A question just for expats: Do you do your own taxes or have a professional tax preparer help you tackle the job?
For Americans living abroad, tax time can be filled with multiple challenges. You have to navigate not only the U.S. Internal Revenue Service’s rules and regulations for reporting global income, but you also have to quickly become familiar with the tax code in the country in which you live. For this reason, most expats opt not to prepare their taxes on their own. Here are some other reasons why expats often call in the professionals:
Peace of Mind
Even those with good intentions can easily make a mistake or misunderstand instructions. The process itself and knowing where to start is often overwhelming. Plus, if you make mistakes, they can be costly, either unknowingly putting less money in your pocket or opening yourself up to liability and even criminal challenges. If going solo with your expats taxes is going to keep you up at night, it’s a good idea to get some tax help.
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So Many Deadlines
April 15 isn’t the only tax deadline in town anymore. All expats receive an automatic extension until June 15, but if you’re not ready by then, you can file for a four-month extension that takes you until Oct. 15. Still not prepared and you can request an extension to Dec. 15. On top of all this, there are deadlines to file your FBAR by October 15, and if you are self-employed or required to pay quarterly taxes, those need to be made by April 15, June 15, Sept. 15 and Jan. 15. It almost seems like something is due on the 15 of every month!
There’s no doubt about it, when you live abroad, you will have to jump through some hoops for the federal government. The government, it seems, loves paperwork and that’s just what you’ll find clogging up your taxes. From your standard Form 1040 to the Foreign Earned Income Exclusion, Foreign Housing Deduction and Foreign Tax Credit, there is much red tape when it comes to filing expat taxes. On top of all this, you’ll need to make sure the proper schedules are attached to your Form 1040. A professional expat tax preparer has experience with all this and can save you the headache of trying to figure it all out yourself.
Reducing the Risk of Audits
Your tax professional should prepare you a tax return that doesn’t open you up to personal liability. Familiar with the tax codes in your new home country and America, your tax preparers should complete all paperwork accurately, completely, and confidently knowing that everything was done “by the book.” No one can guarantee that you won’t be randomly audited, but if, by chance, you do get a letter regarding an audit, your tax preparer will know how to handle the inquiry on your behalf.
The post Expats Taxes – Do it Yourself, or Use a Tax Preparer? first appeared on Mind My Business.