We at Taxes For Expats often get asked to explain tax filing requirements for Americans residing overseas. Here’s a quick and easy to read guide covering what you need to know – and nothing you don’t.
The key issue for all US citizens & Green Card holders residing anywhere in the world is that even if you don’t reside in the US or earn money in the US, you still have to file US tax returns declaring your worldwide income (assuming you meet the minimum filing thresholds).
Are ‘expat’ returns different from regular US returns?
Yes – here’s how:
- First and foremost – when your return is due. The deadline for taxpayers residing abroad is June 15 (a two month filing extension is automatically granted). Note – if tax is owed, the deadline for payment is still April 15th. We recommend completing your returns well ahead of the deadline to avoid unpleasant surprises. If necessary, you can also file for another extension to October. This request for extension must be submitted prior to June 15.
- There are several key exclusions and deductions that can only be claimed by taxpayers living abroad. The key factor is that these special nuggets from the IRS are not given to you automatically. To utilize these critical tax saving provisions – treaty exclusions, the Foreign Earned Income Exclusion (FEIE), Foreign Housing Exclusion, Foreign Tax Credit, and many others – you must prepare your income tax return correctly and claim these deductions and exemptions properly.
- Self-employment tax issues – the complexity begins. If you work for a foreign employer you are not required to pay employment taxes (Social Security and Medicare). If you work for a US employer, the US employer will make the proper withholding from your salary. But, in today’s day and age, where many bloggers worldwide are ‘digital nomads’ and building their own businesses, they may be liable for self-employment tax – also known as SECA (Self-Employed Contributions Act) tax.
What do you have to glean from this? Some countries have signed a ‘Totalization Agreement’. If you reside in a country that has signed this agreement, you won’t have to pay this extra tax if you already pay into the social security system of that country.
This and other tidbits are covered by Ines and her team in their Digital Nomad Tax Guide – critical reading for anyone pursuing this life path. Click here to download it!
Step by step instructions for getting help from Taxes for Expats
1. Navigate to the Taxes for Expats site and register for a new account. This will give you access to a secure portal.
2. Schedule a free introductory consultation. This 30 minute call requires a retainer of $50 which is credited towards tax preparation fees.
3. After you create your account, begin by completing the online tax questionnaire. If you are filing for several tax years, simply create the additional tax year entries – copying your information is easy. If you are unsure about how to respond to something you have several options. You can initiate an online chat session with the Taxes for Expats team, review the FAQ section of the website, or you can email your tax preparer. Quite simply, the team is very accessible.
4. If you have tax documents, such as W-2s or 1099s, to upload you can do that after completing the questionnaire. The document checklist allows you to begin uploading documents. Every part of this process is easy to follow, and your next steps are always clear.
5. Once you have completed the questionnaire the Taxes for Expats team reviews the answers you submitted and will send an engagement letter. This letter outlines the work that TFX will do. All of the fees are declared up front, so there will be no surprises.
6. Now, just sit back while the Taxes for Expats team completes your return. When the documents are ready for you to review you will receive an email notification. It is only at this point in the process that payment is required. Immediately after the payment settles, the return will unlock. Taxes for Expats accepts payment via any credit card, TransferWise, or PayPal.
7. After you examine your return and determine it is ready to file, Taxes for Expats will submit it via e-file on your behalf. At this point they will give you any additional instructions and a work summary.
Cost for filing a tax return
All fees are completely transparent and Taxes for Expats uses a simple flat fee system. The $350 flat fee includes almost any form an expat would need to file. The complete list of more than 40 forms can be seen here.
If the complexity of your return requires a fee outside of this flat fee structure, the details will be in the engagement letter you receive. There are never any fee surprises.
Additional forms that are not included in the flat fee include:
- FBAR form: $75
- Expatriation Form 8854: $400
Positive customer reviews
The ability to file taxes from anywhere is almost to be expected in the modern world, especially for taxpayers living abroad. The TFX online portal keeps your information organized, all of your tax files accessible regardless of where you are, and also keeps you informed during the tax preparation and filing process. The stereotype of visiting a tax preparer with shoeboxes of receipts is no longer true. “Disruption” is a word best left for tech companies, so let’s just say that this way of filing expat taxes is simply more convenient. Taxes for Expats has nearly 1,000 reviews from satisfied clients, including many who have been TFX clients for years.