Elk Grove Expat Tax Attorney

Living and working abroad is one of the most rewarding experiences one can have, but when it comes to filing U.S. taxes as an expat, sometimes it seems easier to pack up your bags and move right back to America. Gathering all the necessary financial information and preparing your tax returns prior to the annual tax deadline can be a complicated process that is known to be complicated and riddled with intricacies. Individuals who choose to prepare and file their own U.S. tax return as expats may spend weeks working to ensure they are in compliance with IRS regulations. The Evolution Tax and Legal team of Elk Grove expat tax attorneys understands how complicated this process is and is prepared to assist you in completing all your tax requirements this year.

Why Hire Evolution Tax and Legal for Your Expat Taxes?

The Evolution Tax and Legal team has a unique skill set: our dually licensed attorney-CPAs 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:

• A streamlined online process that will help you ensure that whether you are filing taxes in the Elk Grove area or thousands of miles from the U.S., you will have easy access to our team of experts. 
• The expertise and knowledge of both a CPA and a lawyer will help guide you through legal and financial intricacies involved in expatriate taxes.
• A team that has served individuals and businesses, large and small, all over the world and understands how complicated the process can be. Whatever your tax situation may be, our team of experts will have answers and guidance.

At Evolution, 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 business. 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. We value transparency and responsiveness, and we are excited to welcome new clients and show them the value that our team of Elk Grove CPAs and lawyers can offer.

Expat Tax Services We Offer in Elk Grove

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

• U.S. Federal Tax Return Preparation: Our Elk Grove tax attorneys will work with you to prepare the necessary financial information to file your U.S. federal income tax returns and ensure compliance with IRS tax standards.
• State Tax Returns: Some 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, will help you file this state tax return with all necessary information. 
• Tax Planning Analysis: Tax optimization strategies to help you save while ensuring compliance can be complex and difficult for an individual to handle on their own. 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 the best strategy and ensure short-term and long-term savings.
• Federal and State Audit Representation: Our team offers federal and state audit representation for both individuals and businesses facing an audit process. 
• Non-Filers and Delinquent Filings: Failing to file taxes or filing incorrectly can seem daunting, and many individuals will try to avoid rectifying the situation. The Evolution team provides services to seamlessly rectify any non-filing or delinquent filings and ensure you are once again in compliance with IRS tax standards, ensuring you can avoid future delinquent issues.

How Do Expats File Taxes?

The United States is one of only a few countries worldwide that taxes based on citizenship as opposed to country of residence. As such, every U.S. citizen or Green Card holder is required to file a federal income tax return even if they no longer live or work in the United States. In some situations, where an individual has certain financial ties to a U.S. state, they will be required to file a state income tax return as well.

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. 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?

Tax treaties have been put in place between the United States and many 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 may vary from country to country and are riddled with jargon and complex information that is difficult to decipher without assistance. 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

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. 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

U.S. citizens who live and work abroad are likely to hold some assets in a foreign bank account throughout their time living and working in another country. 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, regardless of whether you live in the same country where your money is being held.

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 and it is determined that it was 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, 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. It is important to consult with a tax attorney 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

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 Elk Grove

Our team reviews countless expat tax filings every year, and there are some frequent mistakes that our Elk Grove expat tax lawyers notice. 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. Working with an experienced tax professional to ensure you are avoiding these common mistakes and others is a sure-fire way to optimize your tax payments and avoid paying more than is necessary.

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

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 a 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.

Schedule a Free Consultation With an Elk Grove Expat Tax Lawyer Today

Working with an expat tax attorney is an easy way for you to ensure taxes are filed properly without having to rearrange your schedule to account for the extra time it takes to do so. Evolution is prepared to take this complicated process off your hands. Schedule a free consultation with the Evolution Tax and Legal team today to learn more about how our dual-certified Elk Grove expat lawyers can help you this tax season.