Overseas Tax Returns for Independent Contractors Get Complicated
Many Americans find themselves overseas on a temporary contract, but how does this affect their overseas tax return? It is important that you take into consideration quarterly tax projections, any income you are still earning in the United States (including rental properties and investment income) regardless of what you are earning overseas, and the implications of working as an independent contractor while living abroad.
Expatriates are also going to want to make sure that they take advantage of the deductions and credits available on overseas tax returns, such as the Foreign Earned Income Exclusion and Foreign Tax Credit. You can qualify for these credits and deductions by meeting the requirements of either the Bona Fide Resident Test or the Physical Presence Test.
Even if you have a qualified accountant in the United States, remember that preparing overseas tax returns is a whole different ball game; it is important to be aware of the additional forms and schedules that must be attached to a regular Form 1040 in order to avoid double taxation. You will want to find help for your overseas tax return that is understanding, qualified and experienced with American expatriate taxation and can guide you through the filing process while you fulfill your contracting work abroad.
One of our clients, Roya T., was in Malaysia on a consulting assignment and approached Greenback Expat Tax Services for help preparing her overseas tax return and the following year’s quarterly tax projections. She has rental property in the US, gets paid in US dollars and wanted to make sure she would be able to meet the Physical Presence Test by being physically present in a foreign country for 330 days. The goal was to minimize her US tax liability and make sure she was able to take advantage of all the deductions and credits on her overseas tax return.
“I absolutely will recommend Greenback and have done so already. I liked the personal touch, the level of service, the expertise and the prices are extremely fair. I did research on other firms and Greenback was high value for low cost.”
Need Help With Your Overseas Tax Return?
Start with our series Expat Taxes Explained to learn more about your overseas tax return obligations. If you are in a similar situation as Roya and need assistance, or if you would like to learn about our expat tax services, please contact us.