The Wall Street Journal recently ran an article focused on helping expatriates understand the tax forms they need to file with the IRS. Just reading through the list and its jumble of numbers and acronyms is enough to GYAH2DF (give you a headache to die from).
However, the article is indeed helpful, so let's sort through a bit of what overseas Americans should know in order to stave off an IRS investigation.
Before we dive into the numbers, letters and form names, we should mention that the author of the Journal article notes that "(m)any brave Americans overseas attempt to do their own tax returns," but the result is that they hear from the IRS about missing forms or incorrectly filed forms. Even if they pay a professional tax preparer, they may hear from the IRS about missing or incorrectly filed forms.
As a number of clients can attest, when the IRS mentions missing documents or incorrect data, it can too often be a prelude to an investigation or even criminal charges.
So let's take a look at those overseas tax forms: Forms 2555 and 2555- EZ (for calculating Foreign Earned Income Exclusion); Form 1116 (the Foreign Tax Credit form); FBAR Form FinCEN 114 (independent of your tax form, it requires a separate filing if you have foreign financial accounts that exceed $10,000 in aggregate value); Form 8938 (aka the FATCA form, it's for reporting Specified Foreign Financial Assets and any income derived from them); and so on.
The forms, documentation, reports, filings and negotiations with the IRS can seem endless to people who find themselves in disputes involving overseas assets. We can help. We guide people through the IRS labyrinth, helping clients comply with all legal requirements. Please see our FATCA, FBAR and IRS Amnesty page for more information about the depth of experience and knowledge available to you from The Law Offices of Mark L. Horwitz, P.A.
