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US Expat Taxes – Everything You Need to Know
10 Aspects of Your US Expat Taxes You Need to Understand as an American living abroad
The United States is one of the few countries that taxes citizens on their worldwide income, regardless of where that income is earned and where they live. Greenback Expat Tax Services is here to help you make sense of the complicated rules associated with US Expat Taxes.
This article focuses on the key areas of your US Expat Taxes that you need to be aware of. We run a weekly series focusing on different elements of US expat taxes on our website as well (focusing on these items and more) so be sure to check it out!
1- The Foreign Earned Income Exclusion
Qualifying US citizens who live and work abroad may be able to save a lot of money on their expatriate tax return by filling out the form for the foreign earned income exclusion. In order to qualify, a US citizen or resident alien must have earned income in a foreign county, a regular place of business outside the US, and must meet the bona fide residence or physical presence test. This exclusion is claimed on Form 2555, and attached to Form 1040. If you qualify for the foreign earned income exclusion on your US Expatriate tax return, you may also qualify for the foreign housing credit, which would allow you to deduct up to $27,450 of your foreign housing costs.
2- The Foreign Tax Credit
It is common for a US citizen living abroad to be taxed by both their host country and the United States. The Foreign Tax Credit was designed by the IRS to reduce the burden of double taxation on US expats. US citizens may elect to claim a credit for foreign income taxes paid on their US expat taxes. This credit is claimed on Form 1116 and allows you to reduce your US tax burden by what you have paid to the foreign government.
3- Understanding Foreign Exchange Impact
When filing your US Expat taxes, it is important to note that all of the amounts must be reported in US dollars. The IRS prefers that each transaction is converted to US dollars at the daily rate, but they are also willing to accept an average annual rate in cases of numerous transactions. Depending on the fluctuation of current foreign exchange rates, choosing the right method can yield significant tax savings for you and your family. For example, let’s say you received a 50,000 EUR bonus on May 20, 2010. Using the 2010 annual average rate would translate this bonus to $66,225 USD. However, using the daily rate for May 20, 2010 would translate the bonus to $61,335 USD. As you can see, in this case using the daily rate would yield you a higher tax savings on your US Expat taxes than using the annual average rate.
4- Issues with Dual Taxation
Similar to the Foreign Tax Credit, the US has arranged tax treaties with more than 50 countries in an attempt to avoid dual taxation of US citizens living abroad. Generally, the treaties work to allocate an individual’s income only to the source of earnings. You can obtain detailed information about the provisions of each of the treaties in the IRS Publication 901 and determine how these treaties affect your US Expat taxes.
5- Social Security
As an American living abroad, you are still entitled to receive Social Security benefits. The United States has developed agreements with 24 countries in an attempt to eliminate dual taxation and ensure benefit protection for recipients. The Social Security Administration has issued Publication 05-10137 which helps expatriates manage their social security benefits while living in another country. Country specific information is also available on the Social Security website. Visit www.SSA.gov, then search for your specific country.
6- Do You Have to File State taxes?
Each of the fifty states varies in how they determine the filing requirements of your US Expat taxes. Some states have no personal income tax at all, such as Florida, Texas and Washington. On the other hand, some states, such as California and Virginia, consider whether you have retained certain rights as a US citizen, such as ownership of assets, financial accounts and a driver’s license to determine your future “intent.” If they determine that you intend to return to the state you previously resided in, they may still require you to file a tax return.
7- Foreign Bank Accounts
If you are a US citizen that has one or more foreign account(s) and the cumulative balance of these accounts exceeded $10,000 at any time during the calendar year, you must file Form TDF 90-22.1 Report of Foreign Bank and Financial Accounts (FBAR) by June 30 each year. This form is filed separately from your US Expat taxes, and must be received, not just postmarked, by the Treasury on June 30th.
8- Dates for filing
Normally, US citizens are required to file their US income tax returns by April 15. However, a US citizen living abroad is entitled to an automatic extension to file their US Expat taxes until June 15. Despite the automatic extension, all US Expat taxes still need to be paid by April 18, 2011 to avoid any interest charges.
9- Voluntary disclosure
The IRS is currently offering an opportunity for people who may have failed to report their foreign financial accounts to get current on their US expat taxes. This opportunity will end on August 31, 2011. This initiative offers a reduced penalty to those who are out of compliance, and frees you from the possibility of criminal prosecution. In order to become current with their US Expat taxes, participants must file all original and amended tax returns and make all applicable payments for taxes, interest and penalties by the August 31, 2011 deadline.
10- Getting an extension
US expats can receive an automatic extension to file their US expatriate taxes by simply attaching a statement to Form 1040 when filed by June 15. An additional extension to October 15th can be requested as well via Form 4868. Expatriates who need additional time to meet the bona fide residence or physical presence test may request an extension on Form 2350. The extension is generally granted for an additional 30 days after either of the tests have been met.
