The Internal Revenue Service (IRS) recently announced new procedures that may allow certain expats to become complaint with their United States tax filing obligations and even receive relief for their back taxes regardless of whether or not they have relinquished their U.S. citizenship. The new IRS procedures can be difficult to understand and the tax professionals at Orlando, Florida based CPA Accounting & Tax Services outlines the most important elements of the new procedures and criteria for eligibility along with common forms that will need to be filed:

1. What are the eligibility requirements for expats to utilize the new IRS procedures?

There are 5 eligibility requirements that must be met in order for expats to utilize the new IRS procedures in effort to eliminate their U.S. tax obligations as follows:

     1. Expats who have failed to file required United States tax returns due to non-willful conduct.

     2. Those who owe a limited amount of back taxes to the United States.

     3. Expats who have less than $2 million in net assets.

     4. If the expat’s tax liability does not exceed $25,000.

     5. The expat must file outstanding United States tax returns to include all required schedules and information returns for the five years preceding and the year of their expatriation.

2. What are the most common U.S. Federal Tax forms for expats?

There are several common tax forms for expats that can be used to become compliant with the new IRS procedures. They include:

    1. FinCEN 114 – Report of Foreign Bank and Financial Accounts: Also known as FBAR, The Report of Foreign Bank and Financial Accounts requires that you disclose your bank accounts, mutual funds, brokerage accounts as well as other financial related accounts to the Treasury Department while maintaining records on all.

    2. IRS TAX FORM 2555 – Foreign Earned Income. This form attaches to IRS Form 1040 or 1040x and is used to claim the foreign housing exclusion, foreign housing deduction and the foreign earned income exclusion. Form 2555 also helps with the qualifiers for the physical presence test and the bona fide residence test.

    3. IRS TAX FORM 1116Foreign Tax Credit: Form 1116 applies must be completed if an individual, estate or trust earned income overseas and paid taxes and has not already excluded the income from its federal taxes. This form can often help with obtaining a credit toward any U.S. tax obligations.

    4. IRS TAX FORM 8938Statement of Specified Foreign Financial Assets: Under The Foreign Account Tax Compliance Act (FATCA) certain taxpayers who hold assets in other countries outside of the United States are required to report the assets. Normally, Tax Form 8938 is used for the purpose of overseas asset reporting.

We can help navigate you through the complexities of the IRS Procedures for Expats and International Tax Laws. Contact the professionals at CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, Tax Preparation, International Tax Services, Tax Planning and Tax Resolution Services. We have offices in Orlando, Florida and service clients worldwide. Find out how we can serve all of your accounting needs by contacting us today: