Expat Taxes

Filing Tax Returns—The Basics

The following page applies to U.S. citizens and residents living and/or working outside of the United States.

U.S. persons (citizens and permanent residents/Green Card holders) are required to file a tax return each year, no matter where they live, if their income is above US$9,350 when filing as single, or US$18,700 if filing as married (2010 thresholds).

Failure to file your U.S. personal income tax return can result in the loss of your Foreign Earned Income Exclusion, creating a disastrous situation for any U.S. citizen living abroad. As this exclusion can legally eliminate the income tax on your income earned outside the U.S., you don’t want to lose it.

You can qualify for the Foreign Earned Income Exclusion through either the Bona Fide Residency Test or the Physical Presence Test. The maximum amount to qualify was US$91,400 in 2009, and it’s currently US$91,500 for 2010.

The Physical Presence Test mandates that you must be outside of the United States for 330 out of any 365-day period. You meet the Bona Fide Residency Test if you are out of the United States for one full calendar year and move to a country with the intention of making it your home for the foreseeable future.

In addition, those living abroad are generally required to file a Foreign Bank Account Report with the United States Treasury. Failure to file this form can result in extremely severe penalties of up to US$100,000 per violation.

It is common for people living and working abroad to have neglected to file income tax returns for five, 10, or even 20 years. Because our computer system and the workflow we set up are designed to handle the preparation of multiple years of delinquent returns in a quick and efficient manner, in order to minimize the tax due, we are proud to say that we have successfully represented many expats and achieved excellent results.

Preparing and filing past delinquent returns (i.e., becoming compliant) is the first step towards an Offer in Compromise or an Installment Agreement with the IRS.

Also, the collection process is more complex for those living abroad. Because there are no standardized expenses, you must prove the necessity of each item. Also, the IRS may levy certain international banks and lien property in some countries, which makes experienced planning and preparation the key ingredients for success.

The expertise required to prepare international returns and the risks facing expats are unique. Our international tax group is headed by the U.S.-licensed tax attorney Christian Reeves, the author of the 2010 International Tax Bible, published by International Living, an expert in the field of international taxation. Together with him we will guide you through the maze of IRS collections in a professional and efficient manner.

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Note:Because everyone’s tax preparation needs are unique, sign-up and payment must be made by phone, e-mail, fax, or regular mail.It is not available through our website shopping cart.