending on your residency status, the taxes you owe may be different.

The Foreign Earned Income Exclusion
The Foreign Earned Income Exclusion (FEIE) is an important tax benefit available to expat taxpayers. It can significantly reduce the amount of taxes that expats owe in their home country. Under the FEIE, expats can exclude up to $105,900 of their income from being considered in US taxes. This can be a significant saving, since expats may otherwise be required to pay taxes in both countries on their worldwide income. In order to be eligible for the FEIE, expats must pass the Physical Presence Test. This means that they must be present in a foreign country for at least 330 days in a consecutive 12-month period. They must also be bona fide residents of that country for a full calendar year. Expats must be mindful of the Physical Presence Test to take advantage of the FEIE.

The Foreign Housing Exclusion and Deduction
In addition to the FEIE, expats can also take advantage of the Foreign Housing Exclusion and Deduction. This can significantly reduce their taxable income in the host country. The Foreign Housing Exclusion allows an expat to reduce their taxable income in the host country by the amount that they spend on housing in the foreign country. The Foreign Housing Deduction allows an expat to further reduce their taxable income by deducting a percentage of their housing expenses, up to a set limit. In order to take advantage of the Foreign Housing Exclusion and Deduction, expats must be able to show that their housing expenses are reasonable and necessary. Additionally, they must be able to show that their housing expenses were incurred in their host country. This is important to remember, as the Foreign Housing Exclusion and Deduction are only applicable to expats living abroad, not those living temporarily abroad.

The Physical Presence Test
The Physical Presence Test is an important requirement for expats who wish to take advantage of certain tax benefits. It is also important to ensure that expats are in compliance with host country tax laws. The test requires an expat to be present in a foreign country for at least 330 days in a consecutive 12-month period. They must also be bona fide residents of that country for a full calendar year. It is important to consider the Physical Presence Test when filing taxes as an expat. If you do not meet the requirements, you may not be eligible for certain tax benefits or even in compliance with host country tax laws. It is important to be aware of this requirement to ensure your taxes are filed accurately and to ensure there are no penalties.

Taxation of Gifts and Inheritances
When filing taxes as an expat, it is important to consider the taxation of gifts and inheritances. Gifts and inheritances may be subject to different tax regulations in both the host and home countries. Generally, expats may be required to report the value of any gifts and inheritances that are brought into their host country, as this is considered to be taxable income. Additionally, gifts and inheritances may be subject to death taxes in the host country. It is important to consider the taxation of gifts and inheritances when filing taxes as an expat. Depending on the tax laws of both countries, you may be required to report and pay taxes on any gifts and inheritances that you receive, so it is important to make sure that you are aware of the laws in both countries.

Conclusion
If you are an expat and plan on filing, visit our contact page to connect with our tax specialist. We want your taxes to benefit you and your refunds to be hefty.

COVID Penalty Relief for Taxpayers

Many unforeseen situations can occur at any time and for anyone. The IRS understands this and has given taxpayers flexibility. Notice 2022-36 gives relief to those in areas declared by the Federal Emergency Management Agency as a disaster. Only 2019 and 2020 tax returns are qualified under this issue.

Areas within November 15, 2022, are below:

  • Counties in Missouri (under the FEMA Major Disaster Declaration 4665)
  • Counties in Kentucky (under the FEMA Major Disaster Declaration 4633)
  • Crois Islands (US Virgin Islands)
  • Tribal Nation Members of the Salt River Pima Maricopa Indian Community

Areas that are under February 15, 2023:

  • Florida
  • Puerto Rico
  • North & South Carolina
  • Alaska (under the FEMA Major Disaster Declaration 4672)
  • Mississippi (Hinds County)

Certain taxpayers under the failure-to-file penalty are qualified for this relief. The penalty rate can be from 5%- 25% of unpaid taxes. The forms that are accepted under this relief include 1040, 1120, and Notice 2022-36. It is important for taxpayers to verify their qualifications and required adjustments.

Ineligible Tax Returns

This relief is not available for all tax returns. If a return was filed and listed as fraudulent, that submission will disqualify the taxpayer from getting this relief. Returns impacted by the Failure-to-Pay penalty are also disqualified for this relief. 2021 returns are not eligible for this relief. Taxpayers that want to inquire about their 2021 return eligibility should consult with a professional tax agent.

If you want to know if you qualify for the COVID penalty relief, visit our contact page to connect with an expert tax agent.

Helpful Information About The 1099 NEC Form

The 1099 NEC form is required to be filed by U.S. citizens and resident aliens who have been paid $600 or more for services performed for a business by someone who is not an employee of that business. The form is used to report non-employee compensation (NEC) on your federal income tax return.

NEC includes, but is not limited to, payments for services performed by independent contractors, consultants, freelancers, and gig workers. It also includes payments for services performed by attorneys, accountants, and medical doctors.

The NEC form is filed with the IRS and is also provided to the payee. The payer must withhold federal income tax, Socia

l Security tax, and Medicare tax from the payment if the payee does not provide a valid Social Security number or taxpayer identification number.

If you are a payer, you will need to file a 1099 NEC form for each payee you have paid $600 or more during the year. If you are a payee, you will need to report your NEC income on your federal income tax return.

 

What are the penalties for not filing the 1099 NEC form?

If you are a payer and you fail to file a 1099 NEC form for each payee you have paid $600 or more to during the year, you may be subject to a penalty of $50 per form.

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The 1099 NEC also includes payments for services performed by attorneys, accountants, and medical doctors. Companies must file 1099 NEC firms by January 31. Taxpayers must have this form submitted by February 28.

 

If you have any other questions about filing taxes or what forms you need, visit www.expatriatetaxreturns.com to connect with a tax specialist.

 

Tax Season Has Started

The IRS is officially accepting tax returns as of January 24th. What does this mean for you? Let us help! Due to the record number of returns last year, the IRS recommends getting your return in as soon as possible. If you have not yet organized your tax documents, it is time to do so. If tax season has you worried or stressed out, start a checklist of all the documentation you will need. The faster you can get your information to us, the faster we can process your return. Is your first time filing as an expatriate? We have everything you need to make your tax process run smoothly. Whether you find your returns either simple or complex, we can assist. Our website covers everything that we both need to get this process started. We encourage you to begin with our Expatriate FAQ to get an idea of what to expect, and we’ll take it from there!

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.

Understanding the Tax Fairness for Americans Abroad Act of 2018

Expatriate Tax Returns Tax Fairness for Americans Abroad Act

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.