U.S. Tax Services For Expats

  Living in Switzerland is a fantastic experience but if you’re one of the 40,000 Americans living in Switzerland, there are some important things you need to know about paying the US taxes Switzerland residents are required to pay. US tax laws are something that can be daunting but they don’t have to be. Knowing the basics of how taxes work for expats like you will help you avoid any tax penalties in the future. All US citizens and US green card holders who earn a minimum of $10,000 (US Dollars) (or just $400 in self-employment income) anywhere in the world are required to file a US federal tax return and pay tax to the IRS. It doesn’t matter where you live or where your income is generated, a US federal tax return is required. The good news is that doesn’t necessarily mean that you’ll owe US tax to the IRS. If you are paying income tax in Switzerland, there are several tax exclusions and exemptions available to prevent you from paying tax twice on your income and being required t...

  Greetings, non-U.S. entrepreneurs. If you’re looking to establish a business presence in the United States, a Limited Liability Corporation (LLC) might be the perfect entity for you. These entities are easy to form and inexpensive to maintain, making them a popular choice for non-U.S. persons. However, there is a critical issue that many are not aware of – the tax filing requirements that come with LLCs. So, what exactly is a U.S. LLC? Despite its name, an LLC is not taxed as a corporation. If an LLC has only one owner or member, it is treated as a disregarded entity, and any income generated is taxed on the owner’s individual income tax return, regardless of its source. This means that if the income generated by the LLC is deemed taxable in the United States to nonresidents, a non-U.S. owner would have to file a U.S. income tax return. But here’s where things can get a bit tricky. While a single-member U.S. LLC is treated as a disregarded entity for tax purposes, it is still con...

  Life insurance, mutual funds and ETFs are popular investments for US persons living abroad. However, if not properly executed they can fall under the rules of a “Passive Foreign Investment Company”, aka THE PFIC. If this happens, expenses can rise dramatically, and the investment can become more costly than beneficial. Understanding PFIC’s requires hours of study and calculations to determine if one is subject to PFIC treatment. However, we will leave the links below for those who, like us, are fascinated by esoteric tax rules. One example of PFIC’s that we see often in our practice is foreign life insurance. As the US tries to discourage Americans from making foreign investments, it issues complex rules with punitive consequences on these investments. Income from these investments can be subject to the highest US marginal income tax rate as well as interest that accrues from the first day of ownership. When adding all this together, easily 50% of the gains from foreign investmen...

  As an American expat, you may have heard about US tax compliance laws like FATCA but you may not know what impact these tax laws have on you as an American abroad and what compliance with them is required. The FATCA legislation has forced foreign financial institutions to report assets held by Americans directly to the IRS. Tax compliance reporting requirements have always been important but FATCA has serious consequences that make compliance with tax laws more important now than ever. What is FATCA? FATCA stands for Foreign Account Tax Compliance Act and this legislation was passed in 2010. FATCA is a broad yet complex set of rules designed to increase tax compliance by Americans that have financial assets held outside the United States. This is largely a response to recent off-shore banking scandals that revealed that many Americans were keeping large financial holdings in Swiss bank accounts without reporting or paying the US tax due on those assets. FATCA created some new sel...

  If you are an American abroad who has never filed a US tax return, needs to get caught up on your filings, or to correct filings from prior years, we have good news for you. The IRS offers a program called the Streamlined Filing Procedure that allows non-filing Americans to catch up on their taxes without facing harsh penalties. Using the Streamlined Filing Procedure, eligible taxpayers can file the past three years of tax returns and the past six years of the Foreign Bank Account Reports (FBARs) without being subject to the typical penalties for late filings. But this program is only available if you file proactively, without first being contacted by the IRS. At US Tax Services AG, we specialize in both the Streamlined Filing Procedure, and the expatriation procedure. Often these go hand in hand, especially when someone has been unaware they have a filing requirement and wish to get caught up quickly to facilitate their expatriation. Please contact us with questio...