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Tax for Expats – Six Things you Need to Know About Filing American Taxes

Paying tax for expats is intimidating if you don’t know how it affects you. The good news is that you probably don’t have to worry because most Americans don’t owe U.S. tax ( www.EsquireGroup.com/tax-for-expats ) when they live in another country. This is because the government has put in place important tax credits, tax deductions, and tax exclusions. The government took these steps to make sure your income isn’t taxed twice.

There are other important things you should know about tax for expats which we’ll look at in this post.

Tax for Expats – 6 Things you Should Know

1. How to Qualify for Exclusions

To qualify for benefits, such as the foreign tax credit, you must qualify as a legal expat, earn foreign income, and file your income tax for expats.

2. Tax for Expats – Income, Credits, and Special Situations

If your global income is higher than the filing threshold, you have to file an American Federal Tax Return every year. It’s important to note that the filing threshold for tax for expats varies from state to state.

3. Tax for Expats - What’s Included in Your Income

The following is considered income: Your wages and salary from American and non-American sources, interest, rental income, dividends, etc. If you’re self employed, the income threshold is $400. If you’re eligible for certain refunds and credits, you should file even if tax for expats doesn’t apply. Certain situations, such as owing special taxes, could subject you to having to file.

4. Tax for Expats – When to File Your Return

As an expat, you’re automatically given a filing extension to June 15 if you’re living outside the country on the deadline of April 17. But if you owe taxes, penalties and interest begin on April 17, so it’s best to pay your tax for expats by this deadline.
Tax for expats deductions and exclusions might be available to you if you return to the U.S., but you’ll have to file your taxes by the 17th of April because you’re, once again, an American resident.

5. Income Tax for Expats and The Foreign Tax Credit

If your income exceeds the Foreign Earned Income Exclusion, or if you’re living in a country with high taxes, the tax for expats Foreign Tax Credit might help eliminate or offset U.S. tax liability. This tax credit is a dollar-for-dollar credit on taxes you owe to the foreign country you live in.

There are other ways to lower income tax owed, but they get a little tricky. If your situation is like the above scenarios, you should get help from a tax for expats expert.

6. Wanting to use the Foreign Earned Income Exclusion

To qualify for this exclusion, you must pass the residency test. There’s a Physical Presence Test – it requires that you’re physically present in the foreign country for 330 of any 365-day period. Under the Bona Fide Residency Test, you have to live overseas for at least one calendar year with no intention to move back to the States in the near future. Under the Bona Fide Residency Test ( www.EsquireGroup.com/About ), you must have lived overseas for at least one calendar year and have no immediate intention of moving back to the US – so temporary overseas contractors and those on assignment won’t qualify for the tax for expats exclusion.

Importance of Internal Audit for Your Business

There are a number of accounting firms that offer services of internal audit in Dubai. It is important to determine the type and size of business you manage in order to adhere to the accounting standards and laws. Business owners should not look at an auditing firm as an outsourcing cost for the purpose of bookkeeping but it should look at them as an integral business partner. Not all accounting firms offer all the services ( ethicsplusuae.com/internal-audit ), while some firms hold an expertise in audit and assurance, there are many who are experts in taxation or book keeping. The business owner should determine their requirement and choose a firm that is a best fit for the needs of the business. Internal audit is an integral business activity that should not be overlooked. Audit and assurance increase the trust of the third party on the company.

Hiring services for internal audit in Dubai should not be considered as an extra expenditure but it should be looked at as a service that is integral for the growth of the business. Business owners are not experts in bookkeeping and preparing financial statements and if they outsource the service, they will be able to concentrate on areas that require attention. Whether the business is small in size or large, accounting and audit is an integral part. Accountants prepare the financial statements of the company and these financial statements are then audited and provided to the readers which include creditors, shareholders, investors and government. Different users of financial statements have different requirements and it is important to provide adequate information to every user. Financial statements prepared by expert accountants provide detailed information and also follow the rules and regulations of the State. However, it is important to understand the expertise of the auditing firm before hiring them so as to make a well informed decision. Organizations across the world seek the services of experts so as to ensure that the financial statements are prepared as per the requirement and adequate financial information is reflected in the same. It also helps in taxation and filing of annual returns.

