Jeff Haywood, CPA

Archive for the ‘Income Taxes for Expatriates’ Category

Income Tax Returns for US Expatriates

December 2nd, 2011 | Author: admin

What Do I Need to Know About My US Income Taxes if I Move Out of the Country?

If you are a US Expatriate you may need to file a US Income Tax return even though you are living outside the US. Not all CPA’s are experienced with preparing tax returns and the tax provisions or reporting requirements for US Expatriates. I am amending a return right now for US Expatriates to help them benefit from the tax provisions the IRS makes available. These are tax provisions their previous CPA was not aware of. Yes, if you are US Expatriates or are planning to move outside the US you need a CPA who is experienced preparing these tax returns and reporting foreign bank accounts. I prepare these returns for many clients and would like to help you. Contact me today using the information below to schedule a time to discuss your situation.

In addition here are links to a few of my articles about income taxes for expatriates:

US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Also, click Here to Follow My Taxes For Expats Twitter Account

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

Also, take a look at these related posts:

Let’s Accomplish Great Things Together
How to Profit From Your CPA
A Most Valuable Resource For Entrepreneurs
Forming a New Business – Please Consult With Your CPA First

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Click Here to Follow My Taxes For Expats Twitter Account

For recent US income tax content see the following links:

Can I Use My Loss To Get Money Back From Prior Year Taxes Paid?
IRS Top Ten: Tax Tips for Individuals Who Are Moving This Summer
IRS Top Ten: Tax Tips for Individuals Selling Their Home
IRS Tax Tips: Do You Owe the IRS Money? What You Need to Know.
IRS Tax Tips: Do You Owe the IRS Money? What You Need to Know.
Does the IRS Have Money Waiting For You
Ideas: How Young People Can Become Entrepreneurs and Find a Home
IRS Top Ten: Facts about Amending Your Tax Return
Are You Ready To Get Your First Apartment/Home?
How to Succeed in Business: Pricing
Credit for Education Expenses: American Opportunity Credit – Extended Through 2012
How to Prepare Before a Disaster Strikes
IRS: Summer Day Camp Expenses May Qualify for a Tax Credit
IRS Tax Tips for Students Starting a Summer Job
IRS Tax Tips for Deducting Charitable Contributions
Tax Planning Tips
Tax Tips – Tip Income
Stratospheric Success
Are You Ready to Purchase a Home? Factors to Consider.
Foreign Earned Income Exclusion
A Most Valuable Resource for Entrepreneurs
How to Profit From Your CPA
Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes, Income Taxes for Expatriates | 8 Comments »

Foreign Earned Income Exclusion

June 15th, 2011 | Author: admin

Foreign Earned Income Exclusion

Mr. CPA, How does the exclusion of foreign earned income work? Per the IRS “qualifying U.S. citizens and resident aliens who live and work abroad may be able to exclude from their income all or part of their foreign salary or wages, or amounts received as compensation for their personal services. In addition, they may also qualify to exclude or deduct certain foreign housing costs.“

Below is a post from the IRS website with more information on this subject:

Foreign Earned Income Exclusion

International Tax Gap SeriesMay 2008

WASHINGTON – United States citizens and resident aliens are taxed on their worldwide income, whether the person lives inside or outside of the United States. However, qualifying U.S. citizens and resident aliens who live and work abroad may be able to exclude from their income all or part of their foreign salary or wages, or amounts received as compensation for their personal services. In addition, they may also qualify to exclude or deduct certain foreign housing costs.

A common misconception that contributes to the international tax gap is that this potentially excludable foreign earned income is exempt income not reportable on a US tax return. In fact, only a qualifying individual with qualifying income may elect to exclude foreign earned income and this exclusion applies only if a tax return is filed and the income is reported.

General Rule

To qualify for the foreign earned income exclusion, a U.S. citizen or resident alien must:

Have foreign earned income (income received for working in a foreign country),
Have a tax home in a foreign country, and
Meet either the bona fide residence test or the physical presence test

Exclusion Amounts and Limits

The foreign earned income exclusion amount is adjusted annually for inflation, starting with the 2006 tax year. For 2008, the maximum foreign earned income exclusion is up to $87,600 per qualifying person. If married and both individuals work abroad and both meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $175,200 for the 2008 tax year.

