Expat Tax Attorney

If you live and work abroad, there’s a good chance you have heard of the intricacies and complicated process of filing expat taxes. Each year, when April rolls around, U.S. citizens and Green Card holders must begin preparing their financials to file their taxes and comply with IRS requirements. This can be a confusing process if you are not working with an experienced expat tax attorney, so our team is here to help during tax season.

Why Hire Evolution Tax and Legal for Your Expat Taxes?

With a team of dual-certified CPAs and expat tax lawyers, the team at Evolution Tax and Legal is specially suited to handle the intricacies of filing expat taxes. When working with an expatriate tax attorney at our firm, you’ll receive:

  • The legal knowledge of our expat tax attorneys comes together with the expertise of CPAs to offer the best international tax accounting, advisory, and legal services.
  • We offer the expertise of accountants and lawyers under one roof, allowing the team to offer you savings that other accounting firms cannot.
  • We understand that filing your expat taxes often takes place many miles from the U.S. border, so we’ve set up a streamlined, online process that will provide you with easy access to our team of experts, from wherever you reside.
  • Our team has served clients all over the world, from individuals to large businesses, and we understand how difficult it can be to file your expat taxes. We understand your situation, because there’s a good chance we’ve seen it before.
Our value proposition is to bring the expertise of a Big 4 company together with the customer service, feel and personal attention of a small firm. We thrive on openness, transparency and responsiveness, and are ready to welcome new clients and show them the Evolution Tax and Legal difference.
 

Expat Tax Lawyer

Expat Tax Services We Offer

Our team of expat tax lawyers offers a variety of expat tax services, including:

  • U.S. Federal Tax Return Preparation: We will help prepare you to file your federal taxes, starting with the basic income tax return that is required to be filed yearly, to any gift and estate tax returns and any potential delinquent forms and filings that need to be rectified.
  • State Tax Returns: In certain situations, expats will be required to file a state tax return within the U.S., which is to be returned at the same time as federal tax returns. We will help you navigate filing this return with the state, and determining the necessity of state tax returns for your personal situation.
  • Tax Planning Analysis: Our team will conduct an analysis on your finances for the year and determine if and how you can implement a tax-efficiency strategy. We can provide the necessary guidance for implementing the strategy, and save you money in the short-term and long-term.
  • Federal and State Audit Representation: In addition to typical tax planning and compliance, we represent many individuals in both federal and state spurred tax audits.
  • Non-Filers or Delinquent Filers: If you have failed to file your taxes or previously filed incorrectly, our team can help you rectify and fall back into compliance with IRS tax standards. We will assess your situation and determine the best options for you to get back into compliance.
  • Reviewing Prior Returns: It is common for self-filers to make errors on their tax returns, and even more common for these errors to work against the filer. Our team can review your prior returns and determine if any errors were made, and assess how these errors can be rectified or avoided in the future.

How Do Expats File Taxes?

The United States is one of only a few countries that taxes based on citizenship, regardless of residency. As such, Americans who live and work abroad are still required to file taxes with the IRS if they meet a certain income threshold. Taxable foreign income for U.S. citizens living abroad includes wages, dividends, and rental income. 
 
To file expat taxes with the IRS, the tax season follows a similar timeline as if you were filing from within the U.S.: the tax year runs from January 1 to December 31, and taxes are due in the following year. You must file your federal income tax returns, along with any additional forms that may be necessary based on your situation. If you resided in a state where you still have certain ties, such as property or voter registration, you may also be required to file a state income tax return.
 

Do Expats Pay Double Taxes?

The U.S. tries to protect citizens from double taxation through tax treaties. These treaties help citizens and residents determine which country certain taxes will be paid to, in order to avoid paying them to both countries. These tax treaties reduce or eliminate taxes that expats have to pay on certain forms of income. The U.S. has tax treaties with 68 countries worldwide, but the treaties vary from country to country. As such, it is important to review the tax treaty with an international tax professional to ensure you are in compliance with both country’s tax codes and that you are not paying double taxes when it can be avoided.
 

When To File Taxes as an Expat

Expats are given an automatic 2-month extension for filing their tax returns, so they are not due on the typical date of April 15, but rather June 15 of the year following the tax season they are filing for. Taxpayers are still required to pay any taxes due by April 15, and will incur a financial penalty for each day after April 15 that the tax payment is made.
 

