U.S. Expatriates: How to Avoid Mistakes when Filing Taxes     

Tax season is complicated enough while living in the states, and it can get even more confusing for expats juggling forms in their host country and back home. As a result, an alarming number of people make mistakes - or forget to file altogether - and that can lead to costly fiscal penalties.

For many, the source of these tax problems is confusion. It can be hard to balance the demands of the IRS in the U.S. with the legal requirements and regulations of your current place of residence. To make matters worse, there is often a lack of guidance out there for expats just like yourself.

So, to help make things go a little bit smoother for you, here are a few tips and tricks to get the most out of each tax season:

Expatriate Taxes

Never forget to file your taxes while working abroad
Forgetting to file can be one of the biggest mistakes made by expats on a yearly basis. According to Yahoo Finance, U.S. expats will always have to file taxes with the IRS, even if you don't actually pay anything at all. If you make below $97,600 in your current country, you won't have to owe anything - but, you'll still have to fill out all the paperwork. 

"It's very difficult to understand why you have to file when you don't have to pay any taxes," Ronald Marini, a Florida-based tax attorney, told the news source. "You could be earning $90,000 in Spain, paying income taxes there and doing nothing wrong. If you forget to file taxes in the U.S. or you got confused, even with your exemption, you are still on the hook for penalties for failing to file."

Unfortunately for many law-abiding expats, there are a number of people living abroad who do so simply to dodge taxes. This has increased the scrutiny on all citizens overseas, regardless of whether or not they have done anything wrong. Yahoo Finance explained that there is a way to make up for missed filings, called the Off-shore Voluntary Disclosure Program. No matter the course of action, it can be best to consult a tax advisor before making decisions.

Take advantage of expat tax breaks
Being a citizen of the U.S. comes with many perks, but it also means the eye of the IRS will follow you wherever you go. According to TurboTax, this doesn't mean you'll be on the hook for massive payments, thanks in part to a wide range of available tax breaks.

For example, U.S expats may be interested in the foreign tax credit. Once you've been living overseas for at least six months, your country of residence will begin to tax your income. That means you could be paying twice - once there, and once to the U.S. However, this break will allow you to subtract the lower of the tax rates from the higher, so you only pay the higher of the two, divided between the two countries. While this may sound confusing, the result would be a small tax hit on your income, instead of filing twice.

Many potential expats aren't too sure about how to acquire a EU work permit abroad, otherwise known as a "Blue Card." The process can be long and complicated, and a misstep here or there could throw everything off course. So, if you are interested in getting a job in the EU, it may be time to acquire a work permit. To help you out, find out how to obtain an EU work permit

Call us today at +1.202.872.0060 or 800.872.0067 or e-mail request@clements.com to discuss your needs.

How to Obtain an EU Work Permit