As a U.S. citizen or Green Card holder living and working abroad, collecting and preparing the necessary financial information for your taxes every year can be more complicated than it should be. Many individuals will spend days or weeks gathering all of the necessary information, only to be left with questions such as when and how to file taxes and who to file what information with. The process can be confusing and riddled with intricacies, especially when you begin to involve tax optimization strategies and the deciphering of international tax treaties. The Monterey expat tax attorneys at Evolution Tax and Legal are here to help: Our team can work with you to make tax season a breeze, whether you are filing taxes in the Monterey area or from a country across the world.
When working with the team at Evolution Tax and Legal, there is a level of expertise and care that other firms may not be able to offer. Our team consists of dual-licensed CPAs and attorneys, providing experience and knowledge that an attorney or CPA may not have on their own. We will be able to provide you with:
Our team understands the intricacies that come with living and working abroad as a U.S. citizen. We have worked hard to be able to bring you the services of tax attorneys and CPAs under one roof, allowing us to offer savings and experience that other firms cannot. We bring the attention to detail and personal care of a small accounting firm together with the experience of a Big 4 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.
Our team of expatriate tax attorneys in Monterey can provide services to handle any and all of your international tax needs, including:
Most countries tax based on residency, meaning only individuals who reside in the country throughout the tax year will be required to pay taxes, regardless of their citizenship status. The United States is one of a few countries worldwide where taxes are based on citizenship, not residency. As such, U.S. citizens and Green Card holders residing anywhere in the world will be required to pay taxes on both earned and passive income accrued throughout the tax year if they meet a certain threshold. This income requirement includes any wages earned, regardless of where they were earned, as well as any income earned through investments, rental properties, and retirement plan payments. U.S. citizens may also be required to report information from foreign accounts and assets if they meet a certain reporting threshold. Individuals who have certain financial ties to U.S. states may also be required to file a state income tax return.
The United States has put tax treaties into place with 68 countries worldwide in an effort to protect citizens and residents from double taxation. These treaties vary from country to country, but they serve as guidelines and requirements for citizens to reference when determining which country will receive certain tax payments. These tax treaties often contain a wealth of information, but they are not easy to decipher due to the advanced legal and financial jargon they contain. Working with an expat tax attorney to work through the tax treaty for your country of residence will be one of the easiest ways to ensure you are avoiding double taxation and optimizing your tax strategy while ensuring compliance with the IRS and your country of residence.
The payment deadline for expat tax payments follows the same deadline as for U.S. persons living in the United States, and all payments will be due on April 15, commonly known as tax day. Individuals who pay their taxes after this deadline will incur a financial penalty for each day that the taxes are late. For filing purposes, expats receive an automatic two month extension. All tax returns will be due on June 15 for expats.
Individuals living abroad will likely, at some point, open up a foreign bank account in their country of residence. The U.S. government requires that this foreign bank account information be shared with the government in order 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. These forms will be due by April 15, but, similar to the expat tax return extension, they will receive an even longer extension. The final deadline, with an extension, means these tax forms must be returned by October 15. If the deadline is missed due to taxpayer negligence, financial penalties could be incurred.
Individuals living abroad may also begin to acquire assets, such as vehicles, homes, or other goods worth a large amount of money. For such individuals, if they meet a certain financial threshold, there is an additional form that must be filed. Anyone who holds more than $50,000 worth of foreign assets or property throughout the tax year must file Form 8938, the Statement of Specified Foreign Financial Assets. This form 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. Failure to file any of these forms can be costly, so it is worth speaking to a tax professional to ensure you are filing all necessary forms and including all required information.
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. These foreign held asset requirements include any financial accounts or assets that are held in any country outside of the U.S., regardless of whether it is your country of residence. 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 or in any combination of foreign bank accounts, you will be required to file the FBAR. If, at any point throughout the year, you held more than $50,000 worth of foreign assets or property, you are required to file Form 8938.
Over the years of working with expatriate tax filings, we’ve noticed common mistakes that individuals will make when independently filing their taxes. While these mistakes may seem small, they can cost taxpayers a lot of money over time. Our team works with expats to rectify these mistakes and develop strategies to avoid them in the future, ensuring compliance and tax optimization strategies. Some of the most common mistakes include:
Individuals living abroad who fail to file taxes or have delinquent filings can face significant financial and legal penalties. Failing to file your income tax return on time can result in different types of penalties, depending on your situation:
Handling international taxes can be complicated and intricate, even for the most seasoned taxpayer. Working with an expat tax attorney can be an easy way for you to ensure taxes are filed properly and avoid paying any unnecessary fines or additional payments without an optimized tax strategy. Schedule a free consultation with a Monterey expat tax lawyer today to learn more about how the Evolution team can make your taxes as an expat seamless and easy.
I’ve been going to Alton Moore Esq./CPA at Evolution Tax & Legal for my taxes for a couple years now and as a small business owner, I would highly recommend him. He and his team are knowledgeable, professional, and the best tax specialists in California. I cannot thank him enough for all his help and tax expertise
Christopher Nichols
Lauren Nichols
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