Expatriate Tax Return Preparation: Go It Alone, or Get Expert Help?

Expat life has its benefits, including learning a new language, getting exposure to a new culture, and enjoying a high quality of life for less money. But expatriate tax return preparation is a complex and often bedeviling fact of life for US taxpayers living abroad. How to declare and what to disclose are significant decisions that expats must face. Many taxpayers wonder whether they can go it alone on their taxes, or need help from an expert in expatriate tax return preparation. The choice ultimately depends on the individual, their financial situation and risk profile. Here are some reasons you might opt to do your own taxes:

• You have no foreign assets or bank accounts. The US is increasingly active in requesting information about overseas assets, and increasingly aggressive in punishing those who fail to file forms such as the FBAR or IRS Form 8938. However, if all of your accounts are based in the States, this is not something that you have to worry about.
• You have no foreign income. If you are paid salaries, dividends, or other income in the US from a US company, you won't have to worry about filing foreign-income tax exclusion forms.
• You're willing to put in the hours to understand the law. Filing your own tax return is possible if you commit yourself to the research and number crunching that it takes to be done correctly. The IRS website has an excellent selection of documents and resources relating to expatriate tax return preparation.
• You're meticulous about storing your yearly data in a safe place. Having safely stored backup copies of all of your records and documents is a must, in case the IRS disputes your filings from past years.
• You want to save money. Many people live abroad to lower their cost of living, and not shelling out for tax prep services means more money in your pocket.
• You're willing to take the risk. Preparing international taxes means understanding the law, and hoping you make the right judgment calls. If you're willing to live with the risk involved in filing complex tax returns, going it alone is probably fine for you.

Many expats are perfectly happy doing their own taxes, and prepare them year in and year out with no problem. However, hiring an expert to advise you on your expatriate tax return preparation has its benefits, including:

• Knowledge of the latest tax requirements. International tax law changes each year, and failure to file required forms such as the 8938, even through ignorance, is no excuse in the eyes of the IRS. An expert will tell you which forms you need to file, and which you don't need to worry about.
• Tax saving strategies. An international tax advisor will look at your entire financial picture, including income and assets in the US and in your country of residence, and suggest cross-border strategies that legally minimize the amount of tax you have to pay.
• Help with small business issues. Lots of expats start businesses in their adopted countries, or set up corporations for their real estate holdings. Finessing expatriate tax return preparation as it relates to a business is one of the most frequent reasons taxpayers seek expert help.
• Navigating your US state tax requirements. Some states require anyone with a valid state driver's license to file a state tax return; others require filing over a certain income threshold. An expert will help you comply with the requirements of your particular state.
• Saving time. You retired abroad to escape the grind of life back home, not subject yourself to more of it. Instead of spending weekends immersing yourself in the subtleties of TD F 90-22.1, you could be on the beach while a professional does the tax legwork for you.
• Peace of mind. Wondering if you made the right decisions about what you filed, and how you filed it can be agonizing if you do your own taxes. Hiring someone to handle your expatriate tax return preparation means your taxes are in the hands of professionals who dedicate themselves full-time to choosing the right strategy on behalf of clients.