Tax Preparation and International Financial Reporting for a U.S. Expat can be overwhelming. However, with proper preparation, CPA Samaná can help you take the complexity out of the equation when April 15 is just around the corner. We are there for you every step of the way; from determining your obligations; to gathering your information; preparing your filing documents; explaining the information before filing, and filing all your documentation.
For your convenience, we prepared a list of the most common documents a U.S. Expat will need before tax season. The list is by no means exhaustive, but it will give you an idea of what documentation you should look up to as soon as the new year arrives.
Gather either your last year’s tax return or the last return you filed. Please remember, you need your Federal Income Tax Return (filed with the IRS) as well as any other state or local income tax return filed in the U.S. Each taxpayer’s situation is unique. Depending on your particular financial situation, you may have state and local tax filing requirements in the U.S. in addition to your federal tax filing obligations. Please gather all tax return documentation.
If you have bank accounts, investment accounts or other financial assets outside the U.S. (like a foreign pension for example), you may have the obligation to file international financial reports with the U.S. Treasury Department. Some of these obligations are independent of tax filing requirements; which means, you may have an international financial reporting obligation even if you do not have to pay U.S. Federal Income Taxes. If you filed international financial reports in the past, please gather this documentation as well.
If you travel between the U.S. and your foreign home or other overseas locations during the previous year, you will need this information to prepare your tax returns. Your travel dates are used to determine your residency status, as well as to calculate your tax information. If you did not keep a travel log, gather as much information as possible to recreate your travel calendar. Information such as hotel reservations, stamps on your passport, air fare tickets and credit card reports can be used to obtain this data.
Gather all income related documents you receive related to last year. These documents usually arrive early in the year. If you work as an employee, you will receive a form named W-2. In the case that you provided services as an independent contractor, you may receive a form titled 1099-MISC. If you have investments, you may receive forms such as 1099-INT (used to report your interest income) and 1099-DIV (used for dividend income). In the event that you are self-employed or a business owner, you will have to generate your own financial data.
Gather all expense related documents related to last year. Depending on the nature of the expense, you may or may not receive a document serving as evidence for the amounts you paid. If you have a home mortgage, you will receive a form titled 1098. Are you paying student loans? If you are, you will receive a form named 1098-E. Did you make charitable donations? If you did, you may have to request proof of the donation to the charitable organization. Other expenses may not have a specific form attached, like medical expenses. In this case, you will have to keep copies of receipts or other evidence as proof of these payments.
TAX SAVINGS FOR U.S. EXPATS
As a U.S. Expat, you are subject to new tax and financial reporting obligations. However, you are also entitled to special tax benefits, not available to you before. Some of the tax privileges are you are entitled to as a U.S. Expat living abroad are:
1. Foreign Earn Income Exclusion
2. Foreign Housing Exclusion
3. Foreign Housing Deduction
4. Foreign Tax Credit
CPA Samaná is here to help you. Please visit our Tax Planning Services section to learn more about how you can legally pay less in taxes.