When accounting services are outsourced, the business owner has more time on hands to look at the matters that call for his attention and it also saves the cost of hiring an accountant. The services offered by experts are efficient and they also provide guidance with regard to investment and finance decisions. Hiring an expert for accounting service is like hiring an advisor who will help you increase your wealth and grow your business ( https://ethicsplusuae.com/ ) in the best possible manner. Internal audit ensures that the external auditors rely on the financial statements prepared by the accountants.

What You Need To Know About Tax for Expats

Moving to another country is often a daunting task. It can be a difficult time for people: filling out forms, documents, agreements, and other legal issues can be so overwhelming that certain matters are overseen. The taxation of U.S. expatriates (tax for expats) is often forgotten about, and it can be costly. If someone is a U.S. Citizen ( www.EsquireGroup.com/tax-for-expats ), or if they were a Resident Alien (Green Card Holder), the U.S. Internal Revenue Agency will continue to tax them for life despite living in another country (only ceasing 10 years after loss or renunciation of citizenship.)

How can an Expat Reduce Taxation Amounts?

Expats have many credits and exclusions they can take advantage of. Expats can use the Foreign Earned Income Exclusion (FEIE) via IRS Form 2555 to exclude a certain amount of income from U.S. taxation ($102,100 for the 2017 tax year), reducing the total earn income that will be taxed by the U.S. The FEIE cannot exclude incomes such as pensions, interest, capital gains, and US-sourced income, so expats must pay full US tax for expats on those. To qualify for the FEIE, an expat must pass a physical presence test, proving they have been inside a foreign country for 330 days out of any 365-day period. Another is the Foreign Housing Exclusion, reducing tax amounts by excluding housing expenses, such as utilities, and rent. A credit that is available is the Foreign Tax Credit, accessible by filing IRS Form 1116, which allows an expat to subtract the tax on income that is already taxed by a foreign country (cannot be claimed on income already excluded by the FEIE). A child credit is also available if the expat’s children have U.S. social security numbers.

What are Expats Required to Submit?

Filing taxes for expats, even if no taxes are owed, is recommended for all citizens and resident aliens in the U.S., and it’s no different for expats. Filing taxes becomes mandatory if a person’s worldwide income exceeds certain thresholds, depending on filing income. Income includes: wages/salary from US and non-US sources, Interest, Dividends, and Rental Incomes. In addition to normal filings, expats will be required to submit a Foreign Bank Account Report (FBAR, FinCEN form 114) if the total balance of all their worldwide bank accounts exceeds $10,000, including pensions, investments, and signatory authority accounts. Expats are also required to submit a Foreign Account Tax Compliance Act (FATCA) IRS Form 8938 if certain financial assets also exceed filing thresholds.

What Impacts on Social Security are there for Expats?

If an expat is considering retiring, they can rest easy knowing that they will still be able to collect social security benefits abroad (a handful of countries are excluded but can still collect monies owed if moving again to a country that isn’t excluded.) An expat that is collecting social security benefits may be taxed on them if they have other income, but only 85% of it can be considered taxable under U.S. tax for expat regulations. As well, Totalization Agreements with 26 countries outline which countries should receive your social security payment, and the credits earned in one country can be usable for benefit calculations in others.

When do Expats File for Taxes

Living abroad does not change the tax filing date for U.S. tax for expats (April 17th for 2018.) However, expats receive an automatic two-month extension to file (June 15th for 2018), although the original deadline is still when any taxes owed are due. Any filings completed must be in U.S. dollars ( www.EsquireGroup.com/about ), and they must be based on the yearly average currency exchange rates, unless specific date exchange rates are relevant for specific transactions. If returning to U.S., an expat may still be eligible to file with deductions and exclusions for the tax year if they are eligible, but he or she will receive no extension.

