Frequently Asked Questions
To help our customers prepare their US expat taxes while living abroad, we’ve prepared a list of the most frequently asked US expat tax questions.
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Top Ten Expat Questions
- After I have referred a friend to Greenback, when do I receive my referral gift certificate?
- Am I entitled to Social Security as an US expat?
- Are capital gains included in worldwide income?
- Are there flat fees for the US expat tax forms and schedules that are not commonly used?
- As an American expat, do I need to file a US federal tax return?
- As an American expat, do I need to file a US state tax return?
- Can Greenback e-file for me?
- Can I be subject to AMT even when I am paying foreign taxes?
- Can I get just my UK tax returns done with Greenback?
- Can I just have Greenback Expat Tax Services prepare my Foreign Bank Account Reporting (FBAR) and do my taxes on my own?
- Can I use an IRA to save for retirement while working as a contractor overseas?
- Can my non-US spouse receive my Social Security benefits?
- Can you complete my host country returns?
- Can you file Form 1120S (for my S-corp) and how much would it cost?
- Can you help me renounce my US citizenship?
After I have referred a friend to Greenback, when do I receive my referral gift certificate?
Once your friend completes a Federal return with us, you will receive your $25 gift card within the first few days of the following month. So, if your friend completes his return in April, you will receive your gift card in early May.[back to top]
Are capital gains included in worldwide income?
Capital gains are included in your worldwide income for US tax purposes. Gift, real estate and inheritance taxes all apply to US citizens and Green Card holders regardless of where they were located. You will also be taxed on any income from dividends or investments overseas and may face increased reporting requirements on foreign mutual funds or investment vehicles. There may also be different tax rules and exceptions for each type of investment, so we suggest you seek expat tax advice regarding any capital gains you expect to receive in a given tax year.[back to top]
Are there flat fees for the US expat tax forms and schedules that are not commonly used?
Yes. Because our goal is to be as upfront as we can be with our customers about our pricing, we make it a priority to establish flat fees whenever possible. Our pricing includes the most common forms and schedules that most expats need to file including:
– All standard expat forms: Forms 1040, 1116, 2555
– One of each of the following schedules: Schedules A, B, C, D, E (one rental property),
– Up to three Schedule K-1s,
– Up to 20 bank and brokerage transactions
If you need any additional forms or schedules, we are happy to prepare those for you as well, and a list of the fees we charge for each can be found (https://www.greenbacktaxservices.com/expatriate-tax-services/) here under Additional Schedules.
As you can imagine, in most instances, our customers do not need additional forms or schedules filed on their behalf. But for those customers with more complex tax situations, we do our best to make the pricing as clear as possible.[back to top]
As an American expat, do I need to file a US federal tax return?
Overall, all US citizens and Green Card holders are required to file a US federal income tax return each year if their income is over the minimum threshold. It doesn’t matter where you have earned this income, what currency it is earned in or whether you have also paid taxes in the country in which you reside. You are required to file in the US if your income is above these levels.
The thresholds are currently:
– Single with income over $10,300
– Married filing jointly with income over $20,600
– Married filing separately with income over $4,000
– Self-employed individuals need to file if their income is over $400
Note: You may also need to file state taxes as well as taxes for your small business operating overseas. Depending on your situation, you may also be required to file additional reports, including Form 8938 and the Foreign Bank Account Report (FBAR or FinCEN Form 114) to report assets held overseas.[back to top]
As an American expat, do I need to file a US state tax return?
When it comes to US state tax returns, every state is different. Some states are more favorable for expats, as they have no income taxes. These states include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Other favorable states include New Hampshire and Tennessee, as they only collect taxes on dividend and interest income. Unfavorable states include California, South Carolina and New Mexico; these states see their taxpayers as assets and will leave the burden of proof on you to prove you are no longer a resident.
