TAX INVASION - Have you done them yet? don't fret...

Tax Invasion

April 20, 2018 8:08 pm by Editorial Team

So most of you by now have done your taxes – or if you are bit disorganized like me, you may have filed for an extension. Which means you can buy a little time and have them complete and delivered by October.

Navigating tax filing for foreigners (us) can be somewhat of a daunting task, in fact a lot of Brits don’t bother filing (big mistake)…read on for more info about that.

Let me start by saying I’m not a tax specialist, so for proper advice seek out a tax accountant, enrolled agent or a lawyer for more comprehensive and detailed advice.

April 15 is usually the yearly deadline to file your taxes but this year it was April 17, because once in a while, the regular date is disrupted due to a weekend or a holiday celebrated in the nation’s capital.

You are filing taxes for the calendar year previous – i.e. in April 2018 you file your earnings (profit and loss) for Jan.1 2107- to Dec 31 2017.

One main difference is that even if you are employed by a company you are still required to file yourself. There is no PAYE here. Also when filing out your start up paperwork for an employee, you will be asked how many dependents you are claiming. Note here that the more dependents you list the less tax will be taken out of your paycheck each week. But if you list 1 or 0 – you will probably have a lot of tax taken out of your paycheck each week, however the chances of receiving a tax refund after filing are greater.

KEEP ALL RECEIPTS – Take a photo of them in your phone and file them, so you can retrieve them easily – or use one certain credit card for all business transactions, so you can just check the statements each month too. I have a storage box that I put all my reciepts in and write the year on top and on the side. It’s advised that you keep at least five years of back-taxes, just in case of an audit.

I prefer to use a bookkeeper or a site called quickbooks, (www.quickbooks.com) that links up to my bank. This way each month it details my income and expenditure as I go along. This makes it SO much easier than spending days weeks in March trying to catch up.

Everywhere changes are made to our tax structure depending upon which party is in power. So it’s important to note what the changes are and how that might impact your filing(s).

I seek out the help of a Tax preparer to do my taxes each year – for two reasons – firstly its considered a business expense (so I can write it off), and secondly if ever, (God forbid) am audited then the preparer has to come with me or go on my behalf to the meetings with the IRS and answer any questions, or negotiate if there are any discrepancies.

Be careful to whom you entrust your taxes as there are plenty of dodgy operators out there who will charge you a low fee, but file incorrectly and disappear. Ask for referrals from friends or check out Yelp!

Also make sure you go in to the tax preparer organized with your top P&L (profit and loss) sheet. They won’t be too happy if you show up with three carrier-bags of receipts, they won’t have the time to sort through your affairs and you will probably have to rescedule your appointment.

Now it gets a little tricky if you are self-employed and do business both here and in the UK. Or have assets and own property back in the UK. It is my understanding that there is a tax treaty between the UK and USA but a form called an F-BAR must be filed declaring your worldwide earnings and assets. (Perhaps FUBAR would be more appropriate) Failure to do this can get you in a lot of trouble. visit irs.gov to fill out the form.

Its always a little tricky knowing what to do each year, that’s why it’s best to seek out an accountant that understands  the tax rules in both countries. It’s a bit easier for those that live here permanently and have no assets back in Blighty and some people know and like to file alone using certain filing websites.

However, it can be a blooming headache for most, remember you aren’t alone and it might be fun to get together with a group of friends and do it all at the same time over a few beers.

Just remember to stay focused on the task, breathe and sort your expenses by category and not month by month, it will save a lot of time, trust me.