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Three facts about filing your overseas tax return

Why are expat taxes important?
Why are expat taxes important?
Photo by Stefan Postles/Getty Images

If you worked and lived overseas and return to the United States within the tax year, you are required to file an overseas tax return. While you may have split your income between two localities, there is still going to be a singular tax return that you’ll be required to file; this process can be overbearing if you are not common to the international tax laws and how to exchange your foreign earnings into local currency. There is little reason for alarm, however; a professional expatriate tax consultant can assist you in making your filing smooth and assist in proper handling and preparation of these sensitive documents. Here are some basic facts about filing your overseas tax return you should be privy of:

You Can Choose Residential Statuses

When married couples live in different localities, they can choose to file jointly in one locality or simply file their status as separate from each other. Since there are more advantageous reasons to file jointly, many couples choose to do so to get possibly larger returns or at least deeper tax breaks. In order to file with a non-resident, the person living on foreign soil must either have a Social Security Number or an ITIN number; the form for the ITIN is the W7 and can be obtained from your overseas tax return specialist.

Entitled To Special Deductions

Figuring out which tax deductions can be applied to your overseas tax return is another facet of overseas tax preparation that is best left with the professionals; claiming earned income credits, home improvement tax credits and other specialized deductions that common folks are unable to find are the specialty of expatriate tax professionals. Your living expenses, travel, entertainment and even some uncommon tax deductions are available for business owners, self-employed persons and even babysitters. Your tax professional will sit down during your overseas tax return preparation and go over all possible deductions you’ll be entitled to.

Tax Treaty Benefits Are Available

Since the United States has tax treaties, or ‘pacts’ with other countries, there are certain benefits and exemptions you’ll enjoy, such as pension and annuity income becoming tax-free in certain instances, grants, studying abroad while holding down a part-time job or work study, and loans. Tax treaty laws are very comprehensive and should be outlined when your expat CPA is taking care of your overseas tax return simply due to the nature of what can and cannot be considered a viable part of the treaty in relation to your tax situation. There are a moderate amount of forms to fill, you can still file the return electronically in most instances, and the deadlines can equally be extended as part of the international tax treaty.

In Conclusion

Filing your overseas tax return may be a complex process yet, if you deploy the services of professional expatriate CPA’s to assist in your return, you’ll not only have the chance for larger returns, but you’ll even learn international tax laws during the process. You have equal tax benefits while living and working overseas as you do while on your home country’s soil, and once your overseas tax return has been successfully filed, you’ll enjoy peace knowing you are getting the maximum return possible for your complex tax situation.

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