US Expat Tax Documents Made Easy - by Greenback Expat Tax Services

25
US Expat Tax Documents
Made Easy

Welcome! We’ll be your hosts today.

What You’ll Learn
• Who Is Greenback?
• Review of US Expat Tax Basics
• Tax Documents You’ll Receive
• Info You’ll Need to Track Down
• Tax Documents for:
• Property Owners
• Retired Expats
• Self-Employed Expats
• Expats Behind on Taxes
• Common Challenges & How to
Solve Them

info@greenbacktaxservices.com
ESSENTIAL TAX BREAKS
FOR DIGITAL NOMADS
Never worry again if your US expat
taxes are done right
Meet our co-founders, Carrie & David.
They’re expats justlikeyou.After years of
livingabroad, theygot fedupwiththehassle
of filingUSexpat taxes. Soin2009,theybuilt
anew taxpreparation company tomakelife
better for expats everywhere.
 Accountants attheforefront of expertise
inUSexpat taxes
 Simple andeasytowork with
 Treats youfairly andrespectfully
 Personalized care andthebest outcome
for every client

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About Greenback
 Dedicated expat-expert accountant
 Accuracy guaranteed
 Easyonline accessfrom anywhere
 Banking-grade security
 Nohidden feesor tacked-on costs
 Trusted andaward-winning
My tax advisor just became my
personal hero. I will forever be
grateful for his competent advice.

Stay till the end to get your
questions answered!
• Enter your questions into the chat box,
and we’ll answer them at the end of the
webinar.
• Important: Other attendees can see the
chat, so please do not share sensitive
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• If you do have a sensitive question, email
us at info@greenbacktaxservices.com.

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First, let’s review some
US expat tax basics
1

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RENTAL INCOME
INTEREST DIVIDENDS
If your worldwide income exceeds the filing threshold,
you must file a US Federal Tax Return each year –
regardless of where you live.
WAGES
INCOME INCLUDES

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Filing Thresholds for the 2020 tax year:
Single: $12,400
Married Filing Jointly: $24,800
Married Filing Separately: $5
Head of Household: $18,650
Self-Employed: $400
(regardless of filing status)

FOR DIGITAL NOMADS
US Tax Year and Deadlines
The US tax year runs from January to December. Common deadlines include:
• March 15th: Partnerships, S-Corps, Foreign Trusts
• April 15th - Postponed to May 17th in 2021: Deadline for tax returns in the
US and all tax payments (regardless of where you live). Interest accrues on
any taxes due.
• June 15th: Filing deadline for Americans abroad—but payments still due
April 15th most years/May 17th in 2021.
• October 15th: If you request an extension by June 15, you can extend the
filing deadline.
• December 15th: If needed, you can write a letter to the IRS to request this
discretionary extension.

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Three Common Tax Credits and Exclusions for Expats:
1. Foreign Earned Income Exclusion: Exclude up to $107,600 of your
foreign earned income from US taxation on your 2020 tax return.
You must pass one of these tests to qualify:
• Physical Presence: must be physically present inside a foreign
country for 330 of any 365-day period
• Bona Fide Resident: must have lived overseas for one calendar
year and have no immediate intention of moving back to the US

FOR DIGITAL NOMADS
Three Common Tax Credits and Exclusions for Expats:
2. Foreign Housing Exclusion: If you qualify for the FEIE and your
foreign housing costs were at least 16% of the FEIE amount, you
can exclude certain household expenses from your US taxes
3. Foreign Tax Credit: dollar-for-dollar credit for income taxes paid to a
foreign government
• You can’t apply this credit to income already excluded by the
Foreign Earned Income Exclusion
• But you can carry back or carry forward unused credits to get a
refund from the prior year or reduce future taxes

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Foreign Financial Reporting Requirements for Expats
• If the combined total of your foreign financial accounts is $10,000 or
more, you’ll need to file the Foreign Bank Account Report (FBAR, also
known as Fin-Cen Form 114) with the US Treasury.
• If you have foreign financial assets of over $200K on the last day of the
year or $300K at any point, you will need to file Form 8938 with the IRS
to comply with the Foreign Account Tax Compliance Act (FATCA). These
amounts are doubled for married filers.

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The tax documents
you’ll receive
2

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Income statements for wages, compensation, and tips
• United States: W-2
• United Kingdom: P60 or P45
• Canada: T4
• Israel: 106 form
• Russia: 2-NDFL form
Based on where you live, find out
which form you should be on the
lookout for – or request a
statement from your employer.

FOR DIGITAL NOMADS
Interest and dividend income
US-based institutions will send you a Form 1099 to show the interest (income
the bank paid you for storing your money with them) and dividends (profit
shares from a corporation in which you own stock) from that year.

