US Individual Income Tax Return
If you are a U.S. citizen or Green Card Holder who lives and works outside the United States, you still have a requirement to file your US individual income tax return annually and include your worldwide income on the tax return. You may however qualify to exclude some or all of your foreign earned income from U.S. taxation if you meet certain tests. The “foreign earned income exclusion” (“FEIE”) allows a general exclusion of up to USD 99,200 in 2014; the amount is adjusted annually for inflation. In addition to (or in lieu of) the FEIE, you may elect to exclude from income a housing cost amount based on your foreign housing expenses (the “housing cost exclusion”). To claim these exclusions, you must meet certain requirements.
Don't worry - We make complex tax filings simple and efficient for you. Our CPAs will advise you of the requirements you must meet in order to benefit from foreign earned income and housing exclusions to reduce or eliminate your overall tax liability. Due to our knowledge and experience of working with US expats for a number of years, we will also advise you the possibility of other deductions which may be available to reduce your tax liability further depending on your specific situation.
Foreign Bank Account Reporting
Declaring bank accounts abroad with the aggregate value of over $10,000 has been required of US citizens and residents for many years and in recent years the law around foreign bank account reporting has become more complex and non-compliance with respect to this reporting will lead you monterary and non-monetary penalties. As a general rule, foreign bank account reporting does not have any tax implications and only disclosure of your foreign bank accounts. Foreign Bank Account Reporting submission due date is June 30th for the year previously ended on December 31st and there is no extension avaialble to submit the required forms. Speak to one of our experts to understand your obligations in respect of reporting your foreign bank accounts.
State Income Tax filing
Generally, states impose tax only on individuals who are residents of the state or individuals who have had income from the state which is above a certain threshold. If an individual is a resident of a particular state and then moves abroad, such individual will most likely be treated as a part-year resident for the year of the move and will most likely be required to pay tax at least on the portion of income allocated to the period in which they were a resident. In some states, you may have a filing requirement if you own a property in the state or if your family members live in that state. Speak to one of our experts to understand your state tax filing obligations.
Filing requirements for US expat business owners
If you are a US citizen or Green Card Holder and own a business outside the US, you may have seperate filing requirements to go along with filing of your personal tax return. Certain U.S. individuals who own more than 10% of stock in a foreign corporation must include additional (Form 5471) with their federal tax return. In general, Form 5471 assists the IRS with gaging the scope of a U.S. taxpayer's foreign holdings that may facilitate U.S. tax deferral. The form is useful for keeping track of the earnings and profits of U.S.-owned foreign corporations, determining whether a foreign entity is a controlled foreign corporation (“CFC”) generating so-called “subpart F income” (generally passive-type income of a CFC that a 10% U.S. shareholder must include currently in gross income), and tracking possible IRC Section 956 inclusions (i.e., investments in U.S. property by CFCs that can trigger a current inclusion in a 10% U.S. shareholder’s gross income).
Our CPA's can help with filing of your business taxes abroad and assist with filing requirements which are requird to be included as part of your tax return.
FATCA
FATCA stands for the “Foreign Account Tax Compliance Act.” FATCA was enacted in 2010 and the objective behind FATCA is to combat offshore tax evasion by requiring U.S. citizens to report their holdings in foreign financial accounts and their foreign assets on an annual basis to the IRS. As part of the implementation of FATCA, starting with the 2011 tax season, the IRS requires certain U.S. citizens to report the total value of their “foreign financial assets.”
In order to further enforce FATCA reporting, starting on January 1, 2014, foreign financial institutions (“FFIs”) (which include just about every foreign bank, investment house and even some foreign insurance companies) will be required to report the balances in the accounts held by customers who are U.S. citizens. To date, as a general practice foreign banks are requiring that all U.S. citizens who maintain accounts with them provide a Form W9 (declaring their status as U.S. citizens) and sign a waiver of confidentiality agreement whereby they allow the bank to provide information about their account to the IRS directly. In some cases, foreign banks have closed the accounts of U.S. expats who refuse to cooperate with these requests.
It is this renewed effort by the U.S. government to combat offshore tax evasion through FATCA that has led to a recent surge in tax compliance efforts by U.S. expats. We have experience in combating FATCA and can advise you on the steps you are required to take in order to be compliant with FATCA rules.
Form 8938 (FATCA Reporting), Statement of certain foreign assets
If you reside outside the U.S. and have a bank account or investment account in a foreign financial institution, you are generally required to include Form 8938 with your U.S. federal income tax return if you meet the following thresholds:
- You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
- You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.
If you fall within any of the above categories, please advise our tax experts to ensure Form 8938 is included as part of your tax return.
Delinquent Taxpayers
Since the enactment of FATCA, foreign banks have began reporting the account balances of their U.S. citizen customers to the IRS (either directly or to the local tax authority that then reports the information to the IRS under an IGA). As a result, the risk of U.S. expats being detected by the IRS has increased significantly. Therefore, it is highly recommended that U.S. expats who are delinquent on their U.S. tax return filings, come forward and seek the help of a qualified tax professional in order to take advantage of the programs currently available. There are a number of programs available to dilinquent taxpayers and our tax advisors can help you choose the program which will benefit you the most.
Other areas of practice
- Historical tax filings including Amending tax returns
- Audit support in case of IRS audits
- US and Foreign residency of individuals
- Retirment planning and IRA's
- Investment Planning
- Tax consulting and advice
- Local tax return preparation
- Free extension filing
- Free preparation of estimated tax payment vouchers
We are ideally placed in several GCC countries including the UAE, Qatar and Saudi Arabia to manage the complex tax issues facing many US expatriates living in the region.
Our goal is to help ease the administrative burden for US expatriates while ensuring our pricing stay competitive. We provide one stop shop for all of our customers dealing with all of their tax related issues.
Expert, but local, our US tax expertise is welcomed by our many clients in the region.