Must-Know Tips For International Tax Planning
As an individual working in or earning income from abroad, international tax must be on your mind quite a lot. And understandably so – with the globalization of the market came a more complex taxation system, especially in the domain of international tax law. More and more U.S. companies and individuals doing business overseas hire not only a financial advisor or manager but also consult an international tax lawyer Los Angeles and San Diego business people trust.
Tax planning is becoming an increasingly convoluted matter for which you simply need expert guidance. Tax evasion (or perceived tax evasion) results in severe penalties, especially in the U.S. Even if you’ve done business overseas before or have worked from a foreign country while still filing taxes in your home country, it doesn’t mean you have it all figured out. International tax regulations have changed and are bound to change in the future, so in order to avoid audits and hefty penalties and other common taxation issues, keep up with the changes and have an international tax lawyer advise you.
In the meantime, take a look at few general tips regarding international tax planning to get a better idea of what you need to account for.
Make Sure You Understand Your Obligations
If you are a U.S. person but live and work in a foreign country, you must understand the tax implications of the country where you reside. Different countries have different rules and you should consult with a local accountant or tax attorney to determine your tax implications. For example, a country might tax residents differently than non-residents or might provide some benefits that are not usually available to their own citizens.
Make Sure You Don’t Neglect Tax Obligations To Your Home Country
Even if you live and work abroad full time you shouldn’t simply assume that you have no tax obligations to your home country. For instance, U.S. persons working and living abroad are still liable to report and, possibly, pay taxes to Uncle Sam. The US has a unique tax system, in which its citizens and resident aliens are taxed on their worldwide income, which includes the income earned in a foreign country, regardless of where they are living or how long they’ve been living overseas. Technically, a U.S. person living in France must pay French as well as U.S. taxes.
If you are an US person living abroad, it is recommended to consult with an international tax attorney to understand your tax implications and to file your US taxes with an accountant experienced in international taxation to make sure your return is done properly and that you take advantages of certain benefits, such as the Foreign Earned Income Exclusion and Foreign Tax Credit.
Take International Tax Treaties And Laws Into Account
In international tax planning, you have to account for tax treaties between countries. The U.S. signed treaties with several foreign countries. It is important to check if the US has a tax treaty with the country where you currently reside because such treaties usually contain several benefits for the taxpayer to avoid double taxation.
In addition to the treaties, there is a number of international tax laws, which should also inform your international tax planning decisions. It’s imperative you consult an international tax lawyer to help you navigate through the process.
Document Your Foreign Income And Taxes Paid
Filing your tax return should not be taken lightly, least of all if your business is operating globally or you’re earning foreign income. One of the crucial things for international tax planning is documentation. Make sure all the information regarding the taxes you paid as well as your foreign income is documented and stored in a safe place. You can use the documents in case of an audit as proof you’re eligible for a foreign tax credit or tax deduction.
Consult An Expert In International Tax Planning
When planning a business venture or even a number of transactions with a foreign entity, you need a solid tax strategy reviewed by an expert in international tax law. Additionally, if your previous ventures resulted in a tax litigation, you need fierce legal representation. Milikowsky Tax Law is the law firm you can trust for our expertise and experience. Our principal attorney specializes in international tax law and its applications, so you can rest assured you’ll have expert guidance and representation. Reach out to us today!