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Expat Income Tax Services

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U.S. Income Tax Return Preparation for Expatriates - Pitfalls and Traps

To ensure a smooth tax-filing process, you must be well informed. If you take up residence in a foreign country without exploring the tax ramifications, you may find yourself paying more than you expect to the U.S. government or your home state - as well as penalties and interest. Fortunately, here at Gonzalez & Company, C.P.A, P.A., we can help.

Some of the important considerations include…

  • Amount of foreign earned income. Through the Foreign Earned Income Exclusion, you may be able to deduct a substantial amount in earned foreign income from your U.S. taxes. For tax year 2015, if you are a qualified expatriate you get a foreign earned income exclusion (earnings from wages or selfemployment) of $100,800, but this exclusion is only available if you file a tax return.
  • Foreign Tax Credits. You get tax credits against your U.S. income tax obligation for income taxes paid to a foreign country, but you must file a US tax return to claim these foreign tax credits.
  • Your host country. Many countries have tax treaties or conventions with the United States, which will dictate how you file your U.S. taxes.  We can help you with any applicable tax treaty.  
  • Which state you most recently lived in. Some states do not have income taxes; others make it difficult to sever your ties with that state, even if you reside in a foreign country.
  • Rental income and dividends/interest from assets in the U.S. You must pay taxes on these exactly as if you were living in the U.S.
  • Whether you are self-employed. You must pay self-employment tax on your income, even if you can exclude it as foreign earned income on your income taxes.
  • Your holdings in a Foreign bank account. Any interest in or authority over a foreign financial account over a certain dollar amount must be reported to the U.S. Treasury Department. Failure to file may result in a penalty of $10,000 or more, including criminal prosecution.
  • Your holdings in Foreign Assets. Starting in 2011, any interest or ownership in foreign assets, may require you to report these foreign assets to the IRS. This filing requirement is in addition to reporting your Foreign Bank and Financial Accounts. These assets can include foreign stock or securities, financial accounts, partnership interests, mutual funds, hedge funds, private equity funds, life insurance or annuity contract with a cash value, and more.
  • Foreign Entity Ownership. If you own 10% or more of a foreign corporation, foreign partnership (LLC), or other entity you must file special IRS forms. Failure to file IRS Form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations) and corresponding schedules and attachments might subject you to substantial penalties, including criminal prosecution.
  • Foreign Trust or Beneficiary. If you create a foreign trust or are a beneficiary of a foreign trust you may be obligated to file IRS Forms 3520 and /or 3520A each year to report those activities or be subject to severe penalties. Foreign foundations and nonprofits which indirectly benefit you may be foreign trusts in the eyes of the IRS.

Our Expat Tax Services

Although the IRS offers numerous deductions, credits, and exclusions to expats, taking advantage of them is not straightforward.

Some exclusions vary by country, while others can only be claimed for a portion of the year. In addition, each requires supporting forms and worksheets, which can be more than cumbersome to prepare.

For people who are either planning a move or have already settled abroad, we offer the following tax services:

  • U.S. Expat Tax Return Preparation - We prepare and file your U.S. income tax return, including the most common schedules and forms. These include IRS Forms 1040, 1116 (Foreign Tax Credit) and 2555 (Foreign Earned Income) and Schedules A, B, C, D and E.
  • State Tax Returns - Depending on which state you most recently lived in, you may need to file a state return.  We prepare and file state income tax returns for all 50 states.
  • Small Business Tax Returns - Your net self employment income in a foreign country (earned as an independent contractor or in your own sole proprietorship) is subject to US selfemployment tax (Medicare and social security) of 15.3% which cannot be reduced or eliminated by the foreign earned income exclusion. The one exception is if you live in one of the very few countries that have a social security agreement with the US and you pay that countries equivalent of social security. We prepare and file your Expat Tax Return, Schedule C (Profit or Loss from Business).
  • Foreign Bank Account Reporting - We prepare and electronically file the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). This is filed by U.S. persons, which include U.S. citizens, resident aliens, trusts, estates, and domestic entities that have an interest in foreign financial accounts and meet the reporting threshold.  Starting in tax year 2016, the new filing due date is April 15th, with an automatic extension of 2 months for US citizens living abroad. An extension is also available, which can extend the due date to October 15th.  We are registered with the United States Department of Treasury, Financial Crimes Enforcement Network (FinCen) to prepare and electronciall file Fincen Form 114, previoulsy known as the FBAR.  Please visit our Foreign Bank Account Reporting page, to learn more.
  • FATCA (Foreign Account Tax Compliance Act) - We prepare and file IRS Form 8938 (Statement of Specified Foreign Financial Assets) which must be filed by U.S. Expats living abroad and own specified foreign assets that surpass certain threshold values.
  • Information Return of U.S. Persons with Respect to Certain Foreign Corporation - We prepare and file IRS Form 5471. If you are a U.S. Citizen or U.S. Resident and you are an officer, director, or a shareholder in certain foreign corporations or other entities, you are required file Form 5471. This form along with other corresponding schedules and attachments are filed in order to report transactions between you and foreign corporations or other entities. Failure to file IRS 5471 can result in major penalties.
  • Compliance - It's not uncommon for Expats to fall behind on their taxes. We help you sort through the paperwork, forms, and rules, and get you back in compliance with the IRS, including through special Offshore Disclosure Programs that might be available.
  • Consulting - If you're unsure of your need to file federal or state tax returns, give us a call. We help you get clear on your situation.
These are the most common Expat Income Tax Return preparation services we offer but it's not our full list. In addition, in order to help you get organized, we can provide you with an Expat Tax Organizer. Please contact us to discuss your needs if you don't see them reflected here.

EXPATRIATES INCOME TAX RETURN PREPARATION SERVICES

Our CPA Firm specializes in income taxes and tax return preparation services.  In addition to having your income tax return prepared by us, you get:   

·         Experience & Qualifications - CPA Firm with over 20 years of income tax preparation experience;

·         Affordable Fees - Could be the best financial decision you ever make;

·         E-Tax OrganizerAll clients receive FREE year round access to our “Expat Tax Organizer”

·         Secure Client Portal - When you're living in a foreign country, it's not practical to send forms and documents back and forth through the mail. Our highly secure, fully encrypted Client Portal enables the quick, free, and safe transfer of files between you and our office. All clients receive FREE year round access to our "Vault" (see below for more information);

·         Technology - We use sophisticated, top-of-class income tax preparation software;

·         Electronic Filing -  E-filing for fastest tax refunds and filing;

·         Free Second Look - Paid clients will automatically receive a review of their prior year tax return to uncover any errors (last year we found 2 of 3 client's tax returns had errors);

·         Privacy Policy - Gramm-Leach-Bliley Act Compliant (see below for more information);

·         Monthly Newsletter - Clients receive a FREE monthly newsletter full of tax and financial planning tips;

·         Customer Service - Open year round to help you whenever you need us;

·         Much More - Too much to list here.

Affordable Fees

For most Expat Income Tax Return preparation work, we charge an estimated flat fee.  All potential clients have the right to receive a quote before we begin our work.  For this reason, virtually all income tax return preparation fees are agreed upon in advance.  To give you an accurate estimate, we need a copy of your prior year's income tax return along with an explanation of any changes involved in the current year's tax return.  If we prepared your income tax return last year and there are no major changes with the current year, your fee should be the same.  There are some occasions, due to the complex nature of the job or other factors beyond our control, where it is impossible to set a fee in advance.  In these cases, an hourly rate will be set in advance and we will provide our best estimate of the total cost, before we start.  All fees are due at or prior to completion of the work.

Our Guarantees

1.      Satisfaction Guarantee - We are so confident that you will have a pleasant experience with us that you don't pay unless you are satisfied. 

2.      Prompt Service - We will pay any penalty caused by our lateness with regard to any tax deadline.

3.      Tax Penalty Refund Policy - We will pay any penalty caused by our error and respond to any IRS correspondence generated as a result of our error, free of charge.    

4.      Free Audit Support - If your tax return is audited, we will tell you why the IRS is contacting you, what it means and what you should do next, free of charge.       

5.      Audit Representation - From the time you receive an IRS notice to when the audit is resolved; you can count on us to help you.  Our fees for audit representation services related to a tax return that we prepared will be billed at 50% our regular rates, provided your income is less than $125,000.  

Secure Client Portal

The "Vault" is our Secure Client Portal which is comprised of four components consisting of 1) Secure File Exchange, 2) Online Document Management, 3) Off-Site Backup, and 4) One-Click Upload.  The Vault is specifically designed to help us work collaboratively with our clients while allowing us and our clients to safely store and quickly retrieve files, documents, and workpapers from any location with Internet access. 

To register or login, please go here.  To learn more about our Client Portal Security Measures, please go here.

Privacy Policy

Our CPA Firm complies with the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999.  The GLBA was enacted to protect consumers' private financial information and governs the collection and disclosure of clients' financial information by CPAs, accountants and tax preparers.  This means that we must design, implement, and maintain safeguards to protect our client's information.  We do this by ensuring the security and confidentiality of our client's information, protecting against any anticipated threats or hazards to the security or integrity of such information, and protecting against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any client.  To learn more about our Privacy Policy, please go here.

 We can also help you with other income tax return preparation services, including:

Contact Our Office Today

There's no need for Expats to pay more than required - or suffer under penalties and interest - just because the process is more confusing for them.

Let us help you navigate the tricky waters of U.S. taxes for Expats. Give us a call or send us an email today!