The Internal Revenue Services’ (IRS) tax code is full of acronyms. Confusing abbreviations expatriates have to navigate while slogging through taxes. A particular abbreviation expatriates need to be aware of is the acronym FATCA–Foreign Account Tax Compliance Act. This tax act requires expatriates residing in foreign countries to file an annual report of any foreign accounts. This is the report the IRS uses to make sure U.S. citizens are not evading taxes by also gathering information from foreign financial institutions. The FATCA is different than the FBAR (yes, another acronym), an IRS fore ..read more

Expatriates face many challenges navigating their individual United States tax obligations while residing in a foreign country. The tax process becomes much more complicated when an expatriate is also filing U.S. taxes for a foreign business. Figuring out if an expatriate’s business can be considered by the Internal Revenue Service (IRS) as having ownership in a foreign disregarded entity is important; especially if the owner of the business will be required to file IRS form 8858. Beyond the confusion of translating what a foreign disregarded entity means from IRS language; this article will a ..read more

United States persons who are partners in a foreign relationship are required to file the annual Form 8865 with the Internal Revenue Service. Form 8865 needs to be completed for United States persons who own an interest in a foreign entity which is classified as a foreign partnership for United States federal tax purposes. Reporting the income, the financial position of the partnership, and transactions between the partner and partnership is part of the Form 8865 needed to be file with the tax return.   What is Form 8865?   The Form 8865 is required with the foreign partnership is co ..read more

Expatriates around the globe often have questions about their United States tax obligations, especially around tax time. This is particularly true of expatriates employed in foreign countries. Often the questions center around their foreign income and their U.S. tax requirements with the Internal Revenue Service (IRS). For expatriates earning money in a foreign country, comprehending what their tax obligations are can be very confusing. This article will explain what expatriates U.S. tax obligations are in general. The article will also explain the IRS’ concept of Foreign Earned Income Exclusi ..read more

United States income tax treaty benefits can be reported and claimed on Tax Form 8833. Taxpayers should take a treaty position on their tax returns and submit a Form 8833 with a tax return. Taxpayers use the Form 8833 for relying on a treaty that involves the tax laws appropriately. Importantly, the Form 8833 needs to be attached to a tax year for every year in which a treaty provision applies. Additionally, the Form 8833 is required for every treaty-based return position.   What is the purpose of the Tax Form 8833?   Form 8833 is a form that should be filed if there is a claim for c ..read more

The decision to move abroad is generally a complicated choice for a person to make. Once an expatriate moves abroad, deciding how to resolve their foreign tax obligations is sometimes another unexpected decision. The Internal Revenue Service (IRS) has two very specific foreign tax options for U.S. citizens living and working abroad to choose; to avoid being taxed on their income both by the foreign country and also by the IRS. Sometimes the decision of which tax benefit to pursue is filled with more questions than answers. This article will answer questions surrounding foreign tax credits and ..read more

United States citizens living in a foreign country experience many challenges inherent to being an expatriate, especially dealing with foreign taxes and the Internal Revenue Service (IRS). Hopefully, most of the challenges expatriates face are much more rewarding experiences–much more memorable than filing taxes! However, figuring out IRS tax requirements is a very real task faced by many expatriates; particularly if they have involvement with a foreign trust. The IRS has very specific requirements for reporting foreign trusts and how to use IRS form 3520 and IRS form 3520-A. This article will ..read more

American taxpayers in the United States, as well as expatriates abroad, are challenged enough complying with Internal Revenue Service (IRS) regulations. Adding to the annual tax time confusion, U.S. taxpayers who have foreign financial accounts are required to annually provide Foreign Bank Account Reporting (FBAR), generally called the FinCEN form 114, to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). This article will explain the regulations of Foreign Bank Account Reporting (FBAR), what constitutes a foreign account, the requirements for FinCEN form 114, includ ..read more

Categories of United States Taxpayers There are several categories to determine how a person living in the United States is taxed. First, we need to parse out the different circumstances that determine these categories. “Citizenship” is defined by an individual’s country of origin to whom they owe duties and allegiance and are, in return, protected by that country’s set of rights and benefits. In this case, we are talking about United States citizenship. Those who are born inside the United States, including the following U.S. territories: U.S. Virgin Islands, the Marianas, and Puerto Rico, ar ..read more

Expatriates may only claim a Foreign Tax Credit when taxes are imposed on them by a foreign country or a United states possession for which an individual, estate, or trust has paid or accrued. Foreign income taxes reduce expatriate’s United States tax liability. It is usually in the expatriate’s advantage to take foreign income taxes as a tax credit. However, when credit is taken for any eligible expatriate’s taxes, the expatriate cannot take any part of that year’s foreign taxes as a deduction. The Foreign Tax Credit’s purpose is to reduce the double expatriate tax burden that would arise whe ..read more