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PRESENTED BY GREENBACK EXPAT TAX SERVICES

US expats: Have you met your tax deadlines?

As good old Benjamin Franklin once said, "Nothing can be said to be certain, except death and taxes."

US expats: Have you met your tax deadlines?
Photo: Frankie Leon/Flickr

Those of us who have left Benjie and bald eagles behind are sometimes lured into thinking we have escaped at least the second part. Unfortunately, that’s not the case.

“The US is one of only two countries in the world that requires its citizens living overseas to file and pay taxes,” says David McKeegan, co-founder of Greenback Expat Tax Services.

“I think that can come as a shock to many folks, especially people who have been living overseas abroad for a while.” 

McKeegan explains that these rules have been in place for a long time – but it wasn’t until the US government started cracking down on tax evaders and enforcing anti-terror banking rules that they started causing problems for average expats.

“The Foreign Account Tax Compliance Act (FATCA) requires all foreign financial institutions to report US citizens’ bank details to the US government each year,” he explains. “This has been a huge headache for US folks overseas – some foreign banks won’t even work with Americans anymore.”

McKeegan, an American expat himself, has experienced that headache first-hand.

“My wife, Carrie, and I were so frustrated and overwhelmed with our own expat tax needs while living in the UK,” he recalls. “So in 2008, we decided to create the kind of company we were searching for, and together, we founded Greenback Expat Tax Services.”

Not only do American expats living around the world have to keep track of American tax deadlines and rules, they generally also have to file in their country of residence. And the regulations can vary vastly.

“Germany taxes its residents on their worldwide income, for instance, and you’re considered a resident if you arrive with the intent of staying for a period longer than six months,” McKeegan says.  “Whereas Swedish residency only comes with certain types of permits.”

Permanent residents in Sweden pay tax on all worldwide income and capital gains, whereas those on temporary permits only pay tax on Swedish income and capital gains.

Confused? You’re not alone.

“Many American expats find their tax situation daunting, and this is where we can help,” says McKeegan. “The goal of our company is to make life better for Americans living abroad by taking away the anxiety and hassle of becoming and staying compliant on US taxes while overseas.”

And now is the time to get it done.

“June is actually a huge month for US expats,” McKeegan remarks. “For Americans living abroad, US expat taxes are due June 15th, as the IRS provides an automatic two-month extension from ‘Tax Day’, which was April 18th this year. Additionally, if you had over $10,000 in foreign bank accounts during the calendar year, you will need to submit your Foreign Bank Account Reporting (FBAR) form. The FBAR due date is June 30th  this year.”

Expats can apply for an additional extension for their expat tax returns until October 17th, but it’s still important to address the issue in time. It’s easy to postpone the dreaded paperwork – but side-stepping Uncle Sam can come with harsh consequences.

For one, those who file late can be slapped with massive fines.

“Additionally, an unprecedented law enacted on January 1, 2016, now allows the US State Department to revoke an expat’s passport if they are behind on US taxes and owe more than $50,000 to the IRS. This is really big and potentially scary news for the expat community,” McKeegan warns.

“The penalty for willfully not reporting foreign bank accounts starts at $10,000, so if you have five accounts that are not reported, you could hit this in one year and lose your passport!”

Greenback’s team of more than 30 US CPAs and IRS Enrolled Agents are expat tax experts who focus 100 percent on expat tax returns and take the time to understand each individual situation to provide the best advice and service possible.

“All of our accountants have extensive expat tax preparation experience and really try to make the filing process as simple, hassle-free and easy as possible,” McKeegan says. “Also, we offer flat fee pricing so expats know exactly what to expect from the start – no surprises!”

Need help getting your expat taxes done in time? Don’t hesitate to contact Greenback

This article was produced by The Local and sponsored by Greenback Expat Tax Services

For members

WORKING IN SWEDEN

CHECKLIST: Here’s what you need to do if you move away from Sweden

What authorities do you need to inform before you leave, are you liable to Swedish tax and how can you access your Swedish pension? Here's a checklist.

CHECKLIST: Here's what you need to do if you move away from Sweden

Tell the relevant authorities if you’re leaving for more than a year

If you’re planning on leaving Sweden for more than a year, you will have to let the authorities know. The main authorities in question are Skatteverket (the Tax Agency) and Försäkringskassan (the Social Insurance Agency).

