Expat Tax Preparation
Preparing tax returns can be a hassle! Filing your expat tax return can be a real challenge, from maximizing your deductions to minimizing your tax liability. But these don’t have to be so.
US Expat taxes preparation is additionally more tasking because of the special tax rules for expats, the complexity of the ever-changing US tax code, Income Tax Treaties and Totalization Agreements. Whilst there are many tax risks with filing a return for American expatriates, there are also many opportunities! That is why it is important to have your tax return prepared by experienced tax professionals who understand the complex tax laws.
Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938 (Statement of Specified Foreign Financial Assets), which is generally filed with income tax return. The Form 8938 filing requirement is in addition to the FBAR filing requirement (Refer to some of the expat tax forms here).
FBAR – FINCEN 114
If you have a financial interest in, or signature authority over, a foreign financial account of any type, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a FinCen114 form, i.e., Foreign Bank and Financial Accounts Report (FBAR).
The U.S. has tax treaties with many countries, which allows the federal government to exchange data on its citizens for tax purposes, implying that you cannot hide. However, reporting this may add to your tax return burden, as very costly penalties may be imposed if you do not report correctly. Missing filing a form because you didn’t know about it is, unfortunately, not an excuse in the eyes of the IRS!