US Expat Tax Services
Federal Tax return -Form 1040:
According to US tax regulations, US citizens and green card holders are required to file an annual tax return (Form 1040) to report their worldwide income whether or not they live in the United States. We assist the US expats in complying with their U.S. federal income tax return (Form 1040), including all required forms and schedules that goes along with the return.
We pay special attention to ensure that the tax laws and provisions that directly impact your tax filing such as Foreign tax credit (Form 1116), Foreign earned income exclusion (Form 2555) etc. is prudently implemented as required to ensure that the maximum optimal tax savings mechanism is in place.
State Tax return:
Many US expats are not sure if they are required to file the state income tax returns. In most states, residents are required to file an income tax return annually. If you have resided in a particular state for part of the year, you’re still required to file a return for that year.
States have their own set of rules that determine who is a resident and you need to carefully access these residency rules.
FBAR reporting -FinCEN Form 114:
FBAR stands for “Report of Foreign Bank and Financial Accounts" and refers to FinCEN Form 114. The FBAR is only required if you are a U.S. citizen or resident taxpayer having financial interest in one or more overseas financial accounts and the total value of all of the financial accounts combined was $10,000 or more at any point during the tax year.
The FBAR must be filed electronically with the US Treasury Department (not the IRS) by April 15 (individual tax return filing date). There is an automatic extension of 2 months for US citizens living abroad to June 15. If you file for an additional extension, six- months automatic extension is available, which extends the due date to October 15.
FATCA reporting -Form 8938:
FATCA (Foreign Account Tax Compliance Act) Form 8938 must be completed by US expats residing outside the US if specified foreign assets exceed the following thresholds:
For the purposes of filing Form 8938, a taxpayer living abroad is defined as a:
US citizen who has a foreign tax home and is a bona fide resident of a foreign country(ies) for a consecutive time period that contains the whole tax year or
US resident or citizen who was physically present outside of the US for 330 days of a consecutive 12 month period that ends during the tax year.
Specified foreign assets include (but are not limited to):
All financial accounts maintained by foreign financial institutions (deposit, custodial, stocks and securities), with the exception of those specifically excluded in the “not-required-to-report assets” section
Foreign financial assets held for investment:
Securities or stocks issued by a non-US person
Interest in a foreign entity
Financial contracts or instruments in which the issuer or counterparty is a non-US person
Foreign mutual funds
Foreign financial accounts and foreign assets held for investment which are held by any grantor trust in which you are the grantor
Life insurance or annuity contract with a cash value that are issued by a foreign entity
Foreign private equity funds and hedge funds
Any interest in a foreign entity
Form 8938 is attached to the taxpayers annual income tax return (Form 1040).
PFIC -Form 8621:
Per IRS investments made in foreign mutual funds and other types of entities could be subject to US income taxation as an investment in a PFIC.
PFIC stands for Passive Foreign Investment Companies. A PFIC is defined as being any corporation organized under the laws of a non- US jurisdiction, which can satisfy either an income or asset test.
An income test is satisfied when at least 75% of the foreign corporation’s gross income is passive income.
An asset test is satisfied if at least half of the foreign corporation’s assets either produce or are held to produce passive income.
A U.S. person that has a direct or an indirect ownership interest in a PFIC is required to file Form 8621. Indirect ownership would include a partner in any partnership that owns any shares of any PFIC and a beneficiary of any trust or estate that owns any shares of any PFIC.
Form 8621 should be filed with the tax return of the U.S. taxpayer for each separate PFIC in which the taxpayer is a shareholder.
We at Expat tax Services will be happy to help if you need assistance with Form 8621’s.
Streamlined Foreign Offshore procedures for US expats:
The compliance procedure is targeted to US taxpayers residing outside of US and who have made a non-willful default in complying with the US filing procedure. In order to catch up using this program, the IRS requires the past 3 years of delinquent Federal Tax Returns and the past 6 years of FBARs be filed. In the last decade, there has been a substantial increase in the number of US expatriates residing in a country other than their home country wanting to comply with the US tax filing obligations.
We will be happy to assist you with any compliance/ filing requirements you may have under the streamline filing procedure.
$200,000 on the last day of the year or
$300,000 at any point during the year
Married filing jointly:
$400,000 on the last day of the year or
$600,000 at any point during the year