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FAQ

1) If I file my taxes late

a. What is Streamlined Procedure and how does it work?

In Sep 2012, the IRS announced a “Streamlined Program” for Americans who have not filed tax returns for many years. The new program allows taxpayers to file the latest three years expat tax returns as well as six years of Foreign Bank Accounts, if they meet some specific requirements. The tax returns are filed together with a statement to the Department of the Treasury. Recently, the IRS has announced major changes to the program and will waive all penalties for those people who file under Streamlined Program.  For more information, please contact our tax experts.

 

b. How many years of late US tax returns do I need to file?

It depends on your situation.  Some people are not eligible for the Streamline Program. They may be required to file back all the previous tax returns. For more information, please contact our tax experts.

c. What is the Offshore Voluntary Disclosure Program?

The current Offshore Voluntary Disclosure Program (“OVDP”) does not have a scheduled end date. This program was started in 2012, and the IRS has announced that it can close the program at any time.  The IRS also launched a new program, specifically designed for US expats, known as the Streamlined Filing Procedure.  Whereas the OVDP is geared towards individuals who have been avoiding taxes by hiding money overseas, the Streamlined Program is designed for Americans who have been living abroad and have not been filing their taxes or reporting their foreign bank accounts.  If you are behind on your taxes, you should consult with a tax expert to determine the best way to become compliant.

There was a previous program by the IRS called the Offshore Voluntary Disclosure Initiative but it ended on September 9, 2011.

2) Financial bank account reporting

a. Do I need to file foreign bank account reports?

You need to file a foreign bank account report if you have a combined balance of US$10,000 or more in a foreign bank or financial institution.

b. What is form 8938?

If you are American living abroad and have a combined foreign financial account balance of US$200,000 or more if you are single and US$300,000 if you are married and filing jointly, you have to file form 8938 and attach it with your individual tax return. If you reside in the U.S, you need to file this form if your combined foreign financial account balance is US$50,000 or more.

c. If I do not need to file US tax returns, do I still need to file the foreign account report (FBAR)?

You need to file as long as you have a combined balance of US$10,000 or more in a foreign bank or financial institution.

d. What foreign financial accounts do I have to report?

You need to file any financial account you held outside the U.S. Financial accounts include any banks, securities, securities derivatives or any financial instruments accounts. These include mutual funds and foreign pension/ retirement accounts.


3) Documents to be submitted

What documents do I need to provide to have you prepare my US tax returns?
To speed up the process, we will need the most recent US tax return you have filed. We will need the tax return for the host country you are residing in now. Also, we will need income statements of your salary, capital gains, interest, rents, and royalties. It is also helpful if you can provide a report of your expenses and deductions, such as your housing costs, capital losses, moving expenses and your dependent care expenses. We will also need your travel documents to determine if you can claim deductions under the Bona Fide Residence Test or Physical Presence Test.

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