US citizens living abroad, which in this case is the UK, are often referred to as expatriates or expats, and they need to file US taxes just like any other person residing in the US. Yes, you read that right! Though US expats reside in other countries, they still need to file their US taxes.
That said, expatriate taxes are a tad different and complex, due to international laws and treaties, and this is why we believe you should consult an expat tax preparation expert for the same. But why take our word for it? Let’s discuss expat taxes in length and then you can decide yourself whether or not you need help!
Do US expatriates need to pay taxes?
This is clearly one of the most common questions that we at Expat Global Tax frequently come across. Why? Well, that’s because US expats residing in the UK and in other corners of the world often don’t have a deep understanding of international tax laws, expatriate taxation, relevant tax forms, and tax benefits – something we at Expat Global Tax specialise in.
Now, to answer the question, if you are a US citizen residing in the UK or somewhere else, you need to file an income tax return using Form 1040. Generally, you must file a return if your gross income from different sources around the globe crosses the minimum threshold. However, there are different other tax forms and schedules such as Form 2555 for claiming Foreign Earned Income Exclusion and Form 1116 for claiming Foreign Tax Credit, that you must take note of.
Can the US IRS track foreign income?
Well, if you’re thinking that the IRS doesn’t know about the money you make abroad, you’re mistaken. Foreign banks and other financial institutions are required to report accounts held by US citizens to the IRS under the country’s FATCA policy, which stands for Foreign Account Tax Compliance Act.
That is not all! Tax treaties and international agreements between nations allows the IRS to exchange information with tax bodies in other countries.
How Tax Advisors in London Help US Expats Avoid Double Taxation?
Let’s face it! One of the biggest dilemmas/ concerns for US expats living in the UK is double taxation – being taxed by both the US and the UK for the same income. In fact, double taxation is really a complex issue, and the only way for you to avoid it is by understanding the law of the land as well as the expat tax laws from your home country. This is again where our tax advisors London can help.
At Expat Global Tax, we have different strategies in place to help US expats. We use tax credits and exclusions, including the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) to mitigate double taxation.
It is worth mentioning that the United States has tax treaties with many nations around the planet – that are designed to prevent double taxation. Such treaties have different provisions for either lowering or eliminating taxes on certain types of income.
Here are three ways in which we support our clients.
- At Expat Global Tax, we follow modern US expatriate taxation laws, tax treaties between the US and other countries, and tax laws in the client’s country of residence.
- We advise clients on tax credits and deductions such as the FEIE and the FTC, and assist them in properly filing all requisite forms and schedules.
- We navigate complex issues such as the Foreign Bank Account Reporting (FBAR) and FATCA on behalf of our clients.
By providing proper insights and professional assistance in filing US expat taxes from Uk, we help our clients in meeting their tax obligations, lower their tax liabilities, and ensure compliance.
Top Reasons Why Expats in London Need Help from Tax Advisors: Expatriate Taxation & Tax Preparation Experts
Believe it or not, but when filing your taxes, it is best to work with a tax professional. This ensures accuracy, more so because expats are often subject to additional tax reporting obligations. Here are a few scenarios when you should reach out to tax advisors/ tax preparers.
Filing the US expat taxes for the first time: All American citizens and permanent residents, even people living abroad must file the federal tax return, if they meet the minimum reporting threshold. That said, US expat taxes are a bit different from the typical US taxes that you might be familiar with. These include tax breaks that Americans living stateside are not eligible for. Depending on your current country of residence, you may claim benefits from tax treaties and totalization agreements. So, when filing expatriate taxation on your own, you risk overlooking additional rules and paperwork, not claiming tax breaks you qualify for, and/ or failing to submit the needed disclosures. This is why you need help from our tax preparation expert.
Facing an IRS audit: You’d be surprised to know that one in five hundred tax returns leads to an IRS audit, and when that happens, you’d need help from professionals – people who are adept at helping US expats. Accuracy and expertise matter the most when dealing with IRS issues. Attempting to deal with the IRS can lead to unsuccessful appeals, prolonged and stressful back-and-forth with the IRS, and even lead to hefty penalties/ fines.
Are self-employed or own a business: Taxes for US expats who are self-employed or have their own business is even more complex than for employees in companies. How? Well, the fact that you are expected to make quarterly estimated tax payments on self-employment taxes, federal income taxes, and sometimes, even state taxes. All this can be a hassle! Depending on what type of business you own, you may have to file additional forms, such as the Form 1120 S, Form 8865, or Form 5471.
Have multiple sources of income: Different types of income have different tax implications. It’s rather simple when you have a single source of income, but if your case is different, you should seek help from our tax advisors in London. So, if you earn interest from foreign financial accounts, or have capital gains from selling stocks, and/ or rental income from a foreign property, you should connect with us. Filing on your own can lead to missing required forms/ reports, failing to capitalise on the tax breaks, or claiming a tax break on a wrong income.
You’re behind on tax returns: It is rather common for US expats to think that moving abroad relieves them of their US tax obligations, but that couldn’t be further from the truth. No matter what, discovering that you owe taxes can be nerve-racking and this can lead to feeling overwhelmed, having to pay significant penalties, and unable to capitalise on tax breaks. Luckily, with a tax preparation expert by your side, you can have a realistic assessment of your situation, get answers to all your queries, and take advantage of programs designed to catch up with overdue taxes.
Key takeaway
At Expat Global Tax, we help US expats in the UK with tax preparation and their filing needs. Navigating the complexities of expat tax laws can sure be challenging, but with our expertise, you can avoid the hassle. As a trusted tax preparation expert, we help our clients in meeting US tax obligations while minimising liabilities. From understanding tax treaties to claiming tax credits, we help you all through the process, thereby helping you avoid double taxation and meet all reporting requirements.
Let us simplify your US expat tax filing. Connect with the experts now!
