What it is
US expatriate tax applies to US citizens, residents (Green Card holders), and corporations/businesses that move to or have branches in another country outside the US.
US citizens who take up residence in a foreign country without exploring the ramifications of tax may find themselves paying their government or home state way more than expected, from tax to penalties and interest. Also, they may be subject to double taxation.
How it affects your business
If your organization is a US business with an international workforce, you are a US citizen who wants to move abroad, or you are already an expat, you need to plan and keep taxation in mind.
International mobility causes you much more than a cultural shock. The tax situation for expats is usually complicated, as it is affected by numerous variables, such as your host country, foreign taxes, and employment situation.
Although the IRS offers numerous deductions, credits, and exclusions to expats, it is still not easy to follow through.
Some of these exclusions vary by country, while others can only be claimed during a specific time of the year. In addition, supporting forms and documents are required, which can be a hassle to prepare.
At XB4, our US tax professionals are licensed and authorized before the IRS for preparing and electronically filing US tax returns for individuals and businesses/corporations. We provide an integrated solution regarding international mobility, in addition to our tax planning that can minimize the overall costs and risks of expatriate tax will surely ensure a smooth tax-filing process.
When filing a federal tax return, you should take into consideration the following:
- Amount of foreign earned income
- Your host country: Many countries have tax treaties or conventions with the United States, which will dictate how you file your US taxes
- The state in which you most recently lived: Some states do not have income taxes while others do
- Rental income and dividends/interest from assets in the US: You must pay taxes on these as if you were living in the US
- Whether you are self-employed: You must calculate self-employment tax on your income, even if you can exclude it as foreign-earned income on your income taxes
- All your deductions and expenses such as rental cost has been captured
- Your marital status and dependents are taken into consideration
- Your holdings in a foreign bank account: Any interest in or authority over a foreign financial account of a certain amount must be reported to the US Treasury Department
With XB4, you can be sure that all your expat tax issues will be efficiently solved. We offer a plethora of tax services including but not limited to:
- US Tax Returns: We prepare your US income tax return, including the most common schedules and forms
- State Tax Returns: You may need to file a state return depending on your state of residence
- Small Business Tax Returns: We assist small business owners, self-employed individuals, or people with significant rental property with their returns
- Online Filing: When you are living in a foreign country, it is not practical nor safe to send forms and documents back and forth through the mail. Our highly secure, fully encrypted Client Portal enables quick, free, and safe transfer of files between our office and yours
- Foreign Bank Account Reporting: We file the FBAR form for individuals who have above a certain threshold in a foreign account
- Compliance: We help you sort through the paperwork, forms, and rules, and get you back in compliance with the IRS
- Consulting: We help you get clear on your situation if you are unsure of your need to file federal or state tax returns