Four Steps to Expat Income Tax Bliss

If you feel overwhelmed thinking about the expat income tax deadlines, that’s perfectly understandable! Having to sort through and locate tax documents can be quite daunting. Furthermore, as expats, the typical end of year 1099s or W-2s, which summarize your tax data, are not generated by foreign countries. To make filing a little simpler, we have provided the following steps that will guarantee you’re ready to file.

Step 1: Locate Expat Income Tax-Related Documents

Income means more than just wages. Get the below figures ready well in advance, and you’ll be on your way to an effortless tax season.

Wages: Standard W-2s are not an option, but your paychecks can provide the supporting information needed to summarize calendar year wages and tax withheld.

Investment income: Summarize annual interest, dividends, and capital gains.

Rental income: A summary of your rental income and expenses will help provide accountants the data they need. If this was the first year you received rental income, specify the date you placed your rental property in service, the purchase price, and improvements of your rental property or any other equipment.

Business income: This can include an annual income statement, balance sheet, purchase or disposition of fixed assets, or office-in-home information

Other income: This includes documents showing retirement income, alimony, gambling income, and miscellaneous income.

Step Two: Find Your Deduction- and Credit-Related Records

These documents can help save you money on your tax liability, so being thorough will come in handy!

  • Foreign Housing Expenses: If your tax home is in a foreign country, and you qualify for the Foreign Earned Income Exclusion, a further deduction from your gross income is available for foreign housing expenses. Provide a list that includes reasonable expenses paid or incurred for housing in a foreign country.
  • Real estate and personal property tax records
  • Loan or mortgage interest statements
  • Childcare expenses, including name, address, and ID number (if applicable) of child care provider
  • Health insurance and medical expenses summary
  • Charitable contribution summary

Step 3: Collect Your Foreign Financial Reports

Foreign Bank Accounts: Foreign account information reporting may be required if you meet certain account balance thresholds. The following will be to ensure an accurate return:

  • Name and address of the financial institution
  • Account number
  • Highest account balance
  • Balance at the end of the year.

Joint ownership/signatory authority, if applicable

Foreign mutual funds: Disclose to your accountant any foreign mutual funds or ETFs held.

Foreign pensions: Depending on the nature of the pension and tax treaty provisions, additional information may be needed to report foreign pensions correctly. Ensure that pension data is provided at tax time.

Foreign gifts/inheritances: US persons who receive certain foreign gifts or inheritances, or who organize a foreign trust may have additional reporting requirements; be sure to inform your tax preparer if this applies to you.

Step 4: Gather the Remaining Miscellany

This step is easier than it sounds, especially if you are a Greenback client! We securely store your tax information, so it is at your fingertips next year – no re-entering data or searching for your old return.

  • Personal and dependent information, including dates of birth and ID numbers
  • Foreign country tax return
  • Prior year US tax return

By following these four steps, you’ll be setting yourself up for a stress-free tax season.

Greenback Experts Can Make This Your Best Tax Season Ever

The team at Greenback is here to help. We will guide you through the expat income tax preparation and put your mind at ease! Get started with Greenback today.

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