In addition to the foreign earned income exclusion, qualifying individuals may also choose to exclude or deduct from their foreign earned income a foreign housing amount. Starting with the 2006 tax year, the amount of qualified housing expenses eligible for the housing exclusion and housing deduction is limited. The limitation on housing expenses is generally 30% of the maximum foreign earned income exclusion. For 2008, the housing amount limitation is $26,280 for the tax year. However, the limit will vary depending upon the location of the qualifying individual’s foreign tax home and the number of qualifying days in the tax year.

The foreign earned income exclusion is limited to the actual foreign earned income minus the foreign housing exclusion. Therefore, to exclude a foreign housing amount, the qualifying individual must first figure the foreign housing exclusion before determining the amount for the foreign earned income exclusion.

How to Claim the Exclusion

Since the foreign earned income exclusion is voluntary, qualifying individuals must choose to claim the exclusion. The foreign earned income exclusion and the foreign housing cost amount exclusion are claimed and figured using Form 2555 (pdf), which must be attached to Form 1040 (pdf). However, if only the foreign earned income exclusion is claimed, a shorter Form 2555-EZ (pdf) may be used instead. Once the choice is made to exclude foreign earned income, that choice remains in effect for the year the election is made and all later years, unless revoked.

Other Rules

Not foreign earned income: Foreign earned income does not include the following amounts:

Pay received as a military or civilian employee of the U.S. Government or any of its agencies
Pay for services conducted in international waters (not a foreign country)
Pay in specific combat zones, as designated by an Executive Order from the President, that is excludable from income
Payments received after the end of the tax year following the year in which the services that earned the income were performed
The value of meals and lodging that are excluded from income because it was furnished for the convenience of the employer
Pension or annuity payments, including social security benefits

Self-employment income: A qualifying individual may claim the foreign earned income exclusion on foreign earned self-employment income. The excluded amount will reduce the individual’s regular income tax, but will not reduce the individual’s self-employment tax. Also, the foreign housing deduction – instead of a foreign housing exclusion – may be claimed.

Figuring the tax: Beginning with tax year 2006, a qualifying individual claiming the foreign earned income exclusion, the housing exclusion, or both, must figure the tax on the remaining non-excluded income using the tax rates that would have applied had the individual not claimed the exclusions.

Foreign tax credit or deduction: Once the foreign earned income exclusion is chosen, a foreign tax credit, or deduction for taxes, cannot be claimed on the income that can be excluded. If a foreign tax credit or tax deduction is claimed for any of the foreign taxes on the excluded income, the foreign earned income exclusion may be considered revoked.

Earned income credit: Once the foreign earned income exclusion is claimed, the earned income credit cannot be claimed for that year.

Timing of election: Generally, a qualifying individual’s initial choice of the foreign earned income exclusion must be made with one of the following income tax returns:

A return filed by the due date (including any extensions),
A return amending a timely-filed return. Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid, or
A return filed within 1 year from the original due date of the return (determined without regard to any extensions)

Revoking the exclusion: A qualifying individual can revoke an election to claim the foreign earned income exclusion for any year. This is done by attaching a statement to the tax return revoking one or more previously made choices. The statement must specify which choice(s) are being revoked, as the election to exclude foreign earned income and the election to exclude foreign housing amounts must be revoked separately. If an election is revoked, and within 5 years the qualifying individual wishes to again choose the same exclusion, the individual must apply for approval by requesting a ruling from the IRS.

Tools and Links

International Customer Service: 215-516-2000 (Not a toll-free number)

International Information on irs.gov

Publication 54, Tax Guide for US Citizens and Residents

Publication 519, US Tax Guide for Aliens

Form 2555, Foreign Earned Income

Form 2555-EZ, Foreign Earned Income Exclusion

This can get very complicated. I can help you with any and all of this. Feel free to contact me using my contact information below.

