Filing American taxes as an expat can be tricky, so we’ve consulted with our expert accountants here at Greenback and come up with a list of four common mistakes. Avoiding these will save you lots of future time and effort, so read on!
#1: Not Filing FBAR and FATCA, if applicable
As an expat, you’re not only responsible for submitting Federal Tax Returns annually, but you may have a Foreign Bank Account Reporting (FBAR) requirement or may need to file Form 8938 to comply with the Foreign Account Tax Compliance Act.
For FBAR, you must file if the aggregate amount of all your foreign bank accounts totals $10,000 at any point during the year. For FATCA, single filers must file if the total value of assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year . For married individuals, if the total value of assets more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.
#2: Not Filing Your Annual American Taxes
It comes as a surprise to many that no matter how long you’ve lived in another country, as an American citizen, you still have a tax-filing responsibility. However, if you were unaware of this requirement, we have good news for you: you can use the Streamlined Filing Procedures to catch up penalty-free! If, on the other hand, you were purposefully hiding money in foreign accounts to evade your tax requirements, you may want to look into using the Offshore Voluntary Disclosure Program (OVDP). And don’t delay, because the OVDP is ending this year!
#3: Not Paying Attention to PFIC Rules
Passive Foreign Investment Companies (PFIC) include mutual funds, hedge funds, insurance, money market saving, or a non-US pension. Form 8621 can be complicated (for instance – each PFIC must be reported separately!), and a lot of expats opt for professional help to ensure their American taxes are completed correctly!
#4: Not Tending to Complicated Foreign Company Investments
If you have more than a 10% ownership in a foreign company, you’ll need to submit more forms to be compliant on your American taxes. You will need to fill out a Form 5471, or you may find yourself on the receiving end of a $10,000 fine!
Want Professional Help With Your American Taxes?
Contact Greenback today, and you’ll know for certain that your taxes are correct.