Expat Taxes: 14 Questions You Need to Ask Your Tax Advisor

Nick Hodges, CPA/PFS, MBA, CFP

We receive questions nearly every day from American expatriates. Most of their emails express confusion and distress surrounding an expat’s reporting and filing requirements. Don’t be fooled, the IRS Tax Code regarding Americans living and working abroad are some of the most confusing regulations, whose application may be different for each expat. Be sure you work with a tax professional experienced in helping American expats maximize their tax benefits and minimize their tax liabilities.

Make sure you ask these important questions:

Practice

1. Where are they located? Even if you never have to meet them face-to-face, the professionalism required of a firm conducting a bona fide business is important.
2. What professional licensure(s) do they hold? Make sure that the professional you would like to use has an active license in good standing.
3. What is the size of the practice? Too small, and they will not be able to provide you the support you need. Too large, and you are just a number, dealing with a junior partner being trained for larger arenas. Know who is going to be there to help you if the IRS comes knocking at your door.

Experience

4. How long has the firm been filing returns for American expats? Experience over time provides perspective with respect to interpreting tax code and applying it to your unique situation.
5. What is their familiarity with these tax forms and filings? Can they explain them to you in terms you understand?
   • Form 2555 (for foreign earned income exclusion)
   • Form 1116 (for foreign tax credit)
   • Form 1040NR (for nonresident aliens)
   • Form TD. 90-22.1 (for foreign bank accounts)
6. Do they share their experience with expat matters? Experience is sometimes the best teacher, and the best teachers share their experience with others.

Relationships

7. Who will YOU be dealing with? Is there an actual licensed professional who will be ultimately responsible to take care of you and your financial world?
8. How do you feel after talking with them? Whomever you work with should be dedicated to educating you on how best to handle your unique situation; they should be able to explain your issues and the appropriate tax regulations in terms you understand.
9. Are they committed to long-term relationships with their clients? Are they going to be there for you in the long haul and through the many phases of your life?
10. How does the firm handle your private, personal information? Is it shared with outsiders or shipped out of the country for processing?

Services

11. What ELSE do they do? If the firm offers additional financial services, they can integrate your tax and financial information, offering you more comprehensive advice. If the firm is technology savvy, they can provide secure, on-line communications, storage, and access to account balances wherever you are.
12. Do they make it easy for you to work with them?
    Do they offer:
    • Tax Organizers that pull all your information together
    • Secure, Online Document Vault to help you keep all your information in ONE place
    • Financial Tools to help you budget and plan ahead
    • Monthly Newsletter updates that keep you informed of tax law changes back home
    • Voice Over Internet Phone services to help keep costs down when you just have to talk to someone
13. What if your world changes?
    How can they help you:
    • Start a business
    • Buy property
    • Protect your assets
    • Manage your changing family needs
14. What will it ALL cost? Many tax professionals individually quote their various services and charge you for the time they spend on every call. Others provide comprehensive packages for one annual fee. What you pay for their services should not be a mystery.

Take the time to thoroughly interview the tax professionals you are considering to help you manage your taxes and finances, whether stateside or abroad. Prepare well for your overseas adventure by planning ahead with a experienced tax and financial professional.

These kinds of conversations are all part of our overall services to our clients at NCH Wealth Advisors. Please contact our office if you have any questions: (866) 729-6425. We are happy to help provide the direction you need.

Please feel free to pass this along to anyone you think might benefit from this information. We appreciate all referrals.