expatriate tax

Get Expert U.S. Expatriate Tax Return Preparation Wherever You Live

The expat tax filing requirements for filing a U.S. tax return and paying estimated taxes are the same when living abroad. Your worldwide income is subject to U.S. income tax. The U.S. imposes an expatriate tax filing requirement irrespective of where you reside. Most taxpayers that live overseas have no idea that they need to file U.S. taxes. If this applies to you, you are not alone.

Living overseas generates many unique tax opportunities as well as expat tax risks. However, the requirement to file an expat tax return while living abroad is one that many American expats are often not aware of. Iven when there was no tax liability.

Tax Samaritan professionally prepares US income tax returns for American taxpayers living abroad. Our Enrolled Agents (EAs) and CPAs have the experience and training to help you navigate through this process.

Reporting Foreign Income

Many United States (U.S.) citizens and resident aliens receive foreign earned income. Moreover, there have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts overseas. The interest of the IRS covers accounts anywhere in the world. You must report your worldwide income on your U.S. expat tax return and ensure that you have an accurate and complete disclosure.

You must report income from all sources within and outside of the U.S. Above all, this is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return), the foreign equivalents or no statement at all.

Not reporting income from foreign sources may be a crime.  Consequently, the IRS and its international partners are actively pursuing those who hide income or assets offshore to evade taxes. The goal is to ensure U.S. citizens and residents are accurately reporting their income and complying with their U.S. Expatriate Tax Obligations.

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts.  In addition, these consequences can include not just the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

Generally, the statute of limitations for an expat tax return now is three years after you file your return. However, if you do not file an expatriate tax return, the statute of limitations does not expire.

US expatriate tax preparation by Enrolled Agents trained and experienced in foreign earned income laws and regulations

As an overseas resident, there are many opportunities for tax savings but also many risks. Most importantly, Tax Samaritan has the experience and knowledge of the tax code to guide you through the complex expatriate tax preparation process. This includes, but is not limited to the following areas that may be utilized to maximize your tax savings:

Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion is the single largest expatriate tax advantage available to you.

If you meet certain requirements, you may qualify for the foreign earned income exclusion and foreign housing exclusions. Most importantly, it is only applicable by filing an expat tax return and claiming the exclusion with the requisite forms.

The maximum foreign earned income exclusion amount is adjusted annually for inflation. For example, the maximum foreign earned income exclusion for tax year 2019 is $105,900 per qualifying person. However, for tax year 2020, the maximum exclusion is $107,600 per person.

Earned income is income that you earn from work and does not include passive income. For instance, passive income includes interest and dividend income, rental income and other income that does not come from labor.

In addition, you may also be able to claim an additional foreign housing exclusion or housing deduction for your housing expenses that exceed a standard amount established by the U.S.

Tax Samaritan can help you claim the foreign earned income exclusion that can be used to partially or completely reduce your foreign earned income.

Foreign Tax Credit

If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a foreign tax credit or an itemized deduction for those taxes. Taken as a deduction, foreign income taxes reduce your U.S. taxable income. Taken as a credit, foreign income taxes reduce your U.S. tax liability. In most cases, it is to your advantage to take foreign income taxes as a credit.

We can help you claim the foreign tax credit and ensure that you are paying the least amount of expat taxes legally possible.

FBAR – Reporting Foreign Assets

If you have a financial interest in or signature authority over a foreign financial account. Including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account; exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the IRS. In short, this is done by filing a Report of Foreign Bank and Financial Accounts (FBAR) on the FinCen Form 114.

Form 5471 – Controlled Foreign Corporation

U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations. The reporting requirements of transactions between foreign corporations and U.S. persons is satisfied by filing the Form 5471 and associated schedules. Consequently, substantial penalties exist for U.S. taxpayers who are liable for filing Form 5471 and who failed to do so.

The filing requirements for Form 5471 relate to persons who have a certain level of control in certain foreign corporations. So, let Tax Samaritan put your mind at ease by having one of our experts prepare the Form 5471.

The Form 5471 is filed as an attachment to the your expat tax return.

Totalization Agreements

International Social Security agreements, often called “Totalization agreements,” serve to eliminate dual Social Security taxation (to both countries) on self-employment income. We will review to determine whether you can benefit from a totalization agreement and assist you with the presentation of the required documentation for your return.

Expatriate Tax Return Due Date

When residing overseas on the regular due date of your return (April 15), you are allowed an automatic 2-month extension to file your return (until June 15) and pay any amount due without requesting an extension.

Why Choose Tax Samaritan?

We have carefully studied those particular code sections that apply to foreign earned income and other areas that are of direct interest to US taxpayers overseas, and we are certain that we will give your taxable events the most advantageous tax treatment. Our specialty is expat tax services and tax planning.

We have been working with overseas clients for several years and we understand the communication challenges. On the other hand, many tax preparers unfortunately are unable or unwilling to deal with these communication challenges. You will find that we are easy to reach and 100% with you every step of the way.