Author Topic: Help for US Citizen Working in Europe and Filing taxes in US and Abroad  (Read 1648 times)

Stagleton

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I am a US citizen working in Europe and filing taxes in Europe and the US. I have a firm that files my taxes for me in the US but they charge a good amount of money and seem pretty crappy. I really don't want to mess up filing my taxes as there are steep penalties and fines, but I think there is a lot of money to be saved by filing the taxes more efficiently. Does anyone have any recommendations for a company who could help me or ideas how how to find a good company? I was also thinking about Turbo tax or something, but not sure if they will fit my needs since they cater more to people who live and work in the US and unfortunately my taxes are a little more complicated.

Bryan_in_Ger

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Re: Help for US Citizen Working in Europe and Filing taxes in US and Abroad
« Reply #1 on: October 10, 2016, 12:01:23 PM »
Hey Stagleton,

depending on how complicated your situation is, you could file taxes yourself.

Anecdotal Evidence: My aunt is a tax specialist at a large US Tax Prep company and I just asked her to file my US taxes when I moved to Germany since I thought it would be super complicated as well (I had never took on the responsibility of filing before since I got my first real job here right after college and my parents had their accountant take care of it when necessary up until then).  Luckily, one of her co-workers had a son who lived in the UK for a few years, so they were confident they could take care of things.  After looking at what needed to be filed, it looks to be quite simple in my case (single, no dependents, no house, no large financial holdings, etc.), but I can't bring myself to terminate my aunt's tax-services.

I file my taxes in Germany myself since it is also relatively simple (again, due to my personal circumstances).


Do you still have a copy of a prior year's tax return from your current tax specialist?  As long you haven't had any major life changes (bought/sold a house, windfall, large capital gains), you should be able to copy the info from last year into the current year's return with few changes (your income will be slightly different due to the exchange rate for instance).  Then you could crank out next year's return pretty easy.

A few months back I replied to a US/German couple and updated it a few days back since another US-citizen living in Europe posted some questions in the investment page: http://forum.mrmoneymustache.com/investor-alley/us-ger-mustachian-couple-needs-us-investment-advice/msg1013356/#msg1013356  Even though it sounds like you know there are some pitfalls to be aware of, the info might help you out as well.  Better safe than sorry.

Cheers,
Bryan

gxl84456

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Re: Help for US Citizen Working in Europe and Filing taxes in US and Abroad
« Reply #2 on: October 17, 2016, 04:03:59 PM »
Hi Stagleton,

I am also a US ExPat living in Canada, but previously lived in England and I know what you're going though.  Initially I had the pros doing this work for me too, but it was costing between $1000-2000/year.  So in the spirit of Mustachianism,  I eventually decided I would take it on myself, but it was very daunting because there are so many schedules to file beside the basic 1040 (3520,3520-A, 1116 (4 types), 6521,8962, 8891, not to mention all the FBAR stuff.  If u decide to go for it, use the TurboTax Home and Business edition, most of the other programmes are worthless since they don't recognize for foreign source income and assets.  Then you can take the last last return you filed (presumable prepared by an accountant) and use that as a template.  Unless you do a lot trading, it should relatively straight forward.  Once you do it a few times, it pretty satisfying doing it yourself, plus I found all these mistakes my accountant was making because these type returns are unusual for them too.

One final word of advise, which you probably know already, don't open up any Tax free savings accounts (similar to US Roth IRA) that aren't already recognized under US/German Tax treaty.  This includes stuff for your kids like educational savings accounts.  The reason is that these are considered by the IRS as a non-taxable trusts and they trigger the requirement of filing a schedule 3520 to the US treasury (not the IRS) as well as the schedule 3520-A.  These schedules are not a part of Turbo Tax and must be filed separately from your regular return.  Also they extremely complex and require knowledge of accounting to complete.  So unless these accounts are huge and your saving many thousands in taxes every year, my recommendation is to stay clear of them as they are not worth the hassle and are the most likely thing to attract scrutiny from the IRS.

Good luck man.