Bakersfield Expat Tax Attorney

Tax season is one of the more stressful times of the year for many of us, and it is only made more complex for U.S. citizens and Green Card holders who live outside of the United States. 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 to complete on your own, and our team of Bakersfield expat tax attorneys is here to break it down and provide background on how Evolution Tax and Legal can help.

Why Hire Evolution Tax and Legal for Your Expat Taxes?

Our team of attorney-CPAs at Evolution has a unique skill set: with their dual-licensed background, they are able to handle the intricacies of taxes with the expertise of an accountant but can also look at each situation with the perspective and legal understanding 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 wherever you are filing your taxes this year, 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 Bakersfield

Our team of expatriate tax attorneys in Bakersfield can provide services to handle any and all of your international tax needs, including:

• U.S. Federal Tax Returns: Our team will work with you to gather and prepare any necessary financial information in order to file your U.S. federal income tax returns within the deadline.
• U.S. State Tax Returns: Some individuals living and working abroad may have certain financial ties that will require them to pay state income taxes. Our team will evaluate your financial situation to determine whether this will be necessary, and if it is, we will work with you to file the state income tax in the necessary state or states.
• Tax Planning Optimization: An analysis of your tax returns to determine an optimization strategy to save money can be a complicated and timely process for an individual to do on their own. Working with our team means discovering the best optimization strategies for you: We will analyze your tax situation, determine what type of long-term and short-term savings we can offer you, and help implement this strategy.
• Audit Representation: It is possible that an individual or business may face an audit process, and our team is here to represent you in such cases. We offer representation for both Federal and State audit processes.
• Delinquent Filings: If you are not currently in compliance with IRS tax standards due to failure to file or delinquent filings, our team can work with you to rectify this situation. We will determine the easiest way to get back into tax compliance and help you through the steps of the process, working to avoid any penalties or fines along the way.
• Reviewing Prior Returns: If you’ve been independently filing for years, chances are there may be some mistakes or missed optimization opportunities. Our team will work with you to review previous tax returns to determine if any mistakes need to be rectified and how you can better optimize savings 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 file information on any foreign accounts and foreign assets. Some individuals who have certain financial ties to a U.S. state may be required to file a state income tax return.

Do Expats Pay Double Taxes?

Tax treaties have been put in place between the United States and 68 countries worldwide, 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, or 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 to 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, 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 Bakersfield

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 file an extension past June 15
• Failure to file an FBAR with your tax return: Failure to include the FBAR if you hold more than $10,000 in foreign bank accounts throughout the tax year can result in large penalties or fees, costing you a large sum of money in the long run.
• Failure to take advantage of 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 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.

These mistakes, while they may seem small, can be extremely costly. To optimize your tax payments and avoid making simple mistakes, work 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% 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: 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 an expat tax attorney and avoiding any costly mistakes.

Schedule a Free Consultation With a Bakersfield Expat Tax Lawyer Today

Every year, even the most seasoned expat taxpayers must go through the complicated process of filing from abroad. This process does not have to be so complicated, and working with an expat tax lawyer can help make this process seamless and easy, not to mention provide savings and tax optimization strategies that will help make the most of your money. Schedule a free consultation with our team of Bakersfield expat tax lawyers today to learn more about how the Evolution team can help you.