The above is meant to be an overview only- please consult with a tax professional for assistance filing your US expat taxes.
Secured Loan The Best Loan to go For in Need
Many a times you find yourself in need of money and you are unable to arrange cash it on time because your friend and relative may not help in such circumstances the only thing you can do in such a situation is to go for secured personal loan. Secured loan is most old tradition of loan followed right from the ancient times.
Secured loan are purely based on the principle of place security against the loan amount. These loans provide enough cash for meeting the personal expenditure without any holdup and trouble. The loan is hassle free with any complicated paperwork and documentation. The loan amount will be determined by the lenders on the basis of the worth of the security you put with them. The collateral you place can be your home, real estate, car etc.
With secured loan the loan amount you can obtain is availed usually ranges from 5,000-75,000 and the 5-25 years. These loan give you advantage like higher loan amount and longer repayment time with and good reasonable rates. Longer repayment period implies that you can easily repay the loan within the fixed time period. The loan can fulfill your various expenses like improving your home, meeting wedding expenses, to consolidate debts, paying off education fees, purchasing a car etc.
Bad credit secured loan is introduce to help people need of cash but have a lot of credit problem like CCJs, overcast, defaults, arrears and bad loans in arrears as they loan application gets rejected due poor credit score but now with the introduction of these loan these get chance to improve their credit score in the market with timely repayment of the loan.
Secured loan is even found online searching for online secured loan is better option as with proper research of the market you can get the loan as per your requirement rates and criteria and the loan process is very fast you just have to fill and online application with a few details and within 24hrs of the loan application your loan will be approved and deposited in your checking account.
Mortgage Refinancing – What You Need To Know About Refinancing Your Mortgage
When you go for mortgage refinancing loan you should know the following things in nutshell:
Mortgage refinance is like taking second loan to repay your first mortgage loan. Reason to go in for such a loan is that your first mortgage loan tenure is long, and the associated interest rates are very high. Now the interest rates have reduced heavily in the market. Before planning to take a mortgage refinancing loan be careful while doing online research, compare the interest rates and tenures of different lenders, and analyze the best option suitable for you. While taking second loan, do analyze how much cash you can avail after paying your first mortgage loan, which will help you in finishing off other expenses or liabilities you have in hand. Mortgage refinance loan is normally taken to replace the existing loan with a new loan with better terms and conditions as compared to the first one, which can help you save time and concentrate on your career. People basically go for a refinance mortgage loan for few reasons.
# To minimize existing interest rate on their existing mortgage loans, and lowering their monthly mortgage expenses.
# To get some money out of their mortgage or home loans for a house improvement project, to combine debts and pay them off.
There are other terms you need to consider when you go for refinance mortgage loans. What are the loan types and down payment penalties? It’s important to avail refinance loan quotations from lenders and make the correct decisions. The other reasons you may opt for mortgage refinance loan could be to get a sort-term mortgage loan of 10 or 20 years, which will help you to pay off your mortgage loan. You may like to switch from fixed rate mortgage to adjustable rate mortgage loans depending on which one is more beneficial to you. Following mistakes should be avoided while going for home mortgage refinance loan.
# Don’t take your county assessor’s value as a basis for refinance; try to find out the exact market value which could be higher than the county assessor’s value. If you consider the market value, you would get a higher value of mortgage loan which can help you in paying other debts.
# Not providing documentation promptly, can get your loan process delayed, which can result in your loan not being approved at the lower interest rates which you have agreed.
Even if you have a bad credit history you can easily get the bad credit home refinance from us. With a poor credit rating there can be a financial hindrance to many things we do in our life. When you have a bad credit rating you may not be able to buy a car, obtain a credit card, get a student loan, and, in some cases, even get certain jobs. You can, however refinance your home with bad credit mortgage refinance even if you have a bad score. You should normally know what your credit history and the actual score contains. It’s recommended you get the reports from all agencies and check the facts, if the reports contain wrong information then get the error corrected with the agencies, and get it rectified before applying for bad credit mortgage refinancing.
When you have bad credit history and you are applying for home mortgage refinance, care should be taken that the interest rates should be very low than the current home mortgage loans. A difference of 0.50 to 1% difference is not enough. There should be a difference of 2 to 3% in interest rates, when you apply for mortgage refinancing loan. Your new mortgage refinance loan interest rates should be lower than the existing ones. This can help you in getting more money in hand, and you can pay off your debts and have enough money in hand for redeeming other liabilities. When going for home mortgage refinance loan with bad credit or bad history be careful that the second mortgage refinance loan you take does not have a clause of pre-payment penalty ranging from 6 month to 2 years. That means if you want to end your home mortgage refinancing loan early, you can’t make any pre-payments as it will carry penalties.
You can apply through us for bad credit home refinancing if you have a bad credit history, you can fill our online form and we will get in touch with you as soon as possible to solve your queries.