Expatriates and Foreign Nationals
M. Robinson & Company, P.C. attorneys work closely with employers and employees to achieve the best results.
Tax Services for Expatriates and Foreign Nationals
Our tax professionals perform the following services for U.S. citizens working abroad, sometimes known as expatriate Americans, and for foreign nationals working in the United States.
Tax Orientation Interview
Our tax professionals will meet with each employee to discuss what the employee may expect of us and what we may expect of the employee.
This meeting also allows us to begin to plan the engagement. We try to determine the employee’s filing status: married filing jointly, married filing separately, head of household, or single. We also begin to determine the employee’s tax status: citizen/resident or nonresident alien. We attempt to learn of major sources of non-salary income, such as the rental or sale of the employee’s home and/or the issuance or exercise of stock options. We also determine whether we will need to prepare a Form 673 for an expatriate American employee or a Form W-7 for a foreign national employee. We also determine if the employee benefits from the provisions of an income tax treaty.
Preliminary Tax Compliance
Our tax professionals will prepare a projection (informal tax calculation) of United States and related state income taxes for each employee so that there are no major surprises down the road. Where appropriate, we also:
- Assist expatriate Americans in completing and filing the Form 673 which estimates earned income exclusion and foreign housing allowance exclusion.
- Assist foreign nationals in completing and filing the Form W-7 so that the spouse and dependents of the foreign national can obtain their Tax Identification Numbers.
Determining an Appropriate Withholding Amount
The United States and state taxing authorities require employers to withhold taxes from salary. We typically review withholding amounts at least twice a year, sometimes more often. The determination of the appropriate withholdings must take into account (1) the United States earned income exclusion and housing allowance exclusion; (2) the anticipated United States foreign tax credit after considering the foreign earned income and housing allowance exclusions; and (3) whether a nonresident or noncitizen spouse has elected to file a joint income tax return with his/her spouse who is a United States citizen or resident. The withholding amount must also consider any other income the employee may have, including dividend and interest income, stock options, rental income arising from the lease of the employee’s home, and capital gains arising from the sale of the employee’s home.
Coordination with Foreign Income Tax Return Preparers/Filing Extensions
M. Robinson & Company relies on foreign income tax return preparers to prepare the employee’s foreign income tax returns and to timely provide us with their work product. Our tax professionals will put the employees’ United States and state income tax returns on extension. These extensions are only valid if an appropriate amount of income tax has been paid in by the original tax filing due date (April 15thor June 15thas appropriate). Our tax professionals will prepare a projection (informal tax calculation) of the employee’s income tax liability before we file the extensions so that tax underpayments, if any, can be corrected at the time the extension is filed.
For many expatriate Americans and foreign nationals data collection can be challenging. Our tax professionals work with each employee to coordinate the accurate and timely exchange of information.
U.S. and State Income Tax Return Preparation
United States income tax return preparation includes, but is not limited to: 1) making the joint income tax return election under Section 6013(g) if the employee or his/her spouse is NOT a United States citizen and wishes to use “married filing jointly” rates; 2) calculating the earned income exclusion and the foreign housing exclusion; 3) calculating the United States foreign tax credit; 4) calculating the moving expense deduction, if appropriate; and 5) preparing Foreign Account Tax Compliance Act (FATCA) disclosures. We also prepare all state income tax returns.
Foreign Bank Accounting Reporting (FBAR)
M. Robinson & Company will disclose the FBAR filing obligation on the United States income tax return and prepare the required FBAR. When preparing an employee’s FBAR, our tax professionals also consider the employee’s signature authority over the employer’s foreign corporate bank and brokerage accounts.
Tax Equalization Analysis and Calculation
M. Robinson & Company will provide employees with a calculation showing why they do not pay more in taxes than if they had stayed in their home country. This is critical toward maintaining employee morale.