Today we’re talking about every entrepreneur’s favorite topic: Taxes (I joke, I joke!).
But seriously, we all have to file taxes each year, and if you’re someone who travels and works as a digital nomad or if you’ve relocated outside of the US, filing your taxes can be a total nightmare.
Today I want to highlight Taxes For Expats (TFX), a company founded and run by an awesome lady named Ines Zemelman. TFX provides a niche service to American taxpayers worldwide (expats, digital nomads, etc.)
The key issue for all US citizens & Green Card holders residing anywhere in the world is that even if you don’t live in the US or earn money in the US, you still have to file US tax returns (assuming you meet the minimum filing thresholds) declaring your worldwide income.
This is where Ines and her team at TFX come in, to make the painstaking process of filing taxes a little bit more pleasant.
Let’s get into the nitty-gritty…
Are ‘expat’ returns different from regular U.S. returns?
Yes, and here’s how:
1. First and foremost – when your return is due.
The Deadlines for those residing abroad is June 15 (an automatic two month extension is granted). Note – if you owe any tax, it is still due on April 15th, so get your returns done early in the year to avoid any unpleasant surprises. An additional extension until October is also available – this must be filed before June 15
2. There are several key deductions/exclusions available only to those residing abroad.
The key factor is that these special nuggets from the IRS are not given to you automatically. In order to utilize these critical tax saving methods – the Foreign Earned Income Exclusion (FEIE), Foreign Tax Credit, Foreign Housing Exclusion, Treaty exclusions, and many more – your tax return must be prepared correctly and tax saving tools utilized properly.
3. Self Employment tax issues – the complexity begins.
If you work for a foreign employer you are not required to pay US self-employment taxes (Social security and Medicare). If you work for US employer the US employer will make the withholding from your salary.
In today’s day and age, where many bloggers worldwide are ‘digital nomads’ and building their own businesses, they may be liable for self employment tax, also known as SECA (Self-Employed Contributions Act) tax.
What do you have to glean from this? Some countries have signed a ‘Totalization Agreement’. If you reside in a country that has signed this agreement, you won’t have to pay this extra tax if you already pay into the social security system of that country.
This and other tidbits are covered by Ines and her team in their Digital Nomad Tax Guide – critical reading for anyone pursuing this life path. Click here to download it!
How to Work with Taxes for Expats
1. Go to the Taxes for Expats site and sign up for an account. After doing so, you will have access to your very own secure tax portal. (see screenshot below)
2. Schedule a free intro 30-minute consultation: This consultation requires a $50 retainer which goes towards tax prep.
3. Tax questionnaire: After creating your account, complete the interactive tax questionnaire (note – if you have to file for several years, it is very easy to create additional tax years, and copying info is instantaneous).
If you have any questions or are not sure how to answer something, you can chat with the team or review their extensive faq section to help you or you can email your assigned tax preparer directly. In a nutshell, they’re very accessible.
4. Do you have supporting tax documents to upload (ie 1099, W2, etc)? At the end of the questionnaire, you’ll see a document checklist where you can begin uploading documents. Every step of the process is easily tracked, and you always know what you have to do next.
5. Once you complete your questionnaire, the team will review and issue an engagement letter, which will outline the scope of the project; there are no surprises, and all fees are provided up front.
6. Sit back and wait for the return to be completed – you will be notified via email as soon as your do is ready for your review. Only at this stage do you have to pay, and as soon as payment is settled the document will unlock – quite a neat system. Payment is accepted with all credit cards, Paypal, or Transferwise.
7. Once you’re happy with the return, TFX will e-file for you. They will also provide you with complete instructions summarizing the engagement.
The Cost to File Your Tax Return
As mentioned earlier, the fees are transparent and TFX incorporates a flat fee structure. The flat fee ($350) includes most forms that any expat would be required to file. Click here for the full list – over 40 forms are included.
If your return is outside the flat fee, you will be informed in the engagement letter. As before – no surprises.
Here are some examples of additional forms you might need to purchase.
Everyone loves Taxes for Expats!
Filing taxes online is the wave of the future, especially if you live abroad. Taxes for Expat’s online portal is great in keeping all information organized, your files accessible from anywhere, and for keeping you in the loop.
No more visits with shoeboxes in hand – I’m not sure if disruption is the word (we’ll save that for the Netflix’s of the world), but it’s certainly more convenient. There are almost 1,000 customer reviews from happy clients, many of whom have been working with TFX for years.
Need help filing your taxes as a US Expat? Be sure to visit Taxes for Expats here and use the steps above to get started!