Our service offering includes the following:
- Produce U.S. income tax returns
- Apply for filing extensions for your U.S. tax return
- Produce Foreign Bank Account Reports (FBAR)
- Apply for U.S. Individual Taxpayer Identification Numbers (ITIN) and social security numbers (SSN)
- Individual advice on your personal tax situation
- Participation in the Streamlined Program or Streamlined Foreign Offshore Procedure
- Advice in connection with relinquishing U.S. citizenship
- Advice on work assignments in the United States
- Support and tax advice for subsidiaries/branches of American companies
So that we can offer perfectly tailored advice, we work closely and extensively with our American partners in the United States. Together we form a competent bilingual team.
Important information for U.S. citizens having no direct connection with the United States
Few Germans are aware that they need to file U.S. tax returns if they have the right to reside permanently in the United States (Green Card holder) or have American citizenship. This applies even if they do not live in the United States and also if they do not receive any significant income from U.S. sources. Unlike in Germany, the tax system in the United States is based solely on citizenship, regardless of the place of residence or source of income.
Accordingly, every U.S. citizen having worldwide income equivalent to $10,000 (U.S. dollars) is required to file an American tax return annually by April/June 15th, even if no tax is due.
Filing deadline for U.S. tax return:
|Filing deadline for U.S. tax return (normal)||April 15th of the following year|
|For taxpayers who are resident outside the United States||June 15th of the following year|
|With filing extension (F4868)||October 15th of the following year|
!!! The filing extension applies only to filing the return, not to paying the tax !!!
Taxes must be paid to the IRS by April 15th of the following year irrespective of whether a filing extension has been applied for or not.
!!! Failure to comply with this obligation may incur significant penalties !!!
Requirement to report foreign bank accounts (Foreign Bank Account Reports, FBAR)
In addition to filing American tax returns, all U.S. citizens are also required to file an FBAR (now called FinCEN 114) annually if the total highest account balance in all their financial accounts outside the United States exceeds the equivalent of $10,000 during a tax year. The report is filed separately from the American income tax declaration and has a different filing deadline (June 30th).
Penalties for not filing the FBAR can be considerable. Willful omission can result in criminal and civil penalties of up to 50% per year of the amount in each reported account. Non-willful violation can result in penalties of up to $10,000 per account per year.
The Foreign Account Tax Compliance Act (FATCA)
Until recently, it was not easy for the IRS to tell whether U.S. citizens living overseas had failed to file the required forms.
In 2010, the U.S. Congress passed the “FATCA” act. Under the act, U.S. citizens are required to submit FBAR from the 2011 tax year onwards. Furthermore, non-U.S. financial institutions are asked to report account holders who are U.S. citizens to the United States’ federal tax agency (IRS). In other words: the IRS finds out from the financial institutions which U.S. citizens hold financial accounts overseas, and whether they have fulfilled their obligation to file American tax returns and bank account reports.
Streamlined Foreign Offshore Procedures (SFOP) for subsequently filing overdue American tax returns and FBAR
On June 18, 2014, the IRS announced the SFOP / Streamlined Program for U.S. citizens resident outside of the United States who can prove that their failure to file American tax returns and FBARs was not intentional.
All U.S. citizens living overseas who honestly did not know about their obligation to file U.S. tax returns and bank account reports are entitled to use these so-called streamlined procedures. These procedures require U.S. citizens to file overdue tax returns for the last three years and FBARs for the six most recent tax years, without tax penalties being incurred. Income taxes for the last three years that become due for payment as a result have to be paid plus interest. All penalties for failure to file or late filing are then waived. The so-called “streamlined procedures” offer U.S. citizens an excellent opportunity to bring their American tax returns and bank account reports into compliance without being required to pay a penalty.