Happy Halloween from everyone here at Expatriatetaxreturns.com!
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The “A” word – I’m being AUDITED, now what?!
The “A” word may be in the top 10 of scariest words ever!
Am I in trouble? Was I flagged? Not necessarily. Some reasons your return could be picked for an audit include: random sampling, computation errors, computer screening, excessive deductions, and large charitable contributions. Respond as quickly as possible. Ignorance is not bliss! If you ignore the notice, the IRS will not go away. Keep in mind, the audit process can be a lengthy one for people living abroad, so be patient.
Do not panic. If you have good records to substantiate your information and are honest, an audit should be of little concern.
Be organized. Ordinarily, you are asked to support specific items reported on your return. Have all of your original documents organized by each item called into question. However, there is no need to provide more information than what was requested of you.
Be polite. The old saying, “you catch more bees with honey…” may apply. No need upsetting the IRS agent that is reviewing your information.
Contact a tax professional. If you prepared your own return, you should contact a tax professional to see if your return was properly prepared. If not, they can help you deal with the IRS and solve the issue reasonably. If you choose, your tax professional can deal directly with the IRS agent on your behalf.
Expat Tax Preparation Made Easy
Dealing with a tax preparer for your expat tax return can feel overwhelming. Knowing what documentation you will need to provide will make it easier for you. You can use this as a guideline for information to save.
The Questionnaire – Your tax professional will ask you to provide the basics: name, address, contact information, ID numbers, marital status, etc. There will also be questions about occupation, ownership of property and businesses. The questions may seem wearisome, but keep in mind; they are necessary to fulfill your filing requirements and can save plenty of time in the long run!
Last year’s return – An important piece of information can be your prior year tax return. This is a starting point for your tax professional. They can see what credits you may have carried over and any income or deduction items you may have overlooked.
Keep a travel calendar – If you travel back and forth between your foreign home and the U.S., it is important to know what dates you left and returned. It is also necessary to know how much of the time away was for business or pleasure. The foreign earned income exclusion and housing exclusion are calculated using this information. Providing this detail to your tax professional is important.
Earned income – If your only earned income is as an employee, this part will be easy. Your employer will provide you with a W-2 or an equivalent from the foreign country. If you are self-employed, the tax professional will need to know if you are paid as an individual or if you have formed a foreign entity. If the latter, is true, a whole new set of questions will come your way! Either way, you will need to provide records of earnings and expenses for the year.
Passive income – You may have interest, dividends, or stock sales. Statements are typically provided by the financial institutions you use for your investments. The 1099-b for stock sales should give the detail of the purchase dates, purchase price, sales date, and sales price. If not, additional information will be needed. Keep in mind, if you have foreign bank accounts, you may have further reporting requirements, check with your tax professional.
Retirement income – If you are in your golden years, you may have 1099-Rs from IRA’s, pensions or other retirement accounts. You also may have Form 1099-SSA from your social security.
Rental income – Many expats have houses in the U.S. that they rent out while they are overseas. The rent collected as well as any expenses paid for the properties must be reported as well.
Other income – You may have other miscellaneous income from partnerships, trusts, gambling income, etc. Any forms you receive reporting income need to be provided to your tax professional.
Deductions – There are many deductions you may be eligible for. Here is a general list:
Keep in mind, these are the basics. If you have unusual or other tax issues, it is important to communicate the information with your tax professional. Remember, they are there for you!
Expats are not exempt from U.S. tax returns!
Living overseas does not exempt U.S. citizens from filing and/or paying taxes in the United States. Even if you pay taxes in your host country, you still need to file a tax return in the United States. Whether or not you will owe taxes, is something that your tax professional can help you figure out.
Many expats are confused on their tax filing obligations since they are no longer living or earning money in the U.S. Many find that they are behind in filing and wonder, “what do I do now?!”
At expatriatetaxreturns.com, we are able and willing to help you sort out your federal and state tax obligations.
Sure I can still prepare my own tax return…Can’t I?!
Many people file their own U.S. tax returns, and do it well. However, now that you are an expatriate, is it still possible? Here is a list of advantages and disadvantages to preparing your own tax return as an expat.
Reasons to prepare your own U.S. return:
Reasons to have Expatriatetaxreturns.com do your U.S. return:
There are many more reasons to have a professional prepare your U.S tax return while living abroad. We have just listed those we feel effect many of you.
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