US tax filing obligations for American citizens and Green Card holders living in Switzerland

Many U.S. citizens and Green Card holders wrongly assume that they do not have to file a US tax return, because they live abroad or they don’t owe taxes. As an American citizen or Green Card holder you are required to file a US tax return, regardless of where you live, as long as your worldwide income is over $ 10’150 (single filing status, different amounts apply for other filing status). US citizens and Green Card holders living abroad, however, have different options available to reduce or even eliminate the actual tax owned in the US. For example, you can make use of the “Foreign Earned Income Exclusion (FEIE)”, which essentially excludes the first $ 99’200 (for 2014) of your foreign earned income from US taxation. Also, you can claim for a “Foreign Tax Credit” for taxes paid on your foreign income, under the tax treaties which the US has with many countries. Unless you properly file a US tax return, however, you cannot take advantage of these benefits. Your minimum US tax filing requirement includes the filing of a form 1040 (“US Individual Income Tax Return”) with the applicable schedules A (“Itemized Deductions”), B (“Interest and Dividend Income”), C (“Profit or Loss from Business”), D (“Capital Gains and Losses”) and E (“Supplemental Income or Loss”). To make use of the “Foreign Earned Income Exclusion” or the “Foreign Tax Credit” you will have to submit forms 2555 (“Foreign Earned Income”) and 1116 “Foreign Tax Credit”). Depending on your personal situation, you may be required to file additional forms, such as the form 114 (“Report of Foreign Bank and Financials...

I am an American citizen or Green Card holder living abroad and have not filed any tax returns in years – what are my options to come compliant with the IRS?

As an US citizen or Green Card holder you are required to file a US tax return, regardless of where you live. Many US citizens and Green Card holders wrongly assume that they do not have to file a US tax return, because they live abroad or they don’t owe taxes. As a result, many US citizen or Green Card holder are non-compliant with their US tax situation exposing them to the risk of criminal prosecution and severe penalties. Since 2012, the IRS provides options for delinquent tax filers to come compliant with their tax situation. Depending on your circumstances you can make use of the “Streamlined Filing Compliance Procedures” or “Offshore Voluntary Disclosure Program (OVDP)”. Filing under the “Streamline Filing Compliance Procedures” requires to meet high eligibility criteria, but allows for a $ 0 penalty treatment. Filing under the OVDP results in most cases in financial penalties. Effective July 1st, 2014 the IRS has reduced the eligibility criteria for the “Streamline Filing Compliance Procedures”, allowing more delinquent taxpayers to benefit from the much kinder procedure. If you are non-compliant with your US tax situation and decide to make use of the “Streamlined Filing Compliance Procedures” or “Offshore Voluntary Disclosure Program (OVDP)”, you must choose one or the other. If rejected from the “Streamlined Filing Compliance Procedures” you may not later enter the “Offshore Voluntary Disclosure Program (OVDP)”. Moreover the “Streamlined Filing Compliance Procedures” does not come with the guarantee that the IRS will not recommend criminal prosecution if rejected. Under both the “Streamlined Filing Compliance Procedures” and “Offshore Voluntary Disclosure Program (OVDP)” you will be required to back-file...

myCPA GmbH website now live!

Welcome to the new website of myCPA GmbH! myCPA GmbH provides professional tax services for American citizens, Green Card holders and other foreign nationals residing in Switzerland. Benefit from my vast experience as US Certified Public Accountant (CPA) and Swiss Certified Expert in Accounting & Controlling. Understanding your tax situation and preparing your US and Swiss tax returns can be daunting. You can spend a lot of time figuring your tax requirements and yet risk making costly mistakes or omissions or even risk tax non-compliance. Let myCPA GmbH take care of your tax returns! I will make the tax planning and preparation process as easy as possible for you. All you need to do is provide your prior year tax returns and some other documents and information. I will then help you understand your personal tax situation, identify tax optimization options and prepare your Swiss and US tax returns at affordable and transparent rates. I am an Internal Revenue Service (IRS) registered Professional Tax Preparer and an IRS authorized e-file provider for electronic tax return filing.  Use the contact form to receive a free quote! © myCPA GmbH – 2015 Disclaimer: myCPA GmbH informs you that any tax advice contained in this article was not intended or written to be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties imposed by the Internal Revenue Code. Information contained in this article is for the general education and knowledge of the reader. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a...

Another new tax form for Americans and Green Card Holders overseas

The Affordable Care Act (ACA) will impact US taxpayers for the first time in fiscal year 2014, for which US income tax returns are filed in 2015. Americans and Green Card Holders living abroad should be aware of the important need to attach a completed Form 8965 to their tax returns. Form 8965 allows you to describe your status as an overseas resident, which indicates to the IRS that you benefit from “deemed covered” status by a foreign health plan and do not need to participate in a US plan. If you do not attach Form 8965, you may be subject to the USD 600 penalty for not having US health coverage. US citizens living abroad are subject to the individual “shared responsibility” provision under the ACA. However, US citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having “minimum essential coverage” for that 12-month period regardless of whether they enroll in any healthcare coverage. In addition, US citizens who are bona fide residents of a foreign country for an entire year are treated as having minimum essential coverage for that year. US citizens who do not meet the foreign physical presence or foreign residency requirements must have essential coverage, or qualify for a coverage exemption, or make an individual shared responsibility payment when they file their federal income tax returns. Note that “minimum essential coverage” includes a group health plan provided by an overseas employer. Use the contact form to receive a free quote! myCPA GmbH provides professional tax services for American citizens, Green...

Do I need to make payments for my estimated US taxes?

There is no general answer to that. Rather, it depends on your situation. The rule is that you must pay your taxes as you go. If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment. To determine whether you need to make quarterly estimates, answer these questions: Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you’re safe—you don’t need to make estimated tax payments. Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the tax that you will owe for this tax year? If so, then you’re in the clear, and you don’t need to make estimated tax payments. Do you expect that your income tax withholding will be at least 100 percent of the tax on your previous year’s return? Or, if your adjusted gross income (Form 1040, line 37) on your tax return was over $150,000 ($75,000 if you’re married and file separately), do you expect that your income tax withholding will be at least 110 percent of the tax you owed in tax for the previous year? If so, then you’re not required to make estimated tax payments. If you answered “no” to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the...