Sacramento Expat Tax Attorney

Tax returns are a complicated process, made more difficult when you are a U.S. citizen or Green Card holder who lives and works abroad. Collecting all the necessary financial information and preparing your tax return in time to meet the deadline while also ensuring compliance with IRS standards as well as the standards of your country of residence is difficult for even the most experienced individual. Filing from abroad is riddled with legal and financial intricacies, all of which can be made easier for expats by working with an experienced professional. The Evolution Tax and Legal team of expat lawyers is here to provide you with the guidance and experience to make this tax season as seamless as possible.

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 and the knowledge of a lawyer. When working with an expatriate tax attorney at our firm, you can expect:

• The expertise of a CPA coming together with the knowledge of an attorney to provide the best international tax accounting, advisory and legal services.
• A streamlined online process. Whether you are filing taxes in the Sacramento area or thousands of miles from the U.S., our process will ensure you will have easy access to our team of experts.
• A team of experts who have experience in a number of different expatriate tax situations. Our team has served individuals and businesses, large and small, all over the world and while we understand how complicated the process can be, we have the necessary skills to guarantee an easy tax process.

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 team is able to bring the expertise of a Big 4 accounting firm together with the personal care and attention to detail of a small-business accountant. 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 Sacramento

Our team of expatriate tax attorneys offers a wide variety of international tax services, including:

• U.S. Federal Tax Return Preparation: The Sacramento tax attorneys at Evolution Tax and Legal will work with you to prepare the necessary financial information to file your U.S. federal income tax returns and ensure filing compliance.
• Tax Planning Analysis: Optimizing your tax returns to achieve savings can be complicated. Our team of tax experts will conduct a tax planning analysis to ensure you are saving the maximum amount on your income tax return. We will work with you to implement a savings strategy and ensure short-term and long-term savings.
• State Tax Returns: In certain cases, individuals living and working abroad may have financial or residential ties in certain states that will require them to file a state tax return. Our team will work with you to determine if this will be necessary and, if so, to file this state tax return to ensure state tax compliance.
• Non-Filers and Delinquent Filings: If you have previously failed to file or have filed incorrectly, it may seem very complicated or daunting to rectify these non-filings or delinquent filings. Our team will work with you to seamlessly rectify any non-filing or delinquent filings and ensure you are once again in compliance with IRS tax standards.
• Reviewing Prior Returns: Mistakes are common when individuals file their own taxes. Our team will review your prior tax returns to determine if mistakes have been made and how they may be rectified and avoided in the future.
• Federal and State Audit Representation: Our team offers federal and state audit representation for both individuals and businesses facing an audit process.

How Do Expats File Taxes?

The U.S. is unique in its tax requirements, being one of the only countries to tax based on citizenship, regardless of where an individual resides. This means that any and every U.S. citizen or Green Card holder is required to file some form of federal income tax return with the IRS annually, even if they live or work abroad. Some states may require individuals in certain financial situations to file a state income tax return in addition to their federal income tax return.

U.S. citizens will be required to pay income taxes on both earned and passive income they have accrued throughout the tax year if they meet a certain threshold, even if this income was earned in a foreign country or through a company that is not located within the U.S. This includes any wages earned, any income earned from investments, rental properties, and retirement plan payments, as well as reporting information from foreign accounts and foreign assets.

Do Expats Pay Double Taxes?

The United States has worked with 68 countries worldwide to put tax treaties in place, serving as requirements and guidelines for individuals living and working abroad on which country they are required to pay certain taxes to. These treaties help U.S. citizens and Green Card holders living and working abroad avoid double taxation. Tax treaties vary from country to country, and it is important to review the tax treaty for your country of residence to ensure compliance with U.S. tax standards as well as tax requirements for the country of residence. Working with a tax professional to understand the treaties and intricacies of tax compliance will help ensure you are avoiding double taxation. 

When To File Taxes as an Expat

Individuals living and working abroad 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. Even though the filing deadline is June 15, the filer must pay any taxes they owe by the regular deadline, which is April 15. Individuals who pay their taxes after the April 15 deadline will incur a financial penalty for each day the taxes are late. 

FBAR Filing

It is very common for U.S. expats to hold some sort of financial asset in a foreign financial institution throughout their time living and working abroad. The U.S. government requires that foreign bank account information be 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. People who fail to file the FBAR will face financial penalties.

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, will 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. If you feel you do not meet these filing requirements and decide not to file, it is worth reviewing this decision with a tax professional. Failing to file FATCA or FBAR can result in expensive financial penalties, and it is better to ensure compliance than fail to file and face the penalties.

FBAR, FATCA & Offshore Disclosure Obligations for Expats

U.S. individuals who are required to file an income tax return each year will also have certain obligations when it comes to disclosing certain offshore accounts, foreign bank accounts, and foreign held assets to the IRS. 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 a foreign bank account, you are required to file an FBAR. This $10,000 will be the sum of any and all foreign bank accounts you may hold. 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 Sacramento

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 can be extremely costly for individuals. 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?

The biggest tax mistake you can make as a U.S. citizen living and working abroad is failing to file taxes at all. There are 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 is the most costly penalty and will result in a fine of 5% of 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 owe, as well as paying the full amount of taxes. Failure to pay 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. 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.

Ensuring compliance with expat taxes is important to avoid these unnecessary penalties. Working with an expat tax attorney can be an easy way to make sure all necessary filings are done on time and properly, making the process less complicated along the way.

Schedule a Free Consultation With a Sacramento Expat Tax Lawyer Today

The Sacramento expat tax lawyers at Evolution Tax and Legal are ready to help you seamlessly file your expat taxes: Whether you are in the Sacramento area or thousands of miles away, our team has the expertise and knowledge to understand your tax situation and ensure compliance with the IRS as well as your country of residence. Contact the Evolution team today to schedule your free consultation and learn more about how our team can serve you.