Stay on top of filing your taxes.
Every year in early March, many US expats notice the date, realize that tax-time is approaching, and get overwhelmed. For US expats around the world, the issue of filing taxes in our home country and in the USA feels like a really big deal. It is a task that cannot be avoided, though. In order to alleviate the extra anxiety, I recommend a “Spring Cleaning” of your financial papers. This will help you get a better handle on the tax-filing process, and take the fear out of filing your 1040.
Normally, in the first quarter of the year, financial institutions send tax statements that you will need in order to file – although some may be provided digitally. I recommend creating a backup of those documents.
In order to file US taxes, you will need some combination of the following:
From the USA:
- Social Security numbers for all family members (required)
- 1099 forms
- Mortgage statement showing annual interest paid
- Student Loan statement showing annual interest paid
- IRA/Roth IRA contribution statement
- Any receipts from tax-deductible donations you have made
- Real estate transaction information
From your current country of residence:
- Annual bank summary showing interest earned and taxes withheld at the source
- Annual investment house statements showing earnings and dividends and taxes withheld at the source
- Pension fund statement showing contributions
- Real estate transaction statements
- Records of employment income
- Self-employed yearly report
Individual situations vary and sometimes other forms may be required.
Once all these papers are gathered, you’ll need to submit them to your tax preparer. Your tax preparer can then get to work filling in your 1040 and related forms, such as: Schedule A if itemizing deductions, Schedule B to report interest and dividends, Schedule C for business owners, Schedule D for capital gains/losses, Schedule E for Real Estate income/losses, Schedule SE for those making Social Security Contributions on self-employment income) as well as Form 1116 to claim a Foreign Tax Credit for income tax paid. In some cases, you may choose to take the Foreign Earned Income Exclusion instead (Form 2555) – please discuss this with your tax preparer. Some taxpayers also qualify for the Child Tax Credit (Form 8812). There may be other forms that will need to be filed – your tax preparer will let you know.
Rest assured, the IRS does not need to see your credit card bills or grocery receipts, so you don’t need to submit those. It’s always a good idea to keep scans of your credit card statements, quarterly financial statements, monthly payslips and other official documents, as sometimes they are needed further down the line.
Many American Expats miss out on large US tax refunds due to improper or late filing. Don’t be one of them. Our experienced accountants will help you save time and money, while making sure you maximize your refund.