Ties to the state that may require you to file a state return can include the following:
– Mortgage or lease payments on property
– State driver’s license
– State bank accounts or investments
– Telephone and utility bills
– Voter registration
– Library cards
– Mail correspondence
– Association memberships
– Dependents living within the state
As an American expat, if you have some of the above ties in one of the states that have income taxes, you may be required to submit a state return until you prove residency in another state.[back to top]
Can Greenback e-file for me?
For the vast majority of our customers, Greenback can e-file your tax return with the IRS on your behalf. There are some cases in which the IRS does not allow e-filing, such as if you are filing late and/or for multiple tax years at one time. In that case, we will inform you and provide you with instructions to file a signed paper version. Then, you will need to sign the form, and submit directly to the IRS.
There are also times when the IRS e-file system is down (generally at the end of the year when they are updating the system for the coming tax year). In these cases, you will need to print, sign and mail in a paper version.[back to top]
Can I be subject to AMT even when I am paying foreign taxes?
The short answer is that yes, one can be subject to AMT (Alternative Minimum Tax) even when overseas.
Expatriates utilizing the Foreign Earned Income and Housing Exclusions to eliminate or substantially reduce income should be aware of the AMT. This tax is applied to adjusted gross income (after exclusions) plus certain tax preference items and adjustments, which are reduced by an exemption and limited deductions. The exemption is phased out beginning at certain higher levels of income. An individual is subject to the AMT if it is greater than the regular income tax. If the alternative minimum tax applies, certain deductions for tax preference items may not provide actual income tax benefits. The alternative minimum tax may be reduced by the Foreign Tax Credit to the extent that tax is generated by foreign sourced income. However, the Foreign Tax Credit may not offset more than 90 percent of the tentative AMT liability. This Foreign Tax Credit is computed separately from the regular Foreign Tax Credit on a separate Form 1116.[back to top]
Can I get just my UK tax returns done with Greenback?
In short, yes, although we recommend having Greenback file both your US and UK tax returns, as we cannot guarantee another firm’s work. However, if you need only your UK returns filed, we can certainly help.[back to top]
Can I just have Greenback Expat Tax Services prepare my Foreign Bank Account Reporting (FBAR) and do my taxes on my own?
Yes! We understand that some expats prefer to file their own taxes or perhaps have no US filing obligation, but still need to file FBAR. Please contact us if you would like us to file FBAR on your behalf.[back to top]
Can I use an IRA to save for retirement while working as a contractor overseas?
You are not allowed to contribute income that has been excluded under the foreign earned income exclusion to an IRA. So, if you have excluded all of your income under the FEIE then you may not contribute to an IRA. If you already have, then you will have made an excess contribution that will need to be withdrawn. If you have income that was not excluded under the FEIE then you can contribute to an IRA, subject to the income restrictions for the specific type of IRA.[back to top]
Can you complete my host country returns?
Many of our clients come to us asking if we can complete their host country returns (for example, their German, French, or Australian taxes). Although we would love to offer this service, with clients in more than 90 countries, it Is just not possible. We do however have a UK accountant on staff, and can complete the UK returns for our clients residing abroad.[back to top]
Can you file Form 1120S (for my S-corp) and how much would it cost?
We can file the tax documents for all types of small businesses including an S-corp. Specifically for an S-corp, you would file using Form 1120S (and then report the income on a K-1 along with your personal tax return). In this case, we would charge $485 to complete Small Business Tax Returns (Forms 1065, 1120, 1120-F, 1120-S) and $485 to complete your 1040 and the associated forms, including the K-1.[back to top]
Can you help me renounce my US citizenship?
The decision to renounce your US citizenship is a big one, and if you have decided that it is the right choice for you, we can certainly help!
The renouncing process requires you to be caught up on your US tax obligation, which may mean filing up to 8 tax returns at one time as well as the Foreign Bank Account Reports. We can prepare all of these documents for you and help you file them with the IRS. The actual steps to renounce your citizenship and the number of returns required can vary based on the rules in your local US embassy, so we recommend speaking with someone there first, then contacting us to do the actual tax return preparation for you.[back to top]