Expatriate Tax Service
Expatriate Tax Service – We offer wide range of expatriate, foreign tax planning and compliance services.
If you are a U.S. citizen or resident alien living overseas or have foreign incomes, the tax situation can be often complicated and frustrating. You need to be well informed in order to take advantage of the numerous deductions, credits and exclusions that the IRS offers.
The important issues include:
Foreign earned income exclusion – citizens and residents living and working outside the United Sates may be entitled to a foreign earned income exclusion that reduces taxable income. Through the foreign earned income exclusion, citizens and residents may be able to exclude all or part of their foreign-source wages and self-employment income from the federal income tax. To qualify for the foreign earned income exclusion, a person needs to work and reside outside the United States and meet either the Bona Fide Resident or Physical Presence tests.
Foreign tax credit – if you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Taken as a deduction, foreign income taxes reduce your U.S. taxable income. Taken as a credit, foreign income taxes reduce your U.S. tax liability. In most cases, it is to your advantage to take foreign income taxes as a tax credit.
Foreign bank account reporting – if you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other types of foreign financial account, exceeding certain thresholds ($10,000 at any time during the calendar year), the Bank Secrecy Act may require you to report the account yearly to the IRS by filing a report of Foreign Bank and Financial Accounts (FBAR). The form to report the FBAR is TD F 90-22.1.
Form 8938 – under FATCA, certain U.S. taxpayers holding financial assets ($50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living abroad)) outside the United States must report those assets to the IRS, generally using Form 8938, Statement of Specified Foreign Financial Assets. The Form 8938 must be attached to taxpayer’s annual tax return.
If you are neither citizen nor resident but with a U.S. income, you may be required to file U.S. income tax return:
Rental income and dividends/interest from assets in the US – foreign individual who are neither U.S. citizens nor resident are subject to U.S. income tax only on the income that is effectively connected with a U.S. trade or business. Rental income and gains from the sale of real estate located in the United States are U.S. source income. As a general rule, dividends and interest paid by a U.S. corporation are U.S. source income.
Located in the Seattle/Bellevue area, Huddleston Tax CPAs provides tax solutions both for U.S. expatriates overseas and for foreign nationals including resident or non-resident aliens.
Call 425-483-6600 today and learn about our expatriate tax service.