Click Here to Follow Jeff Haywood, CPA on Twitter

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

For recent US income tax content see the following links:

June 15th Filing Deadline for Residents Living Abroad
A Most Valuable Resource for Entrepreneurs
How to Profit From Your CPA
Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

I do not manage a comments section on this blog. If you have a comment for me, please email me at jeff.jhtaxes@gmail.com.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes, Income Taxes for Expatriates | Tags: CPA, Earned, Exclusion, Expats, Foreign, Income, IRS, Taxes | 7 Comments »

US Income Tax Help for Expatriates

March 26th, 2011 | Author: admin

Filing and IRS Requirements and for US Citizens and Alien Residents Living Abroad:

Are you an Expat? I have been one for more than a year now and serving my income tax clients remotely. Would be expats have questions about income taxes before they move. Below is a post from the IRS providing some useful information.

Tax Help – What Do You Need to do? See this from the IRS for help to Americans Living Abroad.

Reaching Out to Americans Abroad

International Tax Gap SeriesApril 2009Globalization continues to affect us all. Businesses are no longer defined by national borders. Individuals and capital move freely from one country to another. It is estimated that more than 7 million Americans reside outside of the United States (not including military personnel). The IRS recognizes that it must find innovative ways to meet the needs of the growing number of U.S. taxpayers who live in other countries, so a special tax page has been added to the IRS web site that specifically addresses the tax issues of U.S. Citizens and Resident Aliens Abroad.This new tax page contains a wealth of information on where and when to file, and how to get tax help. It also includes links to many more international tax topics, such as information on reporting foreign bank accounts and how to take advantage of tax provisions like the foreign tax credit and foreign earned income exclusion. The page will soon be linked to the 263 U.S. Embassy and Consulate homepages throughout the world.Also, many Americans who live overseas are already familiar with Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. But a more concise brochure has now been developed to help direct overseas citizens and residents to helpful tax resources, Publication 4732, Federal Tax Information for U.S. Taxpayers Living Abroad.The IRS is eager to meet the needs of all of our customers, both domestically and in the international arena. We continue to look for ways to make taxes less taxing.References and Links
U.S. Citizens and Resident Aliens Abroad
Publication 4732 , Federal Tax Information for U.S. Taxpayers Living Abroad
Publication 54 , Tax Guide for U.S. Citizens and Resident Aliens Abroad

Notice also this information from Publication 4732 regarding when you must file your tax return by and when your taxes are due:

“Filing Deadlines – U.S. income tax returns are due on April 15th. If you reside overseas, however, you are given an automatic two month extension to file. Any tax due though, must be paid by April 15th to avoid paying interest and, possibly, penalties. This also applies if you are in military service on duty outside the United States and Puerto Rico, except if you are serving in a combat zone.

Note: Payments are not considered received until the date of actual receipt by the IRS, not the postmark date.”

(In 2011 the deadline has been moved to April 18th.)

Virtual Service:

I have a virtual service available so you can send me your tax information no matter where you are in the world as long as you have access to the internet or to a fax machine. Even if you can mail your information to the US I can help you prepare your tax returns. For more information about how you can get your tax information to me see this post: Client Portal

To have an experienced CPA and fellow Expat help you prepare your tax returns and help you reach your goals contact me at the phone number below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

For more US income tax content see the following links:

