Debt Equity Finance

Life In a Box

The Internet super-highway opens up marvelous opportunities for expatriates to harvest expat tax advice and information from some of the greatest minds at reasonable prices from anywhere in the world. But it also emphasizes a crucial question: How do you know whom to trust? Sharing your intimate, personal financial information with a stranger is problematic at best.

Here are 25 questions to help any expat choose a tax and financial professional you can trust.

1. Physical office. Is there a real office you can go to? Even if you never have to meet them face-to-face, the professional integrity required of a firm conducting a bona fide business should be considered.

2. Reachable contact person. Is there an actual person who will be ultimately responsible to take care of you and your financial world?

3. Valid licensure. Does their home state licensing board affirm that the tax professional you would like to use has an active license in good standing?

4. FINRA background check. If the tax professional is also Series-7 licensed, do they and their broker dealer and have a clean history with FINRA?

5. Active insurance license. If the tax professional is also insurance licensed, does their resident state’s Insurance Commissioner affirm that they have an active license in good standing?

6. Clean history. If the tax professional is also a registered investment adviser, does their state or the SEC affirm that they have a clean history?

7. Age of business. when did you start doing US expat income tax returns? if too new do they have the experience you need. If they are nearing retirement, they may not have the interest to stay current with the changing regulations.

8. Size of practice. Are they a sole-practitioner? Or do a team of qualified professionals work with you? If you are dealing with just one practitioner, what do you do if something happens to them? who will help you with the IRS?

9. qualification of tax preparer. How big is too big? Will you have access to the senior professionals in the firm, or are you working with firms so big you are just getting the inexperienced junior preparers? Those who work at large, international corporations often have the opportunity to use large, international accounting firms, and pay thousands of dollars just to be ignored by inexperienced junior preparers. big can mean less attention.

10. Reputation of firm. Does the firms clients reward the firm with long-term relationships? Do you know what are their clients are saying about them?

11. other services. Does the firm offer other services to help you so you can get the “one-stop financial shopping” you need? If so, what are they offering? How do they help you understand which services you really need?

12. Name recognition. Are they nationally-known in their industry? and are they teaching other tax professionals? Do state CPA societies use them for seminars? The best way to really know something is to teach it to other professionals.

13. Online presence. Do they have a website that specializes in serving Expats?

14. Ongoing support. Can they continue to help you after you return to the US?

15. small business suport. What if you start a business? Can they continue to help you?

16. Expat tax forms. Do they know the proper use and filing of these forms:

–Form 2555 (for foreign income exclusion)
–Form 1116 (for foreign tax credit)
–Form 1040NR (for non-residence aliens)
–Form TD. 90-22.1 (for foreign bank accounts)

And more importantly, can they explain them to you in simple enough terms to help you really understand the tax challenges of being an Expat?

17. Fees charged. Are they charging too little for you to receive the quality, professional service your situation requires?

18. Quote for service. Are they charging too much (sometimes thousands of dollars) or do they hesitate to give you an upfront quote?

19.Personal interaction. Will a live person speak to you before they take your money?

20. Tax organization. Will they provide you with a specialized tax organizer to help you gather all the information you are going to need?

21. Access to important information. Will they provide you with a secure, online document vault to access your return and source information from anywhere in the world?

22. Financial tools. Do they have online financial tools that allow you to conduct your own research on various aspects of your financial world?

23. Tax law changes. Do they send out a monthly newsletter to keep you updated on tax law changes?

24. Information sharing. Will your personal, private information be shared with outsiders or shipped out of the country for processing?

25. Comprehensive coverage. Do they offer to go beyond just getting the numbers right, to working with you to get the answers right for your entire financial world?

Take the time to thoroughly interview the tax professionals you are considering to help you manage your expat taxes and expat finances. This simple step could save you from creating sticky situations in the filing and management of your expatriate taxes.

Life In a Box

President Obama is tagging your Foreign Earned Income Exclusion to help pay for huge federal budget deficits. He thinks to hide this motive behind recent White House announcements about U.S. companies, providing smokescreens such as: “I want to see our companies remain the most competitive in the world,” and “…the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”This is one reason you need Tax Help now, from a CPA Firm you can trust.

The reality is that with tax gaps estimated in the $400 billion range, this administration is hard-pressed to come up with new sources of revenues to fill the deficit. The US is expected to loose 0 billion each year from these kinds of tax abuses. Recovering these funds represent a substantial portion of the annual U.S. tax gap, which is why President Obama has authorized an additional $128 million for the 2010 IRS budget, which includes the addition of 800 new IRS agents. Do not be fooled, they have declared war on YOU and are coming after YOUR money.

First, they are going after the companies you work for because they see companies operating abroad as a viable source of additional revenues. Currently, companies with overseas operations pay U.S. taxes only if they bring the profits back to the United States. They can defer paying U.S. taxes indefinitely if they keep the profits offshore. Obama’s plan, which would take effect in 2011, cracks down on these loopholes so that companies would no longer be able to write off domestic expenses for generating profits abroad. It is estimated that this change alone would generate $210 billion in new taxes over the next 10 years, making a modest dent in the forecasted $1.8 trillion federal deficit. Rest assured, this administration will encourage any possible avenue to be able to bring these monies back into the U.S.

And, they are coming after YOU. The recently released IRS report on the 2006 tax year indicates that the Foreign Earned Income Exclusion might be another modest source for helping to fill the tax gap. In tax year 2006, about U.S. taxpayers living abroad reported approximately $36.7 billion in foreign-earned income and claimed nearly $18.4 billion in income exclusions. And that was three years ago. The US expat comunity continues to grow. Can’t you just see the wheels turning in the minds of our government leaders? Removing the Foreign Earned Income Exclusion could add billions to U.S. tax coffers.

Perhaps you think they won’t find YOU. The historic legal struggle that has cracked Switzerland’s renowned reputation for banking secrecy is part of an on-going IRS quest to identify nearly 52,000 suspect offshore bank accounts. When the IRS increases their workforce by 800 new agents, they won’t be hiring new college recruits. They have said fancy attorneys and other professionals that helped hide assets, will be hired. Now, multiply the number of suspected offshore accounts by the $10,000 or possibly $20,000 in allowable fines for non-reporting, and you come up with another modest number toward the filling of the U.S. tax gap. If you have been one of those ‘tax evaders’ thinking they can hide assets in offshore bank accounts, think again. The IRS is already searching for you, cracking the international bank privacy policies and gearing up to hire professionals to find you.

All of these items add up to making the American Expatriate look like a great big piggy bank to the current administration. While there will likely be a huge fight in Congress regarding closing the corporate loopholes, it is even more likely that the tax benefits associated with your Foreign Earned Income Exclusion will be taken from you. Fines for unreported bank accounts will soon become automatic bills. This means that for you, the individual American Expatriate, the stakes are high and getting higher if you seek to hide your income off-shore or evade paying U.S. taxes on that income.

What action do you need to take as an expatriate? Stay abreast of the latest information that develops about the foreign earned income exclusion. The best way to accomplish this is to work with a reputable advisor who will focus on keeping you out of the scrutiny of the IRS by keeping your activities well above board and within the law. Your advisor must be well-versed in the nuances of expatriate tax law, so check with your advisor about his/her expertise in this arena and be ensure you’ve chosen your advisor wisely.

Copyright (c) 2009 Nick Hodges

Nick Hodges,President of NCH WealthAdvisors,provides US expatriates with the best tools,strategies and planning techniques to help expats manage their tax and financial goals and dreams on a day-to-day basis regardless of their location. To claim your free gift, ExPat Life Portfolio Kit,visit his site at www.ExpatCFO.com