Orange County Expat Tax Attorney
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Taxes for Expats
The Orange County expat tax attorneys at Evolution Tax and Legal can help the following citizens calculate and comply with the U.S. tax filing requirements:
- Americans with overseas investments and operations
- American expatriates or non-US citizens living or earning income within the U.S.
Our team offers all services related to U.S. international tax as it applies to individuals (both U.S. citizens and non-U.S. citizens). From tax planning advice, to tax compliance services, and representation in front of the IRS.
Commonly, our individual clients are American expats living in the following foreign countries OR non-U.S. citizens who have either immigrated to the U.S. or have assets and income in the U.S. from the following countries:
Our main book of work for individual taxpayers is to bring those with international tax issues back into compliance with the U.S. reporting obligations upon them. Generally, our expat tax lawyers work with individuals who may not have known they were required to report certain foreign assets and income to the U.S. as part of their annual tax filings. Bringing an individual back into tax compliance can be done through various programs depending on his or her level of “willfulness” behind his or her improper U.S. tax reporting. You can find out more about each one of these programs via our services page on U.S. and Foreign Disclosures.
Our Expat Tax Services in Orange County, CA
U.S. Federal Tax Return Preparation
Our expert Orange County expat tax lawyers have experience in assisting countless expatriates and non-U.S. citizens preparing their U.S. tax returns. We can help individuals with all sorts of U.S. tax compliance, starting from your basic, single-year tax return preparation, to gift and estate tax return preparation, through bringing delinquent and non-compliant filers back into compliance with U.S. tax law.
State Tax Return
Sometimes, American expatriates and non-U.S. citizens will have U.S. state tax filing obligations. As part of our services, we will advise you if you are required to file such returns and can prepare them on your behalf. Most expats or non-U.S. residents with investments or assets in the U.S. will not have U.S. state filing requirements. If you do, a knowledgeable Orange County expat tax attorney at Evolution Tax and Legal can also assist you in determining how to stop being subject to such filings and lower your overall cost of tax compliance moving forward.
Tax Planning Analysis
We can, and do, provide tax planning to many of our clients who are looking to implement a tax-efficient strategy. Amongst the many forms of advice and planning we assist in, this includes advice to those ex-pats and non-U.S. citizens to those looking to best structure their U.S. and foreign investments, report or reduce their compensation, move into or out of the U.S., and how to best utilize a tax treaty between the U.S. and their applicable foreign country. When you retain our services, an Orange County expatriate tax attorney will take a deep dive into your current tax situation to make recommendations as to how you can reduce or even eliminate taxes owed in the U.S. Additionally, we help our clients implement these strategies.
Federal and State Audit Representation
In addition to providing normal tax planning and compliance solutions, we also represent many individuals in tax audits spurred by the U.S. federal and state tax authorities. Most of our audits are in connection with the IRS, however, we also represent many businesses on audits brought upon by varying U.S. states, such as California.
Non-Filers or Delinquent Filers
For those expats and non-U.S. citizens who did not know they were subject to U.S. tax reporting requirements and payments, or who have failed to timely prepare and file their tax returns, there are many options to bring yourself back into compliance with U.S. tax law. Generally the disclosure program we bring you through depends upon the level of “willfulness” behind the non-compliance. For a full discussion on these various programs, please see our service page on U.S. and Foreign Disclosure Programs.
Reviewing Prior Returns
Very often when we get a new client and review his or her prior tax filings, we find numerous errors – almost always made against the client’s interests. This happens when a client self-prepared or the return was performed by tax preparers unfamiliar with the complexities of U.S. international taxation as it applies to individuals. This happens so frequently that we have an established service specifically dedicated to this. With our review, we list the errors we find along with potential solutions for correcting any errors we find. Additionally, if we find any errors, the fee paid for this service will be applied towards the cost of preparing an amended return.
What to Know About U.S. Expat Taxes
Reporting Your Worldwide Income
If you are an American citizen, or U.S. Green cardholder, you are required to report your income on a “worldwide” basis to the Internal Revenue Service (IRS).
That means you are required to report every dollar of income earned in a given year, no matter whether it was earned in or outside of the United States.
Reporting Your Foreign Assets
If you are an American expat, and still maintain your American citizenship or U.S. Green card, you may be required to report your foreign assets to the U.S. government on an annual basis. There are many potential reporting requirements, but the following are the most common:
The Report of Foreign Bank and Financial Accounts (FBAR) and Form 8938, Statement of Specified Foreign Financial Assets.