FOR DIGITAL NOMADS
Records of the sale and purchase of stocks and securities
Your broker will send a statement with all of the purchases and sales of stock
or other securities from the relevant tax year. These numbers will be used to
report capital gains and losses on both US and foreign investments.

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Mortgage statements
If you have a mortgage, your lender should send you a statement with
information on mortgage interest paid, which, when itemizing, is a tax-
deductible expense that you can use to limit your tax liability.

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The information you’ll
need to track down
3

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Last year’s tax return (or the most recent one filed)
Your tax return has info that you’ll need to carry from one year to the next.
For instance, if you used the Foreign Tax Credit last year, you’ll need to
input that information exactly—especially if you carried back/forward these
credits.
Prior tax returns are also handy for checking your personal info and
numbers when filling out this year’s info to make the process go faster!
Note: Your prior year tax return will NOT be used to calculate Recovery
Rebate Credits for any stimulus checks you were owed but didn’t receive.
These credits are based on your 2020 income.

FOR DIGITAL NOMADS
Records of any miscellaneous income
Income from:
• A business that isn’t a sole proprietorship
• Part-ownership of a foreign partnership or corporation
• Gambling
• Farming
• Royalties
• Unemployment compensation
• Alimony
• Foreign disability income
• Statements for any foreign mutual funds (even if there was
no income distributed during the year)

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A list of foreign housing expenses
If you qualify for the Foreign Earned Income Exclusion (FEIE) and your housing
expenses exceed 16% of the FEIE, you can also deduct certain foreign housing
expenses, including:
• Rent
• Utilities (except for telephone, TV, and internet)
• Personal property insurance (homeowner’s or renter’s)
• Leasing fees
• Furniture rental
• Parking rental
• Repairs

FOR DIGITAL NOMADS
Have children or dependents? Track costs for care
The Child Tax Credit and Child &
Dependent Care Credit can both
be used to reduce US taxes for
families.
The Child Tax Credit has increased
to $3,000 per child for 2021. To
use this credit, you’ll need the
names and Social Security numbers
for the dependents you wish to
claim.
You can also deduct qualifying
expenses for child/dependent care.
Keep a list of expenses, including
the:
• Name, address, and ID number
(if applicable) of your childcare
provider
• Health insurance and medical
expenses summary
• Your charitable contribution
summary

FOR DIGITAL NOMADS
Records of your foreign financial accounts
If you have a financial reporting requirement (FBAR or FATCA), you’ll
need:
• The names and addresses of your foreign financial institutions
• Your account numbers
• Highest account balance during the year
• End-of-year balances
• Joint ownership or signatory authority, if applicable

FOR DIGITAL NOMADS
Foreign financial accounts you’ll need to report:
FBAR
• Financial account held at a foreign
branch of a US bank
• Foreign mutual funds
• Foreign-issued life insurance or
annuity contract with a cash-value
• Foreign stock or securities held in a
financial account at a foreign financial
institution (you must report the
account itself but not the individual
contents)
FATCA
• Foreign pensions
• Foreign stockholdings
• Foreign partnership interests
• Foreign financial accounts
• Foreign mutual funds
• Foreign issued life insurance
• Foreign hedge funds
• Foreign real estate held through a
foreign entity (you must report the
entity, and its value will include
your real estate value)

FOR DIGITAL NOMADS
Want to qualify for the FEIE? Keep a travel calendar
Remember, one of the ways to
qualify for the Foreign Earned
Income Exclusion ($107,600 in
2020) is to be physically present in
a foreign country for 330 days out
of a 365-day period.
Keep in mind, these must be FULL
days. Any time spent traveling to
or from the USA won’t count.
To make sure you qualify, keep a
travel calendar to track the dates
you were in each country.

FOR DIGITAL NOMADS
4 Tax documents for
property owners
25 TH I N G S T O KNO W
ABOU T US EXPAT TAXES

FOR DIGITAL NOMADS
Records of real estate/property purchase and sale
When you sell personal property, you need to calculate and report any
capital gains on your US tax return. (Contrary to popular belief, losses
from the sale of personal property are not deductible.)
You’ll need documents from the purchase and the sale that contain:
• the date of sale
• date of purchase
• whether it’s for business or personal use
• total cost and proceeds
• information on any improvements made while owning the
property

FOR DIGITAL NOMADS
Beware of phantom gains
Foreign property values must be converted to USD when reporting
to the IRS.
If there have been large currency fluctuations since purchasing your
property, it is possible to have a USD gain, even if there is no gain in
your local currency.
These are known as phantom gains and they are taxable!