10 Things to Know About the Child and Dependent Care Credit
10 Important Facts About Capital Gains and Loses
IRS: Beware of Tax Scams
IRS Top Ten: Mortgage Debt Forgiveness
IRS Top Ten: IRA Contributions
US Income Tax Help for Expatriates
4 Credits That Can Pay You at Tax Time
What Business Deductions Can I Take as an Employee? IRS Tax Tips.
Was This Year a Bad Year? We may be able to get you a refund of your taxes paid in prior years.
6 IRS Tax Tips for Self-Employed Individuals
Important IRS Tax Tips: Health Insurance Tax Breaks for the Self-Employed
6 Things the IRS Wants You to Know About the Home Office Deduction
Is Your Child’s Investment Income Supposed to be Taxed at Your Tax Rate?
IRS Notice – Don’t Panic – Call Me
Who Can I Claim As A Dependent?
Which Filing Status Should I Use?
Do I Have To File A Tax Return For 2010?
6 Things You Should Know About Business Expenses – What You Can Deduct
Top Four Reasons Clients Hire Me To Prepare Their Tax Returns – Individual and Business
Instant Convenient Access To Your Tax Returns and Documents
How To Avoid the Social Security Penalty and Does Warren Buffett Get Penalized??
5000 Birds Fall From the Sky – Casualty Losses
Are You Required to Report Foreign Banks and Financial Accounts?
2010: “A Last Minute Checklist”
Energy Credits
ROTH IRAs
Traditional IRAs
Year-End Tax Planning Tips
Education Credits-American Opportunity Credit
ROTH IRA Conversion

As always keep in mind that the content provide on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes, Income Taxes for Expatriates | Tags: Business, CPA, Expats, IRS, Tax, Tax Return, Tax Tips, Taxes | 9 Comments »

Are You Required to Report Foreign Bank and Financial Accounts?

December 16th, 2010 | Author: admin

Are you required to report foreign bank and financial accounts? Here is the IRS’ answer to that question:

“If you own or have authority over a foreign financial account, including a bank account, brokerage account, mutual fund or other type of financial account, you may be required to report the account yearly to the Department of the Treasury. Under the Bank Secrecy Act, each United States person must file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if

* The person has a financial interest in, or signature authority (or other authority that is comparable to signature authority) over one or more accounts in a foreign country, and
* The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

A United States person is not prohibited from owning foreign accounts but civil and criminal penalties may apply for failures to properly file FBARs when required. The information reported on an FBAR may be used for governmental purposes, including law enforcement and tax compliance purposes.”

When must you report your foreign accounts? If you meet the requirements above you are required to file Form TD F 90-22.1 by June 30th annually. With this particular form it is considered filed not when it is postmarked but when the IRS receives it. So the IRS must receive your Form TD F 90-22.1 by June 30th.

These posts provide highlights that may be of interest to taxpayers. For a consultation about these requirements and your tax situation contact me at the number below. Additional information is also available from the IRS.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com
I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

Also, I am available for tax planning and discussions about business, retirement planning and life goals.

For more US income tax content see the following links:

10 Things to Know About the Child and Dependent Care Credit
10 Important Facts About Capital Gains and Loses
IRS: Beware of Tax Scams
IRS Top Ten: Mortgage Debt Forgiveness
IRS Top Ten: IRA Contributions
US Income Tax Help for Expatriates
4 Credits That Can Pay You at Tax Time
What Business Deductions Can I Take as an Employee? IRS Tax Tips.
Was This Year a Bad Year? We may be able to get you a refund of your taxes paid in prior years.
6 IRS Tax Tips for Self-Employed Individuals
Important IRS Tax Tips: Health Insurance Tax Breaks for the Self-Employed
6 Things the IRS Wants You to Know About the Home Office Deduction
Is Your Child’s Investment Income Supposed to be Taxed at Your Tax Rate?
IRS Notice – Don’t Panic – Call Me
Who Can I Claim As A Dependent?
Which Filing Status Should I Use?
Do I Have To File A Tax Return For 2010?
6 Things You Should Know About Business Expenses – What You Can Deduct
Top Four Reasons Clients Hire Me To Prepare Their Tax Returns – Individual and Business
Instant Convenient Access To Your Tax Returns and Documents
How To Avoid the Social Security Penalty and Does Warren Buffett Get Penalized??
5000 Birds Fall From the Sky – Casualty Losses
Are You Required to Report Foreign Banks and Financial Accounts?
2010: “A Last Minute Checklist”
Energy Credits
ROTH IRAs
Traditional IRAs
Year-End Tax Planning Tips
Education Credits-American Opportunity Credit
ROTH IRA Conversion

As always keep in mind that the content provide on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes, Income Taxes for Expatriates | 21 Comments »