Should you hire an expatriate tax preparer or try to do your taxes yourself?
Most Americans have a “can-do” attitude. We like to tackle many chores and tasks ourselves, even when we know there are professionals out there to help.
However, are your taxes an area that you really want to delve into on your own? For some people, the answer to this question is a resounding yes. They like being in control and knowing where they stand. However, other people prefer to let the professionals take over, saving time and hassle.
Expats have to weigh this decision carefully. Even if your tax filings are up-to-date, and your receipts carefully organized, do you really want to take the chance that you might make a mistake? For Americans living abroad, tax issues can be incredibly complex and there are consequences to missing a deadline, forgetting to include information, or filling out a form incorrectly.
Plus, the Internal Revenue Service (IRS) doesn’t look favorably on people who try using the classic excuse, “Well, I didn’t know.”
Whether you choose to hire a professional tax preparer who specializes in expatriate filings or go it on your own, you – and only you – are responsible for your obligation to the United States IRS.
Stateside, American tax preparers are kept pretty busy from January-April each year as taxpayers prefer to have someone else handle this headache. Expats have even more concerns to care about, from filing for all the proper tax credits so they aren’t double-taxed and making sure they pay the right amount of tax, to at the same time avoiding huge liabilities if they get things wrong or miss a filing deadline.
It’s for this reason that all Americans living abroad have an automatic two-month extension until June 15 to file their US tax return.
Here are some items to consider as you weigh the pros and cons:
As an expat, there is more red tape. Filing as an expatriate means taking care of your legal responsibility to both the United States and the country you currently reside in. In many cases, that means double the forms and twice the amount of time than when you lived stateside. On top of all that, there are several forms you need to on time, some of which you are familiar with and others that will be new to you.
Among them are Form 1040, the Foreign Earned Income Exclusion, Foreign Housing Deduction and Foreign Tax Credit. On top of all these forms and decisions to make about which deductions and credits provide the most benefit to you and your family, there are other schedules that must be attached to your Form 1040. A professional expat tax preparer will know exactly which forms you need and how to use the various credits to your advantage to reduce your tax liability.
In terms of filing foreign taxes, note:
There may be different timelines. April 15 isn’t a worldwide universal tax deadline and isn’t the only date you need to work within anymore.
You may need assistance translating. Foreign tax forms and instructions may be written in a language other than English, perhaps adding to your confusion if you’re not fluent.