17 December 2020
We’ll share our professional recommendations with you now. Alternatively, you can download the PDF copy of this information, so that you can read in your own time.
If you are a US citizen you will be aware that as we are reaching the end of the financial year (December 31) it’s time to start thinking about your tax return for 2020, even if you live abroad.
Although it’s not normally due until April 15, or June 15 for those taxpayers living outside the US, last year’s filing deadline was extended to July 15 due to the pandemic. To date, no such extension has been announced for the 2020 Federal tax return season. State and local filing deadlines vary from State to State.
However, whether April or June, it’s never too soon to start preparing the information that you will require to ensure that the process runs smoothly. As usual, if you can’t meet the April or June deadlines, there is the option to file for an extension of time.
There are various pieces of information and documents that you will need to gather and prepare, if you are a US citizen residing abroad, as well as completing a tax return form. This information will include:
A schedule of the countries (including USA) you have visited with dates of arrival and departure
All official documentation (e.g. W-2, P60, P45, payslips, etc.) as well as any self-employed records of income and expenses.
This is either from a foreign bank, domestic bank or other financial institution.
This could include income from partnerships, trusts, or other business interests that you have.
As a US citizen, mortgage interest, property taxes, and State income/sales taxes can count as a deductible expense. Other deductible expenses can include charitable contributions, alimony, and medical expenses.
You may be eligible to deduct the cost of your accommodation outside the US.
You must provide information including, if available, Social Security Numbers (SSN) or Individual Tax Identification Numbers (ITIN) of your dependents.
You will need to provide information regarding your foreign bank and other financial accounts.
If you have an interest in a foreign entity such as a trust, company, or partnership, you may need to provide detailed information about that entity.
The sooner you start to gather the correct information the better, and if you are unsure what applies to you or what can be counted as a deduction ,,contact your tax specialist who will be able to guide you.
In addition to preparing for next year’s tax filings, you might wish to consider a few simple year-end planning exercises to make your tax affairs run more smoothly:
New US tax laws were passed in December 2019 extending a number of expiring provisions. Additionally, some new tax changes take effect from 2020 including:
If you are uncertain which of these breaks could benefit you or your family when you file your US tax return, here at Everfair we are always available to advise you based on your personal circumstances.
Although as a US citizen living abroad it is not necessary to engage a US tax specialist to help file US tax returns, it will definitely save you time and give you peace of mind, and it could minimise the amount of tax you could ultimately pay by ensuring all the tax breaks, exemptions and deductible expenses are taken into account, as well as reducing your risk of double taxation.
Obviously the more time, stress and tax saved will vary on your personal circumstances and how complex your financial situation is.
For peace of mind, and a stress-free US tax return, why not ,,contact us today and ensure your tax return is as accurate and as beneficial for you as possible.
For updates featuring tax changes, reminders for deadlines, pointers on how to maximise your accounts, and information on Everfair Tax and their activities: you need look no further than our news & resources pages.View More
Need some UK, US or International advice?
Contact us now & we will get back to you as soon as we can