Cross-Border Tax Services
The United States has several unique tax rules and requirements for expats and newcomers that can complicate filing. This means that even if you're residing abroad, you're still required to file a U.S. tax return and report your foreign income. However, there are special provisions that can help reduce double taxation, but they come with strict eligibility criteria and complex reporting requirements. Without specialized knowledge, expats risk overpaying taxes or facing IRS penalties, making it vital to work with a professional who is experienced in U.S. expat and cross-border tax matters.
US Filing Obligation for Expats
The obligation to file a tax return for all U.S. persons requires U.S. citizens, green card holders, and residents by law to report their worldwide income to the IRS, regardless of where they live or work. This includes wages, investments, and any other sources of income. Even if a U.S. person is living abroad or earns income outside the U.S., they must still file a tax return annually. Failure to do so can result in penalties, interest, or legal complications.
Financial Asset Reporting Requirements
U.S. persons are also required to comply with the Foreign Bank Account Report (FBAR) and FinCEN Form 114 requirements if they have financial interests in or signature authority over foreign bank accounts. The FBAR is separate from the IRS tax return and must be filed electronically. Failure to file the FBAR can lead to severe penalties, including fines of up to $10,000 per violation, or more for willful non-compliance. Additionally, certain foreign financial assets may also need to be reported on IRS Form 8938, depending on the thresholds set by the taxpayer's filing status and location.
Tax Planning
U.S. persons living abroad must be cautious when enrolling in foreign tax-advantaged savings plans and investment accounts as these can trigger additional reporting requirements and tax implications. Many of these plans may be considered foreign trusts under U.S. tax law, requiring complex disclosures like Form 3520 or Form 3520-A, which carry penalties for non-compliance. Even though these plans may offer tax advantages in the foreign country, they can still be taxable in the U.S., often subject to U.S. tax on the income or distributions. Carefully evaluating these plans and seeking professional advice is crucial to avoid costly mistakes, ensure compliance, and understand the full tax impact, both locally and federally.
Reconstructing Tax Records and Amnesty Programs
We can help Americans navigate the IRS amnesty program by providing expert guidance on how to qualify for relief and ensuring compliance with all necessary requirements. Through voluntary disclosure programs or the Streamlined Filing Compliance Procedures, taxpayers can come forward and resolve past tax issues, avoiding penalties and potential criminal charges. We assess your specific situation, assist in gathering the necessary documentation, file the right forms, and negotiate with the IRS to minimize financial burdens, helping you get back on track with your taxes while offering peace of mind.