A U.S. tax attorney for Americans living abroad can help clients understand U.S. federal tax filing and international reporting obligations that may continue while they reside outside the United States. U.S. citizens and certain U.S. tax residents are generally subject to U.S. tax rules on worldwide income, even while living abroad, and additional reporting may apply to foreign bank accounts, financial assets, businesses, trusts, gifts, or other cross-border interests. Wakrim Law Firm assists Americans abroad with U.S. international tax compliance, foreign asset reporting, past filing issues, and related IRS matters.
U.S. Tax Obligations for Americans Living Abroad
U.S. citizens and certain resident aliens generally remain subject to U.S. federal income tax rules on their worldwide income even when they live outside the United States. Depending on the taxpayer’s circumstances, foreign financial accounts, foreign assets, ownership interests in non-U.S. businesses, foreign trusts, gifts, or other cross-border arrangements may also trigger additional U.S. reporting requirements.
Foreign Bank Accounts and Financial Assets
Americans living abroad may have separate U.S. reporting obligations for foreign bank accounts and other financial assets, even when those assets are located in the country where they live. Depending on the value and type of assets involved, reporting may include the FBAR, Form 8938, or other international information returns. These requirements are separate from the obligation to report worldwide income on a U.S. federal tax return.
Americans Abroad Who Have Not Filed U.S. Taxes
Some U.S. citizens and taxpayers living abroad discover that they have missed U.S. tax returns, FBAR filings, or other international reporting obligations for prior years. The appropriate way to address past noncompliance depends on the facts of each case, including the type of filings involved, the number of years affected, and whether the failure to file was willful or non-willful. Wakrim Law Firm can help evaluate the situation and identify potential paths toward U.S. tax compliance.
Streamlined Foreign Offshore Procedures
Certain U.S. taxpayers living outside the United States may qualify for the Streamlined Foreign Offshore Procedures if their failure to report income, pay U.S. tax, or file required international information returns or FBARs resulted from non-willful conduct. For eligible taxpayers, the procedure generally requires filing or amending the most recent three years of U.S. tax returns and filing delinquent FBARs for the most recent six years for which the FBAR due date has passed. Eligibility depends on specific residency and non-willfulness requirements, so the facts of each case should be reviewed carefully before making a streamlined submission.
Owning a Business Outside the United States
Americans living abroad who own or control a business outside the United States may have additional U.S. tax and information-reporting obligations. Depending on the type of entity and the taxpayer’s ownership or control, filings may include Form 5471 for certain foreign corporations, Form 8865 for certain foreign partnerships, or Form 8858 for certain foreign disregarded entities or foreign branches. These reporting rules can be complex, and penalties may apply when required forms are not filed correctly or on time.
Foreign Gifts, Inheritances and Trusts
Americans living abroad who receive significant gifts or inheritances from foreign persons, or who are involved with foreign trusts, may have additional U.S. reporting obligations. Depending on the circumstances, Form 3520 or Form 3520-A may be required. These rules can apply even when no immediate U.S. income tax is due, and reporting failures can lead to significant penalties. Because the filing requirements vary based on the type of transfer, trust relationship, and amounts involved, each situation should be reviewed individually.
How a U.S. Tax Attorney for Americans Living Abroad Can Help
Wakrim Law Firm assists Americans living abroad with U.S. international tax compliance and reporting matters. Depending on the client’s circumstances, this may include reviewing prior filing history, identifying outstanding reporting obligations, evaluating potential compliance options, addressing foreign account and asset reporting, and helping clients understand the U.S. tax consequences of foreign businesses, trusts, gifts, inheritances, and other cross-border interests. When appropriate, the firm can also coordinate with tax professionals and other advisers involved in the client’s broader international tax matters.
Frequently Asked Questions
Do Americans living abroad still have to file U.S. taxes?
In many cases, yes. U.S. citizens and certain resident aliens living abroad generally remain subject to U.S. federal income tax rules on their worldwide income. Whether a tax return is required depends on factors such as filing status, income, and applicable thresholds. Living outside the United States does not, by itself, eliminate U.S. filing obligations.
Do I need to file an FBAR if I live outside the United States?
Possibly. U.S. persons may be required to file an FBAR if the aggregate value of their foreign financial accounts exceeds $10,000 at any time during the calendar year. Living abroad does not, by itself, remove this reporting requirement. Whether an FBAR is required depends on the type of accounts involved, ownership or signature authority, and the total value of the foreign accounts.
What is the difference between an FBAR and Form 8938?
The FBAR and Form 8938 are separate reporting requirements and may apply to the same taxpayer. The FBAR is filed with FinCEN and generally focuses on foreign financial accounts, while Form 8938 is filed with a federal income tax return and covers specified foreign financial assets. The filing thresholds, definitions, and assets covered are not identical, so some taxpayers may need to file one form, both forms, or neither depending on their circumstances.
What if I have not filed U.S. taxes for several years?
Americans living abroad who have missed several years of U.S. tax returns or international reporting should first determine which filings were required and why they were missed. Depending on the facts, potential compliance options may include filing delinquent returns, correcting prior filings, or, for eligible taxpayers whose failures were non-willful, using the Streamlined Foreign Offshore Procedures. The appropriate approach depends on the taxpayer’s filing history, foreign assets, income, and whether the IRS has already begun an examination or investigation.
Do I have U.S. tax reporting obligations if I own a company abroad?
Possibly. U.S. citizens and certain U.S. residents who own, control, or have certain relationships with foreign corporations may have additional U.S. reporting obligations. Depending on the ownership structure and level of control, Form 5471 or other international information returns may be required. The filing rules are detailed and can apply differently depending on the taxpayer’s role and ownership percentage, so the facts should be reviewed carefully.
Do I need to report a foreign gift or inheritance to the IRS?
Possibly. U.S. persons who receive certain large gifts or bequests from foreign individuals or foreign estates may have to report them to the IRS on Form 3520. Reporting may also be required for certain transactions with foreign trusts. The rules depend on the source and amount of the transfer, and failing to file a required Form 3520 can result in significant penalties.
Can a U.S. tax attorney help me if I live outside the United States?
Yes. A U.S. tax attorney can advise clients who live outside the United States on federal tax filing obligations, international information reporting, foreign account and asset disclosure, past filing issues, and potential compliance options. Legal advice can also be important when the facts involve possible penalties, prior noncompliance, IRS correspondence, or complex ownership structures involving foreign businesses, trusts, gifts, or other cross-border assets.
Speak With a U.S. Tax Attorney About Your International Tax Matters
Working with a U.S. tax attorney for Americans living abroad can be especially helpful when foreign accounts, assets, businesses, trusts, gifts, or prior filing issues make U.S. tax compliance more complex. Wakrim Law Firm helps Americans abroad understand their U.S. tax obligations, evaluate potential compliance options, address international tax reporting requirements, and navigate cross-border tax matters based on their individual circumstances.