The FBAR form is required for U.S. taxpayers who hold foreign financial accounts with an aggregate max value of $10,000 or more in a given tax year. If required to file this form, the U.S. taxpayer must report specific details about all such foreign financial accounts such as the account number, bank name and address, max value of the account in the given year, etc.
Form 8938 is required to be reported by U.S. taxpayers who have an aggregate max value of certain foreign financial assets in a given year over specified threshold. The nature of the reporting required by Form 8938 is similar in nature to that of the FBAR discussed above, but requires additional detail and reporting. The thresholds to report this form vary depending on whether the U.S. taxpayer resides in the U.S. or in a foreign country. You can find the reporting threshold on the IRS website here.
You Are Entitled To An Exclusion For Foreign Earned Income
U.S. taxpayers living and earning income abroad may be allowed to “exclude” certain foreign income earned in a given year. This exclusion is better known as the “Foreign Earned Income Exclusion” (FEIE). It essentially allows U.S. taxpayers who maintain a tax home in a foreign country, and are either a “bona fide resident” of a foreign country OR are outside of the U.S. for more than 330 days in a given year. The max exclusion for 2020 is $107,500.
Additionally, Form 2555 will have to be prepared and filed with your return to claim the exclusion.
See the exclusion amounts and a more detailed explanation of the FEIE here.
You May Be Entitled to a Credit on Foreign Tax Paid
U.S. taxpayers who pay income tax to foreign governments may be entitled to a credit for said amounts of foreign income tax paid. The calculation of this credit is complex and is subject to numerous limitations.
However, if you do pay foreign tax to a government, make sure to let your accountant or attorney know so they can help you take advantage of this potential credit against your U.S. tax liability.
You May Have to Report Your Ownership of Foreign Businesses
U.S. taxpayers may have to report the activity of a foreign company depending on their overall relationships and level of ownership of the foreign company. Some of the most notable forms that may be required to be filed are Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.
Form 5471 is required to be reported by U.S. taxpayers who are officers, directors, or shareholders in certain foreign corporations. There are five categories of filers, each category of which has its own certain reporting requirements.
Form 8865 is required to report the activity of controlled foreign partnerships, transfers to foreign partnerships, or acquisitions, dispositions, and changes in foreign partnership interests. Similar to Form 5471, Form 8865 has various categories of filers, each of which has its own specific set of reporting requirements.
You Might Be Entitled to Benefit Under a Double Tax Treaty
The United States has entered a large network of tax treaties with foreign countries to help lower the incidence of double taxation on income earned between the two countries. Generally, these treaties dictate how income and expenses are treated, reported, and taxed by and between the two countries.
A U.S. expat who maintains their citizenship or U.S. Green card may be able to take advantage of a treaty by reporting themself as a “non-resident” of the U.S. If properly utilized, the U.S. expat may only have to report and pay tax on income earned within and sourced to the United States.
Generally, the protections of a tax treaty utilized in a given year must be reported on Form 8833, Treaty-Based Return Position Disclosure. This form is required to report the treaty benefits claimed and how they are accounted for on your US tax filing for the year.
If You Failed to Properly Report Your Foreign Income and Assets in Previous Years, You Have Options
It is not uncommon to find that many expats do not understand the complex reporting requirements of the U.S. tax system. This in turn leads to errors on returns filed by expats and their accountants. If this is the case, the expat has options to get back in compliance with the IRS, with small to minimal penalties.
One such program is the IRS’s Streamlined Filing Compliance Procedures. The purpose of this program is to allow U.S. taxpayers, who failed to properly report foreign earned income and assets in prior years due to “non-wilfullness”, to file a number of years of back taxes and certain foreign asset information reporting forms known informally as FBARs. Specifically, the program requires the U.S. taxpayer to properly amend and file the three previous years of tax returns and six years of FBARs.
In addition, the specific streamline program chosen will either require a filing of Form 14653 or Form 14654 to report a statement of “non-wilfullness” detailing the mistakes that were made leading to their ultimate non-compliance and need for disclosure through the streamline filing compliance procedures.
Contact Our Orange County Expat Tax Lawyer
The expatriate tax attorneys & CPAs at Evolution Tax and Legal have the experience to provide comprehensive tax guidance and representation for both U.S. and non-U.S. citizens. We are available to walk you through the tax process for expats, and assist you with any hurdles you might face.