FOR DIGITAL NOMADS
Rental income documents
If this will be the first year of your rental income, provide:
• The date you placed your rental property in service
• The purchase price/value of improvements made and equipment bought
• A record of all rents received during the year

FOR DIGITAL NOMADS
5 Tax documents for
retired expats

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Tax documents for retirees living abroad
If you retired in another country, you’ll be required to report any
distributions you received from retirement accounts including pensions,
401ks, annuities, profit sharing plans, and IRAs. If you’ve withdrawn money
from these accounts, you should automatically receive a statement from
your employers or brokers.
If you received Social Security benefits, you’ll be sent a Form SSA
1099. If you receive the same sort of benefits from another country, you
might not be automatically sent a record of the yearly payments, so you’ll
need to keep track of those yourself.

FOR DIGITAL NOMADS
6
Tax documents for
self-employed expats

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Deductible expenses for self-employed expats
To help lower your US income tax liability, you are allowed to deduct
expenses that are considered both ordinary and necessary to generate self-
employment income.
These expenses include:
› Cost of goods sold
› Home office expenses
› Business use of equipment and vehicles

FOR DIGITAL NOMADS
Record of where you pay self-employment taxes
The US has Totalization Agreements with many countries to avoid double
taxation for social insurance taxes (like Social Security and Medicare).
If the Totalization Agreement states that you should pay social insurance
taxes to your host country and not the US, you’ll need a certificate of
coverage from your local social security agency to show that you are paying
self-employment taxes there.

FOR DIGITAL NOMADS
7
Tax documents for expats
who are behind on their
US taxes

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Getting caught up with the Streamlined Procedures
The IRS Streamlined Filing Procedures allows expats who are 3 or more
years behind on their US taxes to get caught up penalty-free if your lack of
filing was non-willful.
To file under this program, you’ll need to submit:
• The last 3 years of delinquent Federal Tax Returns
• The last 6 years of FBARS
• Form 14653 to certify that your tax delinquency was non-willful

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Tax documents for the Streamlined Procedures
To file under the Streamlined Procedures, you’ll need:
• Your tax documents for the past 3 years (using the list we just reviewed)
• Financial account details for the past 6
While this may sound daunting at first, the advantages of becoming
compliant penalty-free are huge—including major cost-savings and avoiding
serious penalties like losing your passport, hefty penalties, and even criminal
charges.
Plus, once you decide to move forward, your accountant will work with you
each step of the way to help make the process as painless as possible.

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8
Common challenges and
how to solve them

FOR DIGITAL NOMADS
Missing a tax document? Contact the issuer
If you are missing a tax document, don’t ignore it! Contact the issuer
to have it resent. It may have been lost in the mail or otherwise
misplaced.
Even though you did not receive it, it likely was still reported to the
IRS. If it was reported to the IRS but omitted on your tax return, the
IRS could feasibly catch this omission, prompting an audit of your
overseas tax return.

FOR DIGITAL NOMADS
Use a virtual mailbox to receive US mail abroad
Many expats live in areas where it’s a challenge to receive US mail.
Others need a US address (not a PO Box) because it’s required by their
US financial institutions.
Using the address of a friend or relative in the US can be unreliable or
trigger an unwanted state tax filing requirement.
Virtual mailboxes provide a personal, non-PO Box mailing address for a
monthly fee. You get email alerts when you have mail. Upon your
request, the mail is scanned or forwarded to you. (Be aware, fees may be
based on the number of openings.)

FOR DIGITAL NOMADS
Do I need to translate my foreign tax documents?
For tax documents in a foreign language, translate key information before
passing it to your accountant. Be sure to label each number to explain what it
means (ex: what type of income, expense, or tax paid).
For individuals, you can typically use a free online translation tool (if you don’t
already know the language).
If you own a business or have a more complex tax situation, you may want to
translate some documents professionally. Talk to your accountant to see if
this is necessary. If needed, there are translation services that specialize in
legal and tax documents.

FOR DIGITAL NOMADS
My host country’s tax year differs from the US
The US tax year is the same as the calendar year (January 1 to December
31). But other countries use different dates and issue documents at different
times:
• Australia: July 1 to June 30
• UK: April 6 to April 5
• Costa Rica: October 1 to September 30
When living in a country that has a different tax year than the USA, keep
monthly pay stubs to make it easy to see how much you earned between
January and December.

FOR DIGITAL NOMADS
I’m waiting on important documents, and I’m worried I’ll
miss the deadline
If you’re waiting on important documents, tell your accountant right away.
They’ll let you know if it’s possible to file by the deadline—or they’ll help you
file an extension (this is free for Greenback clients!) to avoid paying extra
late penalties.

Type your questions into the chat box.
We’ll answer them in the order received.
Remember, do NOT type sensitive information into
the chat as others can see this.

FOR DIGITAL NOMADS
Never worry again if your US expat taxes are done right.
Meet your accountant and
start your taxes today.
Fill out the form at:
greenbacktaxservices.com

US Expat Tax Documents Made Easy - by Greenback Expat Tax Services

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