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How to Handle Your Taxes When You’re Living Overseas

Tax season is here and many Americans are in the midst of gathering and sorting out their expenses and deductible information. Individuals and businesses are responsible for maintaining their income tax information, but what if you aren’t in the United States?

Many businesses and individuals find themselves living as expats in types of work that require them to relocate or even travel the globe while volunteering. There are even some international real-estate businesses which are becoming popular, as are retirees living abroad. These scenarios present the question: How do I go about paying taxes while living overseas?

An American duty

In 1913, the 16th Amendment was established permitting the federal government to accumulate funds by collecting income tax from American citizens. So, even if you don’t live in the United States, you are still responsible for paying their taxes. Regardless of whether you live overseas or not, it’s vital that you pay taxes for your income if you are an American citizen. Many ignore this important fact, and it can come back to haunt them later on. Also, American business owners who are presently in other countries need to file their taxes.

A common concern is that if you own a business in another country, you’d need to monitor your expenses and taxes paid so you can get a full deduction. It’s good to keep all your accounts on paper, so consider making payments with credit cards rather than cash. Many foreign countries can make this difficult to achieve, especially since cash is easier to use and handy to have. But, if you need to hold records for yourself or business, paper trials are a must for verifying transactions. Also, make sure you keep your expenses and accounts ready long before April 15th (even though for this year filing day is April 17th). This will give you plenty of time to prepare and catch any and all deductions you are eligible for so you don’t miss anything- especially valuable deductibles. You don’t want to run into any last minute issues or realize that you’re missing important information that can cost you in deductibles or even fines.

Because of the elaborate guidelines and regulations, it’s difficult to handle taxes when you’re oversees or living in another country, especially since operations in other countries have their own sets of procedures as well. Because expatriation treaties and taxes can be intricate and complex with the various rules concerning living situations and taxes that vary in each country, consulting with an expert in the field can alleviate and prevent any issues that can arise.

Lending a helping hand

Handling taxes as an expat should only be done if you’re well-versed in the rules and regulations that demand expert attention. Here are some qualities to search for when choosing professional assistance.

1. Not overloaded? If your tax or accounting services are incapable of handling your needs, you can’t expect them to be able to accomplish a professional job. Choose an expert that isn’t taking on more than they can handle.

2. Friendly and helpful qualities are always a plus. You can get accounting services from various professionals so you need to be sure that you are comfortable with who you choose. Don’t feel obligated to choose an expert because they are the only ones you’ve heard of. Do some research before settling on help that you feel comfortable leaving your accounting information with.

3.Some of the qualifications you need to look for in a professional would be experience with other CRM systems, tax software, and Big 4 experience. In addition to these qualities, make sure they have knowledge in handling taxes and tariffs in oversees situations, international regulations, and the present tax laws that exist in your country you currently reside in.

4. Quick access. Nothing is scarier than not hearing back from accountants that you’ve trusted with valuable information. This means that not only do you want to be able to quickly access them, but you want to constantly remain in contact, regardless of where you are. Do they have international access, and more importantly, do you have international access such as internet availability, or phone services that are direct? Contact is a valuable asset in preparing for tax time considering that time itself becomes essential when questions need to be answered or concerns need to be addressed.

Gaining assistance with your expat tax issues isn’t necessary, but it is strongly recommended. There are plenty of professionals that are ready to help, allowing you to spend time focusing on your own concerns, whether it’s business, volunteering, or just enjoying life abroad.

**Use this only as a guide based on available Feb 2012 public data.  Please seak out a certified accountant that has experience in International tax laws related to expats.