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Expat Tax Blog

Apr 24

Are You Required to Submit a 2018 Tax Return?

by julie

Tax season is open, and the IRS estimates it will process almost 155 million tax returns from individuals during the 2018 tax season. So the question is, are you required to file a tax return?

The tax system requires that income be reported for the previous year, so in 2018 you will report your income and deductions from the 2017 tax year. Note that even if you were paid for work you performed during 2017, if that pay was not received until 2018 it goes on your 2018 return.

But, just receiving income during 2017 doesn’t always mean you are required to submit a federal tax return. Most taxpayers can look at the following chart to determine if filing is required. Simply choose the correct filing status, age, and look at the minimum gross income required for filing. If your income exceeds this number, you must file.

Whole Story at TFX.


Apr 18

IRS provides additional day to file and pay for taxpayers through Wednesday, April 18; IRS processing systems back online

by julie

On April 17 IRS announced that it is providing taxpayers an additional day to file and pay their taxes following system issues that surfaced early on the April 17 tax deadline. Individuals and businesses with a filing or payment due date of April 17 will now have until midnight on Wednesday, April 18.

The IRS encountered system issues Tuesday morning.

The IRS advised taxpayers to continue to file their taxes as normal Tuesday evening – whether electronically or on paper.

Automatic six-month extensions are available to taxpayers who need additional time to file can visit https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return.

Original Story at IRS website.

Apr 17

What Taxpayers Should do When They Need More Time to Pay

by julie

Filing on time saves taxpayers from a potential failure-to-file penalty.

Here are some tips for those who can’t pay their taxes in full by the April 17 deadline:

– File on Time and Pay as Much as Possible. Taxpayers can pay online, by phone, by check or money order, or with their mobile device using the IRS2Go app.
– Get a Loan or Use a Credit Card to Pay the Tax.
– Use the Online Payment Agreement tool.
– Don’t Ignore a Tax Bill. The IRS may take collection action against taxpayers who don’t respond to notices.

Original Story at IRS website.

Apr 14

Look Out, Meghan Markle! The IRS Is Watching

by julie

Dear Meghan,

Congratulations on finding your Prince Charming! I don’t want to be the bad fairy at the festivities, but we need to have a serious talk about taxes.

I know you’re committed to Harry, because you’ve given up a lot since you two became serious, including your lucrative acting career and your lifestyle website.

But I don’t think you know the tax torment many American expats face when they marry non-U.S. citizens—as you’re about to do. Nearly every financial move they make, and other moves they don’t think of as financial, raises a U.S. tax issue.

In your case, this means that if Queen Elizabeth II gives—or merely lends—you a tiara or a diamond bracelet, you may need to tell the Internal Revenue Service about it. If you have a credit or debit card tied to Harry’s bank account and it has more than $10,000, his account has to be reported to U.S. authorities.

The upshot: You and Harry may soon feel the IRS is a third partner in your marriage. Well, marriage is always an adventure. Good luck and all happiness!

Yours sincerely,

Laura Saunders

Original Story at WSJ.

Apr 12

Mail Bag #14: W-2 Abroad, Qtrly Tax, Spouse FBARs, Relocation & Healthcare, Gifts, Repatriation Tax

by julie

W-2 Abroad

My company is U.S. based, I’m Austrian citizen but live & work in Spain (Barcelona). I need professional help to understand where & how I pay taxes for 2017 and future years.

If you performed work for a U.S. employer who issued a W-2 in your name, you are required to file a U.S. federal return – even if you had tax withholding throughout the year.

You will likely need to file form 1040NR. 1040NR is $450/$550 (over $100k).

Qtrly Tax

For the first few months of 2016 I worked for Rio Tinto in Mongolia they withheld my US & Mongolian tax obligations, my employment with them ended March 26th 2016.

I started working for Jacobs Mongolia July of 2016 they only withhold my 10%Mongolian tax obligation but do not withhold any US taxes, this is left up to me.

Do I have to pay quarterly taxes now to the USA? If so who can I hire to insure I am following US tax laws & obligations?

Rio Tinto used KPMG for my taxes also they did a tax equalization that I was extremely unhappy with! I would prefer not to use KPMG in the future.

Any advise is greatly appreciated.

If you did not owe any tax last year, you do not need to make estimated payments before April 15. If you anticipate you may owe tax this year, please get your docs in early so that we can prepare your return ahead of April 15 (tax due from this date accrues interest).

If you owed U.S. federal tax last year and did not anticipate tax withholding through the employer you were supposed to pay quarterly estimated taxes. By default, quarterly payments are calculated under the assumption of 10% income increase in the following year. We’d also be happy to prepare a tax projection for you to determine the tax hit. In short, this service requires a $350 retainer, but$250 remains as a credit for when your tax return is ready to be prepared. Thus the net cost (if we prepare your return thereafter) would be $100. And, by the way, it is not KPMG fault that you were unhappy with the results. The way equalization works makes you pay more tax than you could have paid if you just filed on your own, using all benefits available to expats (curtailed by equalization tax principles).

Spouse FBARs

I (US citizen) filed a joint tax return with my non-US spouse in 2015, electing to treat her as a US resident for tax purposes. I also filed an FBAR for my non-US spouse for 2015 – I didn’t think this was necessary. Should 2016 and 2017 FBARs for spouse still be filed?

In 2016, FinCEN clarified in the preamble to the regulations that an election under IRC 6013(g) or (h) is not considered when determining residency status for FBAR purposes. This clarification has resolved the uncertainty on whether an NRA (non-resident alien) spouse electing to be treated as US person for US purposes must file FBAR or not. The spouse does not need to file FBAR anymore but filing for 2015 was the required measure of precaution.

Whole Story at TFX.