San Diego Expat Tax Attorney

Tax season can be a stressful time of the year for many of us, and it is only made more complicated for U.S. citizens and Green Card holders living and working abroad. The intricacies of filing from abroad are known to be complicated, and many individuals will spend weeks working on preparing their financials to ensure compliance with IRS requirements as well as requirements with their country of residence. This process can be difficult for expats to do on their own, but our team of experienced San Diego expat tax attorneys is here to help you during tax season.

Why Hire Evolution Tax and Legal for Your Expat Taxes?

The dually licensed attorney-CPAs that will work with you at Evolution offer a unique skill set and are able to handle the intricacies of expat taxes with the expertise of an accountant but also the expertise of a lawyer. When working with an expatriate tax attorney at our firm, you can expect:

• The expertise of a CPA comes together with the knowledge of an attorney to provide the best international tax accounting, advisory and legal services.
• A streamlined online process that will help you ensure that whether you are filing taxes in the San Diego area or thousands of miles from the U.S., you will have easy access to our team of experts.
• A team of experts who have experience in whatever your tax situation may be. Our team has served individuals and businesses, large and small, all over the world and we understand how complicated the process can be.

Our team’s ability to bring you the services of tax attorneys and CPAs under one roof allows us to offer savings and expertise that other firms cannot. Our value proposition is to bring the expertise of a Big 4 accounting firm together with the personal care and attention to detail of a small accounting firm. We value transparency and responsiveness, and we are excited to welcome new clients and show them the value that Evolution Tax and Legal can offer. 

Expat Tax Services We Offer in San Diego

Our team of San Diego expatriate tax attorneys offers a wide variety of expat tax services, including:

• U.S. Federal Tax Return Preparation: Our team can offer you a seamless income tax return process, easily helping you gather all the necessary financial information and file your tax return, as well as any other required forms.
• State Tax Returns: Individuals who have certain financial or residential ties to some states may be required to file a state tax return. Our team will determine whether this is necessary for you, and help seamlessly file this return should it be necessary.
• Tax Planning Analysis: Optimizing your tax strategy to achieve savings while ensuring compliance with IRS tax standards can be complicated, but our team of tax experts can work with you to ensure short-term and long-term savings.
• Federal and State Audit Representation: In addition to tax planning and tax return filing, we represent many individuals and businesses in both federal and state tax audits.
• Non-Filers or Delinquent Filers: Failing to file taxes or filing taxes incorrectly can result in penalties and fines moving forward, and should be rectified as soon as possible. Our team can work with you to begin filing any tax returns you have failed to file, as well as correcting any delinquent filings to ensure you are back in compliance with the IRS.
• Reviewing Prior Returns: It may occur, when self-filing your tax returns, that mistakes are made and these errors may work against the filer when submitting your return. Our team can conduct a review of your previous tax filings and determine if any errors have been made and how we can help you rectify or avoid them in the future.

How Do Expats File Taxes?

The U.S. is one of a few countries worldwide that taxes based on citizenship, regardless of residency. As such, American citizens and Green Card holders who live and work abroad are required to pay taxes on their income if they meet a certain threshold. Taxable foreign income includes earned income, such as wages, and passive income, such as any income earned from investments, interest, and retirement plan payments. Individuals are also required to pay taxes on foreign accounts and foreign assets.

Filing expat taxes follows a similar timeline as if you were filing taxes within the United States. The tax year will be from January 1 to December 31, and you will pay taxes in the months following the end of the tax year. You must file your federal income tax returns along with any additional forms that may be required by April 15, with an automatic extension for individuals living abroad to June 15. If you reside in a state where you still have certain financial or residential ties, you may be required to file a state income tax return as well.

Do Expats Pay Double Taxes?

The U.S. has put tax treaties in place with many countries to help U.S. citizens and Green Card holders living abroad avoid double taxation. These treaties help citizens and residents determine which country certain taxes should be paid to, and help avoid paying these taxes in both countries. The U.S. has tax treaties with 68 countries, but the tax treaties vary country to country. It is important to review the tax treaty of your country of residence to ensure you are in compliance with U.S. tax standards and tax requirements for your country of residence. Working with an experienced expat tax lawyer in San Diego to understand the treaties and intricacies of tax compliance will help ensure you are avoiding double taxation. 

When To File Taxes as an Expat

Expatriates are given an automatic two-month extension for filing their U.S. income tax return. The deadline for individuals living in the United States is April 15, and for expats the extension will make the filing date June 15. While filing can be done by June 15, any tax payments the filer owes must be paid by the regular deadline, which will be April 15. Individuals who pay their taxes after the April 15 deadline will incur a financial penalty for each day late the taxes are paid. 

FBAR Filing

U.S. citizens who live and work abroad likely will hold some assets in a foreign bank account throughout their time residing in another country. The U.S. government requires that foreign bank account information is shared with the government, in an effort to ensure tax compliance for individuals living abroad. If you hold more than $10,000 in a foreign bank account at any point throughout the year, you must file an FBAR, the Foreign Bank Account Report.

The FBAR must be filed with your U.S. federal income tax return each year. Along with FBAR, you will be required to file FinCEN Form 114. Both of these forms are due by April 15, along with your income tax return, but similar to the income tax return individuals are given an automatic extension to October 15 to file these forms. If the deadline is missed due to taxpayer negligence, financial penalties could be incurred.

FATCA Filing

For individuals who hold more than $50,000 worth of foreign assets or property at any point throughout the tax year, there is an additional form that must be filed. Form 8938, the Statement of Specified Foreign Financial Assets, is required to be filed in order to help the government keep track of all foreign assets held by U.S. citizens or Green Card holders. This form, like the FBAR, wil be included with the federal income tax return.

If you hold more than $50,000 in foreign assets but do not meet the foreign income filing requirement, it is not required for you to file Form 8938. It is important to consult with an expat tax attorney in San Diego prior to deciding not to file any foreign tax forms, as penalties for failure to file can be costly.

FBAR, FATCA & Offshore Disclosure Obligations for Expats

As discussed above, U.S. citizens and Green Card holders have an obligation to disclose certain offshore accounts, foreign bank accounts and foreign held assets to the IRS each year when they are filing their federal income tax returns. The requirements for filing an FBAR and filing FATCA vary depending on the individual, but in general you can assume that if at any point throughout the year you held more than $10,000 in an foreign bank account you are required to file FBAR and if at any point throughout the year you held more than $50,000 worth of foreign assets, you are required to file Form 8938. Complying with the filing requirements for FBAR and FATCA is important, as failure to file or delinquent filings can come with hefty financial penalties.

Common U.S. Expat Filing Mistakes in San Diego

There are a few common mistakes that our team notices when reviewing expatriate taxes that are worth taking note of. These mistakes include:

• Failure to include Form 2555 or Form 1116 in your filing: The Foreign Earned Income Tax exclusion form, Form 2555, helps determine how much of your foreign income is to be excluded and determines your residency through the bona fide residence or physical presence test. Form 1116 is the form required to claim a foreign tax credit. Failure to file these forms can work against you, and have you paying higher taxes than necessary during tax season.
• Failure to claim the child tax credit: Claiming your dependents on your tax filings is a great way to save money, and failure to do so will result in you paying additional taxes where you could be saving.
• Failure to file an extension past June 15.
• Failure to file an FBAR with your tax return: The FBAR is a required form for individuals holding more than $10,000 in foreign bank accounts throughout the tax year. Failure to include the FBAR if it is required can result in large penalties or fees, losing you a large sum of money in the long run.

These mistakes, while they may seem small, can be extremely costly. A sure-fire way to optimize your tax payments and avoid making simple mistakes is by working with a tax professional to create a tax plan and seamlessly file your tax return.

What Happens if You Don’t File Taxes While Living Abroad?

While some small mistakes will cost you money in the long run, the biggest mistake you can make as an expat is failing to file taxes at all. The IRS has significant penalties for individuals living and working abroad who fail to file or have delinquent filings. These include hefty penalties and potential prosecution.

Neglecting to file your income tax return on time can result in three different types of penalties, depending on your situation:

• Failure to File: This is the most costly penalty, and will result in a fine of 5% the amount of money you failed to file taxes on, with an additional 5% penalty added for each month that you failed to file. The maximum penalty is 25% of the taxes you owed, as well as paying the full amount of taxes.
• Failure to Pay: This penalty is lower in comparison, but still costly. This results in 0.5% being owed, and this also increases by 0.5% monthly, but this penalty can also add up over time if a taxpayer does not take steps to get back into compliance with taxes.
• Missed Payments: The third type of penalty will be missed payments, which will accrue interest over time.
• Failure to file FATCA or FBAR results in even more costly penalties: failure to file FATCA can result in a $10,000 fine, and failure to file FBAR can result in a maximum of an $87,000 fine.

The penalties for failure to file, failure to pay, or delinquent filing can be costly and ultimately unnecessary. Ensure compliance by working with a San Diego expat tax attorney and avoiding any costly mistakes.

Schedule a Free Consultation With a San Diego Expat Tax Lawyer Today

The team at Evolution Tax and Legal is ready to help you ensure tax compliance, regardless of your country of residence or tax situation. Contact our San Diego expat tax lawyers today to learn more about how we can make your expat taxes a breeze.