Försäkringskassan

You have to tell Försäkringskassan when you leave so they can assess whether or not you still qualify for Swedish social insurance. As a general rule, you aren’t eligible for Swedish social insurance if you move away from Sweden, but there are exceptions, such as maternity or paternity benefits if you’re moving to another EU country.

This also applies to any family members who move with you – any over-18’s should send in their own documentation to Försäkingskassan about their move abroad. If you’re moving abroad with anyone under 18, you can include them in your own report to Försäkringskassan.

If both legal guardians are moving abroad together, both need to include any children in their application. If one legal guardian is moving abroad and the other is staying in Sweden, you need the guardian staying in Sweden to co-sign your application. If you are the sole legal guardian of any under-18’s travelling with you, you don’t need any documentation from the other parent.

You can register a move abroad with Försäkringskassan on the Mina sidor service on their website, here (log in with BankID).

Skatteverket

If you are moving abroad for a year or longer, you also need to tell the Tax Agency. This also applies if you were planning on moving abroad for less than a year but ended up staying for longer.

If you move to another Nordic country, you will also need to register your move with that country’s authorities if you will be there for six months or more. You’ll be deregistered from the Swedish population register the same day you become registered in another Nordic country’s register.

This doesn’t mean that you’ll lose your personnummer – you’ll still be able to use it if you ever move back to Sweden – but you will no longer be registered as resident in Sweden.

Similarly to Försäkringskassan, you will also need to report any children you are bringing with you, and both legal guardians must sign the form, whether or not both guardians are moving abroad or not.

In some cases, you may still be liable to pay tax in Sweden even if you live abroad – particularly if you are a Swedish citizen or have lived in Sweden for at least ten years. This could be due to owning or renting out property in Sweden, having family in Sweden, or owning a business in Sweden.

You can tell the tax agency of your plans to move abroad here.

Contact your a-kassa, if relevant

If you are member of a Swedish a-kassa (unemployment insurance), make sure you tell them that you’re leaving the country. As a general rule, you have unemployment insurance in the country you work in, so you will most likely have to cancel your a-kassa subscription.

If you are moving to another country with the a-kassa system, such as Denmark or Finland, it may pay to wait until you have joined a new a-kassa in that country before you cancel your membership in Sweden.

This is due to the fact, in some countries, you only qualify for benefits once you fulfil a membership and employment requirement. In Sweden and Denmark, you must have been a member for 12 months before you qualify. In Finland, the membership requirement is 26 weeks.

If you qualify for a-kassa in Sweden before you leave the country, you may be able to transfer your a-kassa membership period over to your new a-kassa abroad and qualify there straight away, but this usually only applies if your period of a-kassa membership is unbroken.

Check what applies in your new country before you cancel your membership in Sweden – your a-kassa should be able to help you with this.

Contact your union, if relevant

Similarly, if you are a member of a Swedish union or fackförbund, let them know you’re moving abroad.

If you’re moving to another Nordic country, they might be able to point you in the direction of the relevant union in that country, if you want to remain a member of a union in your new country.

If you’re moving to another EU country, you may be able to remain a member of your Swedish union as a foreign worker with the status utlandsvistelse.

If you chose to do this, you will usually pay a lower monthly fee than you do in Sweden, and they can still provide assistance with work related issues – although it may make more sense to join a local union in your field with more knowledge of the labout market.

If you don’t want to be a member of a union in your new country and don’t want to be a member of a Swedish union, you should contact your  union and ask them to cancel your membership.

Collect relevant documents regarding your Swedish pension

If you have worked in Sweden and paid tax for any length of time, you will have paid in to a Swedish pension. You retain this pension wherever you move, but you must apply for it yourself.

To do so, you will need to give details of when you lived and worked in Sweden, as well as providing copies of work contracts, if you have them. If you have these documents before you leave Sweden, make copies so that you can provide them when asked.

If you move to the EU/EES or Switzerland, you may also have the right to other, non-work based pensions, such as guarantee pension for low- or no-income earners, or the income pension complement (inkomstpensionstillägg).

Currently, you can receive your Swedish pension once you turn 62 – although there is a proposal in parliament due to raise pension age to 63 for those born after 1961 from 2023, so this may change.

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