If you’re about to be assigned to work outside the U.S., you’ll likely have a more difficult time paying taxes. Not only do you have to deal with U.S. tax laws but also with the tax policies in your resident country. Learning about international taxation is a headache that U.S. expatriates typically face as they do business abroad.
It’s also not enough to say that you don’t know how or when to pay your taxes. In some cases, U.S. expats who fail to track and pay their tax obligations are required to pay up to $10,000 as a penalty.
6 Reasons You Should Hire a Tax Expert for International Taxation
If you don’t want to get into trouble with the IRS, it may be time to hire a tax expert who is well-versed in international taxation. Here are six reasons why you should seek help from an international tax accountant.
Address tax resolutions from beginning to end
Working with the IRS to resolve your tax issues is not easy, especially if you’re working in a different country. With IRS representation or tax resolution services, you can properly communicate with the IRS and settle your taxes, penalties, and other liabilities.
One common tax resolution service is “offer in compromise” assistance. This allows the taxpayer to settle their total tax liability partially. There’s also “installment agreement” assistance, where the taxpayer makes regular and monthly payments to the IRS. Finally, a“penalty abatement”, where the taxpayer lobbies to reduce or eliminate tax penalties and interest.
Focus on main tax issues
Tax rules can get overly complicated, making some taxpayers prone to errors if they’re not careful. While it’s possible to file an amended return, not many people know how to do it on their own.
An international tax accountant can help you focus on your main tax issues and amend them one by one. They can give you the right forms, guide you through the process, and help you settle your penalties.
In some cases, tax experts can also confirm whether the IRS’s assessment is correct and help you respond appropriately, as the agency sometimes makes mistakes.
Comply with FATCA and other foreign tax laws
Naturally, U.S. expats must comply with relevant U.S. laws such as the Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank Account Report (FBAR). They also need to follow the tax laws of their resident country, which can be a bit of a minefield if there’s not enough time to learn them.
With an international tax expert, you can properly file and pay your taxes and save on penalties. For example, if you’re a U.S. expat in the Philippines, a tax expert can help you qualify for a reduction in your U.S. taxable income from your foreign earnings that have an annual adjustment for inflation.
A tax expert can also help you avoid double taxation and disclose foreign assets on the FBAR if you have an interest or authority over a foreign bank account, brokerage account, and other financial accounts.
Filing your tax returns and paying your taxes on your own is possible. However, doing so can lead you to certain risks. For instance, if you’re a U.S. expat in Japan, filing a tax return late can result in a 15% penalty of the tax determined by the tax office. Underreporting can also lead to a penalty worth 10% of the additional tax.
Again, filing your tax returns and paying taxes in a foreign country can be a bit of a minefield. This is why hiring an international tax accountant can come in handy.
Save money and time
While hiring a tax expert for international taxation can add to your costs, those costs far outweigh the penalties you could incur if you did your taxes on your own. Remember, penalties for failing to file or pay your taxes as well as committing tax fraud can cost thousands of dollars.
An international tax accountant can also help you save time from studying and complying with both U.S. and foreign tax laws reporting your assets, and planning your finances for the future.
Avoid tax miscalculations
While filing a tax return with miscalculations is common, the erroneous act still incurs taxpayers some penalties. You could prove that you’ve made a miscalculation and avoid paying exorbitant penalties. Otherwise, the IRS may investigate you over serious cases, such as tax evasion.
If you have a complicated financial life, an international tax expert can help you properly compute your taxes. Remember that the more income and investments you have, the more complicated your taxes will get.
Organize Your Taxes Today
Working as a U.S. expat is not easy. Besides having to adapt culturally to your resident country, you also have to fulfill your financial obligations locally and internationally. With an international tax accountant, you can properly comply with both U.S. and foreign tax laws. You can save time and money and enjoy certain tax exemptions or perks.
When it’s time to file your taxes, you can rely on tax experts from Tax Samaritan to help you. Since 1997, we have been providing professional-quality tax resolution services to U.S. expats. Get a free tax debt analysis today to start organizing your finances!