When living abroad, many American citizens watch the looming April tax deadlines with a combination of relief and apprehension. On the one hand they envision their many counterparts back home making the mad-dash to a mailbox by midnight in order to get postmarked in time, and are glad they are not apart of it. But on the other, because your tax situation is so different than your average counterpart back home, it is tough to keep up on what you owe, when you owe it, and what your allowances may be. Lucky for you all, there is now a local company set up to help you ensure that you are keeping as much of your own money as possible, all while keeping you worry-free about getting the tax man his due. We sit down with Danielle Huss the General Manager of The American Tax Bureau to see why this is so important.
Why open a U.S. tax preparation company in Kuwait?
Currently, there are many U.S Citizens as well as many permanent residents residing in Kuwait. There are no U.S. tax preparation companies dedicated to help these citizens with their tax needs while living and working outside the United States. Every year the tax laws change and are consistently difficult to understand. Many citizens are unaware of what they are required to file and why they must do so; therefore, American Tax Bureau was founded to relieve U.S. Citizens and permanent residents of the stress that is involved with preparing and filing their tax returns every year.
What is FATCA?
It is the Foreign Account Tax Compliance Act (FATCA), and certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS. Foreign Financial Institutions will be required to submit annual reports about financial accounts that exceed $50,000 held by U.S. taxpayers directly to the IRS. Foreign entities in which U.S. taxpayers hold a substantial ownership interest are also required to report information. Kuwait’s Ministry of Finance has already formed a committee that is preparing to sign the FATCA agreement before the July 1st deadline this year. Failure to report foreign financial assets may result in a penalty starting at $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.
Who is obligated to file a tax return?
By U.S. Federal Law all U.S. Citizens, including passport and Green Card holders, are required to file an annual tax return with the IRS, even if you do not owe any money. Unfortunately many people wrongly assume that because they have never owed money or they live and work outside the U.S., they do not have to file, which is not the case.
When is the deadline for filing a U.S. tax return?
For most taxpayers, April 15th is the deadline to file returns but U.S. Citizens living abroad have an automatic 2-month extension making the deadline June 15th. However, it is important to know that if you owe any money and do not pay the tax due by April 15th, interest will be charged from that date until the date the tax is paid.
What are the consequences for failing to file on time?
If you do not file your return by June 15th, you can be charged a failure-to-file penalty and interest on whatever you may owe. Greater consequences can occur for those who have never filed or haven’t done so for years including hefty fines, freezing and seizure of financial accounts, liens on physical assets, and even criminal prosecution.
If a citizen renounces their U.S. citizenship, would they still be responsible for paying taxes?
Yes, a timely filed tax return is still due for the year in which you renounce. It is a partial year return that will reflect from January 1 to the date the Certificate of Loss of Nationality (COLN) was issued. A person who renounced would still be required to pay any outstanding amounts due up to the date of renunciation. Also, an additional U.S. Exit Tax is required of those who qualify as a covered expatriate under one of three tests. One, if the individual has a net worth of $2 million USD or more at the time of renunciation. Two, if the individual had an average annual net income tax liability of more than $157,000 USD in the five years ending before the date of expatriation. Or three, the individual failed to certify that he or she had complied with all U.S. Federal tax obligations for the five years preceding the date of expatriation.
Is American Tax Bureau part of the U.S. Government?
No, ATB is a privately owned company in Kuwait. We are in compliance with all laws and regulations pertaining to the U.S. tax system but are not a U.S. Government entity or affiliated with the Internal Revenue Service (IRS). Like any other tax filing company, ATB submits client tax returns to the IRS as part of its service, but the IRS does not have access to confidential client information. Your financial information is protected at ATB, that’s a guarantee.
How can ATB help?
We offer an initial private consultation during which one of our qualified tax preparers will answer questions regarding your individual tax requirements ensuring you have an accurate understanding of your situation. We will thoroughly review your tax situation and prepare your return making certain that you do not over-pay the IRS, and that you get all deductions and tax advantages that you may be entitled to claim.