In the United States, ex-pats can avoid paying taxes on money earned abroad by using a tax preparation service that is familiar with the bona fide residency test, tax treaties, and foreign-earned income exclusion.
Depending on the skill of the tax preparation firm ex-pat hires, he or she could either save or lose thousands of dollars due to the specific complexity of the US tax code parts that apply to Americans who live overseas. The Foreign Earned Income Inclusion, for instance, permits up to $92,900 in accumulated tax-free earnings for a qualified US taxpayer living abroad. However, the criteria for the exclusion are stringent, and the ex-pat taxpayer often needs the assistance of a tax preparation service with extensive knowledge and experience to help them comply with the complex provisions.
For example, a taxpayer could incur thousands of dollars in extra tax burden due to a simple miscalculation of the amount of time spent abroad versus in the United States in a given tax year. In order to meet these specific demands, it is highly recommended to use a tax preparation firm that has expertise in international tax legislation.
Any American citizen living overseas who fails to file their income tax returns or pay any taxes that are owed may face criminal or civil fines. Unlike in the United States, where a tax preparation firm seems to crop up on every corner around tax time, quality tax advice might be hard to obtain for an American living abroad.
As a result of the accessibility and convenience of online resources, international taxpayers now have not only the ability but also the incentive to learn all they can about the nuances of tax law as it applies to their lives as ex-pats. When it comes to tax preparation, Americans residing abroad face unique challenges, and Tax Planners CPA, which specializes in such services, maintains a website that provides a great overview of many of these concerns.