Things expats and immigrants should know before filing the 2021 income tax in the USA
The Covid 19 pandemic has made the already complicated tax scenario even harder to navigate through. People have to go through piles of documents to realize what laws are applicable to them and what is not. In times like these a personal tax consultancy service really helps.
The tax filing becomes especially difficult for the non-residential US citizens or the expats and the immigrants living in the USA. Below are few tips for both these communities that will help them file income tax returns properly and avoid any altercations with the US revenues department.
Expats
- Reporting the income generated from all the sources be it national or international is always advisable. This helps the government keep a track record of all the activities of the expat in the foreign country and eases the paperwork when the expats decide to return.
- Expats are many times eligible for foreign income exclusion. But this is only possible if all the incomes have been properly mentioned by the applicant. The IRS does a thorough checkup of the documents and if eligible the expats can save up to a hundred thousand US dollars.
- Keeping a detailed ledger of all the international travels helps a lot in calculating the taxable incomes and also while getting audited by the IRS. Even if the citizens have been abroad for long, a detailed journey schedule with the income generated in the foreign country helps to check if the citizen can actually be treated as an expat.
- Expats should keep in mind that they receive an extension of two months and should pay their taxes by June 15th as opposed to the regular April 15th for everyone else. Still, they should always recheck the dates and not wait for the deadline to avoid any kind of late fees and penalties.
Immigrants
Not everyone who is living in the USA needs to pay the same amount of taxes. Therefore it is better to define who qualifies as a resident and non-resident. Like US citizens, the resident aliens have green cards from the government. This allows them to work for any American firm. This class has to be in the country for at least 183 days over a period of three years. Now here are the facts to be kept in mind
- If the person is a resident alien with a green card they are liable for paying all kinds of US taxes just like a natural-born US citizen. The calculations for becoming a resident alien are tough and therefore consulting a tax and accounting firm is advisable.
- If the immigrants are non-residential and visit the USA from time to time. All their income is not taxable by the US government. The IRS will only focus on tax filing and returns for the income generated in the USA and via other US channels and services.
The whole tax filing process gets complicated with different forms and bylaws for different cases. The Accounting and Tax company is an expat and personal tax consultancy service in different states around America providing support to these people for easier tax returns.
