U.S. citizens living abroad still need to file their taxes with the federal government. Often times this can be forgotten in the flurry of big life changes like relocating and settling into a life in a foreign country. Since 2015's FAST Act passed, many of our clients have a genuine concern that without resolving their looming tax issues they may face the revocation or denial of renewal of their passport. Other clients are interested in renunciation of their citizenship or are in the process of helping a loved one gain citizenship. These issues too can be affected by unfiled returns and back taxes.
WATAX has 30 plus years of helping U.S. citizens around the globe get back into compliance with the IRS, in the simplest, least expensive way. Here's our handy list of steps you can act upon to resolve your back tax issues before they become even bigger concerns.
- First, find out when the last year you filed was and determine what years you should file to establish "compliance." Six years is considered "compliant" but some people file less than that and see if that satisfies the "system."
- Find out If you qualify for the Foreign Earned Income Exemption (FEIE) which exempts income up to $104,100 from U.S. taxation (in 2018). You might also further reduce your exposure to taxes by using the Foreign Tax Credit (FTC) which gives you credit for any foreign taxes paid.
- If you are self-employed and working abroad, you will be required to pay social security taxes. If you are an employee, however, you might be participating in a foreign country's Social Security system and exempt from U.S. Social Security taxes.
- Report any money held in foreign bank accounts exceeding $10k with a Foreign Bank Account Report (FBAR). If you haven't filed in several years, start filing asap if you want to avoid ending up like this guy!!
- Concerned about owing taxes? No problem. Livable payment agreements or settlements are available to mitigate the damage.
WATAX, our staff of non-filer experts, helps people all around the world solve their expat tax issues. Email us a description of your tax issue and we'll contact you or call us at 1-206-282-4555 for a free analysis.
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