US Expats: Why use an accountant who specializes in expat tax returns?
1. US based accountants may be unfamiliar with the processes needed to be taken care of:
True, your US based CPA may have passed their exam 20 years ago and done well. However, 20 years of doing returns for US based clients means that they most probably aren't reviewing aspects pertinent to expats, nor are they trying to stay up to date on new developments.
2. Mistakes these US based accountants commonly make can cost you dearly:
Some things I've seen:
Earned income credit claimed in error - only US residents can claim it.
Foreign income exclusion claimed instead of foreign tax credit, thus causing no refundable child tax credit to be available.
Foreign income exclusion based on bonifide residence, instead of physical presence, for those that actually met the requirements for physical presence, resulting in increased audit risk.
Forgetting to ask about/include foreign income on a tax return.
Incorrectly filing state returns, resulting in a higher tax bill, or credits claimed in error.
Not being aware of the option to recommend filing jointly with a foreign spouse, resulting in years of missed refunds.
FBARs (report of foreign bank accounts) have not been filed.
Unfamiliarity reading foreign wage statements, resulting in errors.
The most common, by far:
Forgetting to fill out Schedule B, reporting foreign bank accounts.
When the IRS sends out a penalty letter, arguing that you relied on your accountant is a very weak excuse! You signed the return, you're responsible!
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