How to Compare Tax
Preparation Companies

Ines Zemelman, EA 21 February 2018
Who Should Use This Guide?
TOP EXPERTS IN THE FIELD
Anyone who has investments outside of the US, including mutual funds. If you have already invested in or are considering investing in foreign-incorporated investments, it’s important for you to understand the tax obligations involved and what you can do to avoid paying unnecessarily punitive fees, taxes, and interest.
Why Use This Guide?
TOP EXPERTS IN THE FIELD
Failure to understand the filing ramifications of PFIC can turn a great investment sour. PFIC tax rates can reach near or above 50%.
How To Use This Guide?
TOP EXPERTS IN THE FIELD
Apply the considerations we discuss below before investing. If already invested, please get in contact with Taxes for Expats to make sure that you are not in a precarious position. You invest to let your money work for you, but failure to understand the PFIC regime may unfortunately turn that equation against you.

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.

1

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

2

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English.

Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

additional services You May Need
AMENDED RETURN FORM 1040X $100
CARRYOVER OF TAX CREDITS FROM PREVIOUS YEARS (if previous return was done by another company and the amount of carryover was not reported) $125
AMENDED RETURN FORM 1040X $100
CARRYOVER OF TAX CREDITS FROM PREVIOUS YEARS (if previous return was done by another company and the amount of carryover was not reported) $125
additional services You May Need
AMENDED RETURN FORM 1040X $100
CARRYOVER OF TAX CREDITS FROM PREVIOUS YEARS (if previous return was done by another company and the amount of carryover was not reported) $125
AMENDED RETURN FORM 1040X $100
CARRYOVER OF TAX CREDITS FROM PREVIOUS YEARS (if previous return was done by another company and the amount of carryover was not reported) $125

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy.

3

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English.

Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

Sample online chat shown. Prefer a call? We're happy to do so. Give us a ring or request a callback so we can call you!

3

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English.

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.

The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

The standard chunk of Lorem Ipsum used since the 1500s is reproduced below for those interested. Sections 1.10.32 and 1.10.33 from "de Finibus Bonorum et Malorum" by Cicero are also reproduced in their exact original form, accompanied by English versions from the 1914 translation by H. Rackham.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default

model text, and a search for 'lorem ipsum' will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).

3

Lorem Ipsum is simply

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

Why do we use it?It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using 'Content here, content here', making it look like readable English.

SITUATIONAL ANALYSIS

Jane, from Dublin
Kate, from France
Kate, from France
Sandra, from Germany
Michaela, from Spain
Jane, from Dublin
Kate, from France
Kate, from France
Sandra, from Germany
Michaela, from Spain
  • Jane (US Citizen) earns €50k (55k USD) as a teacher in Dublin. Jane also earns €10k as a private tutor.
  • Jane’s husband, Mike, an Irishman, also earns €50k (55k USD) as a paramedic.
  • They have a joint bank account at AIB which has €12k (13k USD)
  • Jane does not need to declare Mike’s income on her return.
  • Jane will not owe tax to the US, but she must file a return annually, and file FBAR annually.
  • Jane does not need to file FATCA (form 8938)
  • Katie, a US citizen, moved to France for graduate school
  • Katie does not work while studying
  • Katie has a French checking account with a €3k balance, and savings account with a €6.5k balance.
  • Katie does not need to file a tax return, but she must file form FBAR annually as she has non-US bank accounts that in aggregate exceed $10k USD (€9.5k is $10.5k)

Katie is considering an internship at a local newspaper and wants to know what impact it would have on her taxes.

She is choosing between the following options:

  • €200 a month – equivalent of $2700 a year. No filing requirement.
  • €500 a month - equivalent of $6700 a year. No filing requirement if Single, Married Filing Jointly, or Head of Household. If Married filing separately, required to file tax return. Will owe no tax.
  • €800 a month – equivalent of $10800 a year. Filing requirement under any filing status. Will owe no tax.

Katie is also considering a graduate fellowship.

  • If scholarship payments are made for tuition/books – it is not taxable income.
  • If scholarship payments are ‘stipends’ for living expenses – this is taxable income.
  • Filing thresholds remain the same (both scholarship payments need to be added together). Will likely owe no tax in either situation due to foreign earned income exclusion.
  • Sandra was born in the US and her family moved to Germany when she was 5
  • Sandra has not been back to the US and never filed taxes
  • For the last 6 years, Sandra has earned €120k per year as a lawyer in Hamburg, and has investment accounts totaling €450k
  • Sandra needs to file annual tax returns, FBAR, and FATCA.
  • Between the Foreign Earned Income Exclusion, Foreign Tax Credit, and Foreign Housing Exclusion, Sandra will likely owe no tax.
  • Sandra should file through the Streamlined Procedure with tax returns (including form 8938) for 2013-2015 and 2010-2015 FBAR
  • Sandra must continue these forms annually (if she meets the thresholds)
  • Michaela is a green card holder who lives in Spain but does not pay tax to Spain and does not pay into the local Social Security System.
    • As a GC holder, Michaela has the same tax filing obligations as a US citizen and must file form 1040 reporting her worldwide income.
  • Michaela is a web designer who works remotely
  • Michaela is wondering how much she will be taxed on her earnings
    • If Michaela earns €500, Michaela must file a US tax return (over $400 threshold for selfemployment income). She will owe no income tax
    • If Michaela earns €5,000, must file, but would owe no tax to the US.
    • If Michaela earns €50,000, Michaela must file, but would owe no tax to the US.
    • If Michaela earns €500,000 and has €200,000 in business expenses. She can exclude from the net business income(€300k):
      • $100k for FEIE and up to $14K of housing expenses.
      • If she does not pay tax in Ireland the remaining income will be taxable in the U.S.
      • Regardless of the income exclusion, net self-employment income in each case will be subject to U.S. Social Security and Medicare tax - unless Michaela pays Social Security tax to Spain
        • There is no double taxation – if filed properly, Michaela will only need to pay Social Security Tax to Spain