A More Friendly US IRS?
A new attitude at the Internal Revenue Service isn't necessarily good news for expat American taxpayers
Could it possibly be true?
Once loathed, and often for good reason, the governmental bureaucracy has worked hard, it seems, to earn the disdain of US taxpayers.
This is especially true of expats, who have tried to wade through the ever-changing regulations, experienced huge migraine headaches discussing their unique situations with IRS agents who seldom understood their own regulations, and generally found themselves paying more into the tax system than was fair -- or required!
The IRS has recently made significant changes that are actually intelligent and long overdue. It sounds like an oxymoron: the IRS making intelligent changes. But, don't be too rash, despite being understandably dubious.
The most readily observed change can be found in attitude. You will find IRS agents willing to take your call in a courteous and friendly manner to answer virtually any question.
More astounding is that they will actually help instruct you to reduce your tax liability.
Further, most expats will be thrilled to learn of multiple changes relative to IRA, Roth IRA, 401(k), SEP and other retirement plans that are of huge value to the taxpayer.
Before we get overly excited about the prospect of a friendlier IRS, let's have a reality check. Ask yourself, "Why, pray tell, the change in attitude?"
The raw truth probably has something to do with the number of returns and their timely filing in an accurate manner.
The IRS's coffers are well served by fewer extensions, fewer audits and re-filings due to errors, fewer proceedings to collect unpaid taxes, and fewer stupid tax-evasion schemes that don't work anyway.
Interestingly, expats cause a larger percentage of multiple extensions, audits and re-filings than the general public. You would think that the IRS would be particularly sensitive to meeting the unique issues expats experience, right? Wrong answer, but thank you for playing!
More Americans are working overseas than ever before, and the trend seems to be increasing. The global reach of US companies is no longer limited to the huge mega-corporations. Virtually all of the S&P 500, NASDAQ 1000 and Russell 1000 companies boast an international presence.
Further, the number of self-employed expats is growing year-over-year at an unprecedented rate.
The unfortunate reality is that, although IRS agents may be friendlier and more helpful, their assistance regarding expats' unique issues is woefully lacking.
The reason stems primarily from the myriad of US treaties with countries around the globe. Each is different and impacts the expat differently.
So, the best expat solution is to seek and find a qualified US tax-preparer that is knowledgeable about the intricacies involving the country of residence. Although daunting, it can be done.
While it is not necessary to pay huge preparation fees for this specialized expertise, remember that you usually "get what you pay for".
Do not rely upon your local tax preparer back home, however. Chances are they are only broadly aware of overseas taxing regulations.
NALICO is a Prague-based provider of US expat tax-preparation, international health insurance, and creative US-designed financial solutions. For contact details see NALICO's Prague Directory listing.
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