FBAR Filing

U.S. citizens who live and work abroad often hold assets in foreign bank accounts and these assets must be reported to the IRS along with the annual federal tax returns. If you hold more than $10,000 in a foreign bank account, whether it is in your country of residence or offshore accounts, you are required to file the Foreign Bank Account Reporting form, along with your tax return. This form helps the IRS keep track of international income and assets of U.S. citizens.

Along with filing FBAR, you must file FinCEN Form 114. Both of these forms are due by April 15, but the IRS provides an automatic extension to those who miss the deadline, and the final deadline is October 15. If the deadline is missed by a taxpayer due to negligence, there could be financial and criminal penalties placed against them.

FATCA Filing

For individuals who hold assets in foreign countries, such as business or properties, that are worth more than $50,000 at any given point throughout the tax year, an additional form is required to be filed with the IRS. This form 8938, is the Statement of Specified Foreign Financial Assets form and helps the government keep track of foreign assets that all citizens may hold. This form should be included with the annual tax return.

If you do not meet the income tax return filing requirement for a tax year, you are also exempt from filing Form 8938, even if you meet the threshold for filing. Consult with an expat tax attorney before determining you do not need to file these international tax forms, as the penalties can be steep and failure to pay penalties can result in prosecution.

FBAR, FATCA & Offshore Disclosure Obligations for Expats

As discussed above, expats have certain obligations to disclose offshore accounts, foreign bank accounts and foreign assets to the IRS each year while filing their annual tax return. The requirements for filing FBAR and FATCA can vary based on an individual’s situation, but the general rule is that if at any point throughout the year you had $10,000 of assets in a foreign bank account that you have financial interest in or control over, you must file FBAR. If at any point throughout the year you had financial assets, such as property or businesses, that are worth more than $50,000, you must file FATCA. These forms are very important to comply with, and failure to do so can result in hefty penalties and fines so consult a skilled expat tax lawyer.

Common U.S. Expat Filing Mistakes

There are a few common mistakes that tax experts often call out when reviewing tax returns of expats. It is beneficial to be aware of these mistakes so you can be cognizant to avoid them in the future. The mistakes include:

  • Failure to include Form 2555 or Form 1116 in your filing. Tax Form 2555 is the Foreign Earned Income Tax exclusion form, and it 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 include both of these forms can work against you during tax season, and leave you paying higher taxes than you otherwise would have. 
  • Failure to claim the child tax credit. Another technique to save money on your taxes is ensuring you are filing for all tax credits that you qualify for, including a child tax credit for each dependent in your care. 
  • Failure to file an extension past June 15. 
  • Failure to file an FBAR with your tax return. The FBAR is an important form for the IRS to have, and failure to file can result in large penalties and fees.

Making these mistakes can cost you more money in the long run, which is why it is important that you ensure you are filing all necessary forms and filing them correctly. The best way to ensure complete compliance with expat taxes is speaking with a seasoned expat tax lawyer about your situation and having them review your filings prior to submission to the IRS.

Expat Tax Attorney

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

Likely the biggest mistake of all you can make as an expat living abroad is failure to file any taxes. The failure to file the forms above will ultimately result in the loss of any potential tax breaks, but the failure to file any tax return can result in hefty penalties and potentially prosecution.

Neglecting to file your income tax return on time results in three different types of penalties, depending on the situation you find yourself in. The failure to file penalty is the most expensive, and can result in a 5% charge on the money you owe in taxes, with an additional 5% being added each month. The maximum penalty is 25% of the taxes owed, paid in addition to the taxes owed to begin with. The failure to pay penalty is lower in comparison, with .5% being owed, and this also increases by .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 will accrue interest, which is the third type of penalty an expat may face if they fail to pay fees overtime. Interest begins accruing on the April 15 deadline, and stops once the tax payments are settled.

Failing to file FATCA or FBAR forms can result in even steeper penalties. For FATCA, penalties can include a $10,000 fine, which can increase overtime up to $50,000 and a 40% charge on the value of undisclosed assets. The maximum fine for failure to file an FBAR is $87,000, if a taxpayer has a pattern of negligence.

The penalties can be very pricey for failure to file tax returns, or for filing incorrectly. It is important to avoid creating a pattern of negligence, which can result in further penalties and investigations.

Schedule a Free Consultation With an Expat Tax Attorney Today

The expat tax lawyers at Evolution Tax and Legal has experience dealing with the intricacies of international taxes, and we can ensure that your personal situation will be examined and a plan put in place to optimize your tax solutions. As tax season rapidly approaches, now is the time to put your expat tax plan in place. Contact Evolution Tax and Legal to get started with a free consultation with an expat tax attorney today.