Everything About Tax for Expats

Myth #1: American expats don’t have to file annual U.S. tax returns because they live abroad or already file a tax return with a foreign government

This is one of the biggest myths when it comes to tax for expats. Even if a person is living abroad, he or she is still required by the U.S. government to file annual tax returns regardless of which country they live in and earn money. Every U.S. citizen and permanent resident is required by law to comply with U.S. tax laws, which require filing a tax return.

Myth #2: You don’t need to report your foreign income on your U.S. tax return

This is another big myth about tax for expats. Some people believe that they only need to report their U.S. income on their U.S. tax returns, but this is simply not the case. The U.S. is one of only two countries in the world that taxes its expats on their global income. In other words, regardless of where a U.S. citizen lives and works, they are required to report all of their income. That’s right: ALL of it.

Myth #3: Tax-Deferrals work the same in my country of residence as they do in the U.S.

One myth people erroneously believe about tax for expats is that if the contribution they make to their retirement or savings plans are deferred in their country of residence, they are automatically tax-deferred in the United States. Unfortunately, this is untrue. In many countries, people are allowed to contribute a pension plan or other investment savings plan and enjoy tax-deferrals. However, that country’s financial regulations and allowances have absolutely no bearing on the U.S. government’s taxation of your pension or investment plans. In fact, the U.S. can tax expats on both the annual employer contributions and earnings.

Myth #4: I don’t need a lawyer

One of the mistakes many expats make when it comes to taxes for expats is believing that they have all the information and resources they need to comply with international tax laws and make smart financial decisions.

Unfortunately, tax laws are often very complicated, and international taxation is even more so. There are a number of factors people don’t realize when it comes to taxes for expats. Furthermore, there is a lot of misinformation out there that could potentially cause even the most willing and well-meaning expat to fall into non-compliance with U.S. tax laws. In recent years, U.S. laws regarding non-compliant

The best thing for an expat to do is to consult with an experienced lawyer who specializes in international tax law to make sure that they are fully compliant with U.S. tax laws, as well as the laws of their country of residence. But an experienced lawyer won’t only help their client stay compliant with tax laws, they’ll also help them plan for their financial future, advising them on how to make smart decisions with their income and investments and avoid double or over-taxation. If a person is already out-of-compliance with U.S. tax laws, an international tax lawyer will work with them through various legal channels to help them get back in the good books of the IRS.

Esquire Group, a boutique international tax advisory firm specializing in tax consulting, tax planning and compliance and helping corporate and individual taxpayers with Offshore Voluntary Disclosure Program, asset protection, and tax consulting for US expats. To learn more about us, visit www.EsquireGroup.com/about.

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