Grow Your Wealth and Your Business with a Financial Controller

There are some financial controllers who specialize in accounting and finance, they help you apply for loans, make the most of available resources and reduce the tax liability. Financial controllers also guide you with regard to your personal investments. They are different from accountants. You can have a full time accountant in your business and seek consultancy services of a financial controller. An accountant will handle the accounts of the business and will have limited power of decision making while the financial controller while help you grow your money and will take decisions keeping you at the forefront. If you are looking for a financial controller near me ( brightencpa.com/services ), look for an experienced professional who has dealt with a number of clients in the industry. Choose a controller who has results to show and who will help lower your taxes in the long term. When you hire a financial controller for your business, you are making an investment which will reap benefits in the long term. The financial controller should help grow your business and reduce your liabilities without affecting your liquidity.

One of the most important criteria when choosing a financial controller is to look for an experienced professional. Education matters, but the experience will help take your business to new heights. Inquire about the types of services offered by them and check their fees. Some financial controllers offer consultancy services and charge by the hour. There are a few others who will join your business full time and work as an employee. Financial controllers offer accounting services as well. They can help you prepare the financial statements and report the same in an appropriate manner. Here is a solution for those looking for financial controller near me; you can approach an accounting firm which has an expertise in handling finances for different businesses. They can offer you a complete bundle of service that includes accounting, audit and financial advice. Financial controllers have mastered the art of handling finances; they can help grow your personal wealth with the right investment advice. You need to ask yourself if your business requires a financial controller ( https://www.brightencpa.com/about-us ), if the answer is yes, you need to look for an experienced professional to handle the assets of your business. If you measure the profits you will generate in the long term, hiring a financial controller will sound like a good decision. They can also help build a budget for your business and remain disciplined about your financial strategies. With them by your side, your personal and professional wealth will grow.

What are the Aspects to Check while Hiring an Accountant?

Accounting is one of the most important and vital tasks in the business. When you are busy running your business, it is important to take care of your finances as well. Studies have shown that a good company is the one which maintains its financial information up-to-date. This not just involves around the regular bookkeeping – it also involves regular paying of taxes, profit loss statements and calculation, future business predications and forecast and last but not the least, growing business model.

The person who maintains all the financial information of the company is called an accountant. The job of an accountant is not just to maintain the money statements. It is much more than that. Read on to find out more about the duties of an accountant and why your business needs one:

1. Business model: A profitable company is one which has a good business model. The business model helps the company to get focus and grow further. An accountant ( ActaeonConsulting/accounting-services-rosewell ) will help the company during the preparation of the business model. He/she will have an overall big picture of the financial statements and conditions of the organization. You can use the expertise of an accountant in obtaining a strong business model for your organization.

2. Budget and predictions: It is important to have business finance predictions at the start of the year. It is also important to have a budget and work according to the same. An accountant would be of help in providing such budget and financial predictions for the year.

3. Bookkeeping: This is one of the primary responsibilities of an accountant. An accountant would take care of the daily bookkeeping. Apart from this, he could also take care of recoding the regular cash flows, profit-loss statements and other financial ( ActaeonConsulting/services ) information of the company. Provident fund transactions, VAT services, Income tax management and regular petty cash flows are all managed efficiently by an accountant.

4. Performance oriented: Regular and effective bookkeeping produces a large amount of data throughout the year. This data can be used to understand the performance of the company. An accountant could use all this data and understand the current performance of the organization and provide feedback to make the company move in the direction it is supposed to.

5. Academia: The role of the accountant is a very ethical one. Since they are dealing with the most important finances of the company, they have a moral responsibility towards the assets and liabilities of the company. Any compromise on the ethical aspect of the accountant would have long fringing ripple effect on the company. Hence an accountant has a very high responsibility. An accountant not just takes care of all this, but also grooms the juniors and related employees about the skills and ethics required for this job.

To do all this work for you and your company, you could either hire a full-time in-house accountant, or you could outsource this job. This depends on the size of your business and the type of finances that you are dealing with.