What is an Expat Tax Advisor?

An expat tax advisor assists U.S. citizens or residents living outside of the United States with both tax compliance and minimizing tax liability. Even if they live abroad, U.S. expats do still have to file their global income with the IRS. Experts help you to navigate through these complicated rules, prepare exclusions such as the Foreign Earned Income Exclusion (FEIE), and other requirements like the Foreign Bank Account Report (FBAR).

Who Qualifies as a U.S. Expat for Tax Purposes?

U.S. expats are citizens or resident aliens living outside of the U.S. who must report their worldwide income to the IRS each year.

Definition: citizens of the United States or resident alien’s who live abroad but are still required to report worldwide income
Filing requirements — these are based on satisfying the substantial presence test or residency tests, irrespective of where you are physically located.

Why Do You Need an Expats Tax Advisor

Let us look at the important reasons which make an expat tax advisor indispensable:

Complicated Paperwork: Expats need to submit extra forms (like Form 2555 and Form 1116).
Prevent double taxation: Provisions like FEIE or the Foreign Tax Credit can help avoid double taxation.
FBAR and FATCA Reporting: Expats must report foreign accounts to the IRS through FBAR and FATCA.
Tax Treaties: This is where an expat tax advisor can help interpret the information so you have less to pay.

An expat tax advisor provides services

Important Tax Forms for Expats

Tax Form	Purpose
Form 1040	U.S. Individual Income Tax Return
Form 2555	Foreign Earned Income Exclusion
Form 1116	Foreign Tax Credit
FBAR (FinCEN Form 114)	Report of Foreign Bank and Financial Accounts
Form 8938	Statement of Specified Foreign Financial Assets (FATCA)

Common Mistakes Expats Make on Taxes

When filing your taxes as an expat you should avoid this common mistakes:

Failing to Report Foreign Income: Whatever the source of your income, it must be reported to the IRS.
Missing FBAR or FATCA Filing: If someone fails to report foreign accounts, large penalties may be imposed.
Incorrect Foreign Tax Credit Calculation: FEIE versus Foreign Tax Credit can be complicated, and may require professional assistance

Tax Planning Strategies for Expats

These are critical tips for lowering your taxes as an Expat.

Foreign Earned Income Exclusion (FEIE): Based on the bona fide residence test or physical presence test, exclude a certain amount of foreign-earned income.
Foreign Tax Credit (FTC): Reduce U.S. taxes by the amount of tax paid to your host country, effectively eliminating double taxation.
Tax Treaty Benefits: Tax treaties provide benefits such as an exemption or lower withholding rate on pensions, to reduce the amount of taxes residents of one state must pay in another.
FBAR and FATCA Compliance: Stay compliant by reporting foreign bank accounts and meeting FATCA requirements.
Housing Exclusion or Deduction: If the costs of housing exceed a specific threshold, then expats might be able to take a foreign housing exclusion or deduction.

What Happens if You Do Not File an Expat Tax?

Failure to file expat taxes may result in penalties, interest, and loss of benefits like FEIE or FTC, and noncompliance with FBAR requirements can incur substantial fines.

Penalties for Late Filing: Failure to file can result in penalties, interest, or potential passport revocation.
Risk of FBAR Noncompliances: Not filing FBAR can lead to significant penalties, especially for large account balances.
Loss of Benefits: Meeting deadlines is essential to keep expat benefits such as FEIE and the Foreign Tax Credit.

Our Services

Here is the complete suite of U.S. expat services we provide, which keeps them compliant and minimizes taxes:

Tax Preparation for Expats: Managing key forms including 1040, 2555 (FEIE), and Form 1116 (Foreign Tax Credit).
FBAR and FATCA Compliance: Help with foreign account reporting obligations, such as FBAR (FinCEN Form 114) and FATCA (Form 8938).
Tax advisory services: Determination of residency for tax purposes, tax treaty analysis and foreign ownership of businesses.
State Tax Assistance: Help with understanding and fulfilling any state tax obligations.
IRS Streamlined Foreign Offshore Filing Procedures: Guidance on IRS Streamlined Foreign Offshore Filing Procedures to regain compliance without facing penalties.

Conclusion

Overseas tax compliance entails intricate nuances only an expert would possess in order to refrain from potentially costly oversights while fully maximizing any benefits at hand. Our expat tax advisors will help ensure that you remain compliant and able to manage your tax obligations. Contact us now for tailored expat tax advice which will make your tax season free of stress.

FAQs

Do I need to file U.S. taxes if I live abroad?

Yes, the citizens of the United States and legal resident aliens must report their worldwide income regardless of where they live. Which begins with Form 1040 and may also include Form 2555 or maybe Form 1116.

What is the Foreign Earned Income Exclusion (FEIE)?

The FEIE allows expats to exclude a specified amount of foreign-earned income from being subject to U.S. taxation. See the IRS FEIE page For More Information.

What is FBAR, and do I need to file it?

If you have over $10,000 in foreign bank accounts at any time during the year, you must file FBAR (FinCEN Form 114). Find out more on the filing page for FBAR.

How do I avoid being taxed twice?

To avoid double taxation, expats have options of either using the Foreign Tax Credit or the Foreign Earned Income Exclusion. Speak to an Expat Tax Advisor to figure out which one is right for you.

What happens if I miss a tax filing deadline?

Filing late can mean fines and interest. The IRS Streamlined Foreign Offshore Filing Procedures are intended for those taxpayers who are not willingly and maybe these rules can assist you with regaining compliance without draconian penalties and if you want to make sure about new regulations, Dimov CPA can help you with these things.

What is an Expat Tax Advisor?