This a loaded topic, , and yes this is a design blog…. BUT if you’ve been a follower of my career for a while, you know that I’m an American expat living abroad and sometimes I like to talk about life/business topics here. I solely operate decor8 since 2006 while living in Boston and Germany, but I’m full-time abroad now and plan to stay on this side of the pond. You can imagine that my American friends are quite curious about how I run my company, particularly with taxes. This post should be a massive help to anyone who either lives abroad or who wants to because the diamond I’m about to hand you will shave years of stress and migraines off of you live.
But first, a little back story on why this is so important that it’s showing up today on my blog. First, you don’t even WANT to know the amount of time and energy I’ve spent researching tax laws before I relocated, the hours spent with my American accountant, more hours researching law updates (and changes) since I’ve relocated, and the thousands of dollars I’ve spent filing over the years through two accountants both in Germany and Boston. It’s really a nightmare when you’re self-employed but I imagine equally tricky if you’re working for an American firm living abroad. In both situations, you have to know what you’re doing.
As crazy as it is, American expats (both U.S. citizens and permanent residents) must file annual U.S. federal income taxes while living and earning income abroad. Even if you earn ZERO you have to file. America is one of the only countries that requires this. The only way around it is if you give up your American citizenship, and even then, there’s a wait time meaning you still have to file annually for a specific period. If you decide to stay forever in your new country, you still need to file each year. What if you don’t? Penalties, penalties, penalties and in some cases, you can lose your passport. Yeah, fun stuff.
Also, a bit of advice – Don’t rely on what you read in expat forums regarding taxes and small business because 99.9% either won’t apply to you specifically, or it’s outdated. Sometimes, you run into the typical know-it-all expat who likes to play sofa accountant but trust me, you need professional help with your taxes. Knowing how to claim tax breaks unique to American citizens living abroad, such as the Foreign Tax Credit and Foreign Earned Income Exclusion, requires both expat and tax expertise.
Plus, there is another complication to all of this: U.S. expats have to report money in foreign accounts. Fun! And wait, another: For expat state taxes, each state has different definitions of who qualifies as a resident, and seven states (including Florida) don’t have income tax requirements. Isn’t this fun? Oh and currently, COVID-19 & Stimulus 3.0 payment updates for expats are in effect too and you need to know how that works so this is why you need H&R Block to handle your taxes going forward and it’s easy – just visit their and get started.
It doesn’t have to be a nightmare anymore, because finally someone was smart enough to realize that expats require tax help – . They recently announced a new online do-it-yourself software for U.S. expats who want to file on their own. Thank God, really. Now that this service has launched I will most definitely sign up and use it going forward because the H&R Block system will save me money, give me more control over my finances, and hopefully take some of the pain away from annual filing.
Ok so let’s be transparent here. Pricing. DIY filing on their site starts at $99 for simpler returns covering employment income (like if you are working for a company but you live abroad), but more complex tax situations such as those who are self-employed, own property, or have investment income, stocks, etc. can also use the software; but higher fees will apply that service starts at $149.
At the moment, this is the ONLY company where U.S. expats can choose how you want to file – with the help of a tax expert or DIY style with online tax software designed for you. Filing through this service also allows you to feel confident that you’re filing correctly so that you can avoid penalties later on.
I’m so relieved and happy to hear that a service like this finally exists. I’ve never before had anything like this to use so I’m grateful that this service is out there now. I hope that this post has helped you. Please comment below if you have any questions.
Love,
Holly
Photo: Holly Becker for decor8
(This post is sponsored by H&R Block, all text and opinions therein are my own.)
