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Financial Translation Services for Expatriation Process

Legal Document Translation Services for Expatriates

We’ve blogged about the need that expats have for accurate financial document translation services to fully understand the foreign tax statutes and their tax liabilities. Today, many Americans and green card holders living abroad are finding it increasingly difficult to keep up with the changes in IRS rules and regulations affecting their lives.

For example, the implementation of the Foreign Account Tax Compliance Act (FACTA) has, in some cases, either forced Americans to close their bank accounts or severely limited options for investing with non-US banks and insurance companies. Couple this with the increasing complexity in filing mandatory US tax returns and reporting requirements, and it’s no wonder some people are starting to ask: ‘Is it time to give up my US citizenship?’

It Depends

The answer to this question depends on individual circumstances. For those who have never lived in the United States or with no assets, family ties and other emotional connections to the US, there could be valid reasons to consider expatriation.

The steps to do so first require an individual to be current on US tax filings – as this is often an initial stumbling block that needs to be addressed. Becoming compliant is anything but straight-forward and one should always work with a professional tax preparer. These professionals should be familiar with overseas issues and should maintain professional designations (i.e. CPA, Enrolled Agent etc.).

Once tax filings are in order, the remaining process towards expatriation is relatively straightforward. The one exception, however, are those individuals with a net worth of $2 Million or more or with an average tax bill of $151,000 or greater over the past five years. These individuals could face an exit tax on unrealized income upon expatriation.

A Growing Trend

To get a sense of the volume of people giving up their US citizenship, in 2008 the figure was 235. By 2011 that number has grown to 1780. Although this may seem like a lot, when you consider there are well over 5 million Americans living outside the United States, the figure is relatively small.

If you plan on joining these numbers, one thing you should avoid when dealing with overseas planning is complex and questionable solutions. Offshore schemes often create tax nightmares when they are challenged by the IRS, and those who sell them cannot or will not attempt to defend them to the IRS. Most of these schemes are ‘listed transactions’ that must be disclosed to the IRS and carry crippling penalties for failure to comply, intentionally or by ignorance.

Other Options

Finally, for those who prefer to keep their US citizenship, there are options for managing your finances abroad. As always, the best place to start is to seek the ongoing advice of a US tax professional who can file annual US tax returns, report overseas accounts and keep you current of the ever changing rules. A specialized professional can also play a key role in identifying alternative opportunities within your planning, such as allocating appropriate assets to nonresident alien spouse.

Pros and Cons

In summary, it is possible for Americans to live enjoyable lives abroad, even with the unique challenges posed by their US citizenship. Besides, the pride of being a US citizen, just think of the shorter immigration lines you have deal with at O’Hare and JFK airports!

Contact our financial translation service to obtain professional document translations from and into Turkish, German, French, Korean, Dutch, Chinese, Polish, Russian, Czech, Japanese, Portuguese, Spanish, and other foreign languages.

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