What is a better way for an American resident in a foreign country to file tax?
"If you live outside the US, then you probably need to deal with foreign tax credits, foreign income exclusions, FBAR forms (you probably have bank account balances enough for the 10K threshold) , various monsters the Congress enacted against you like form 8939 (if you have enough banking and investment accounts), form 3520 (if you have a IRA-like local pension), form 5471 (if you have a stake in a foreign business), form 8833 (if you have treaty claims) etc ect - that's just what I had the pleasure of coming across, there's more. TurboTax/H&R Block At Home/etc/etc are not for you. These programs are developed for a ""mainstream"" American citizen and resident who has nothing, or practically nothing, abroad. They may support the FBAR/FATCA forms (IIRC H&R Block has a problem with Fatca, didn't check if they fixed it for 2013. Heard reports that TurboTax support is not perfect as well), but nothing more than that. If you know the stuff well enough to fill the forms manually - go for it (I'm not sure they even provide all these forms in the software though). Now, specifically to your questions: Turbo tax doesn't seem to like the fact that my wife is a foreigner   and doesn't have a social security number. It keeps bugging me to   input a valid Ssn for her. I input all zeros for now. Not sure what to   do. No, you cannot do that. You need to think whether you even want to include your wife in the return. Does she have income? Do you want to pay US taxes on her income? If she's not a US citizen/green card holder, why would you want that? Consider it again. If you decide to include here after all - you have to get an ITIN for her (instead of SSN). If you hire a professional to do your taxes, that professional will also guide you through the ITIN process. Turbo tax forces me to fill out a 29something form that establishes   bonafide residency. Is this really necessary? Again in here it bugs me   about wife's Ssn Form 2555 probably. Yes, it is, and yes, you have to have a ITIN for your wife if she's included. My previous state is California, and for my present state I input   Foreign. When I get to the state tax portion turbo doesn't seem to   realize that I have input foreign and it wants me to choose a valid   state. However I think my first question is do i have to file a   California tax now that I am not it's resident anymore? I do not have   any assets in California. No house, no phone bill etc If you're not a resident in California, then why would you file? But you might be a partial resident, if you lived in CA part of the year. If so, you need to file 540NR for the part of the year you were a resident. If you have a better way to file tax based on this situation could you   please share with me? As I said - hire a professional, preferably one that practices in your country of residence and knows the provisions of that country's tax treaty with the US. You can also hire a professional in the US, but get a good one, that specializes on expats."
There's no law that prohibits a US citizen or US LPR from holding an account abroad, at least in a country that's not subject to some sort of embargo, so I don't see how it could affect your wife's chances of getting US citizenship when she's eligible. As mentioned by other posters, you'll have to file FBAR if the money you have in all your accounts abroad exceeds $10k at any point of the year and if the account pays any interest, you'll have to tell the IRS about the interest paid and (if applicable) taxes you paid on the interest income abroad. "Tax US corporate ""persons (citizens)"" under the same regime as US human persons/citizens, i.e., file/pay taxes on all income earned annually with deductions for foreign taxes paid.  Problem solved for both shareholders and governments.  [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements)  &gt;If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.**  Thing is, we know solving this isn't the point.  It is to misdirect and talk about everything, but the actual issues, i.e., the discrepancy between tax regimes applied to persons and the massive inequality it creates in tax responsibility.  Because that would lead to the simple solutions that the populace need/crave.  My guess is most US human persons would LOVE to pay taxes only on what was left AFTER they covered their expenses." Companies in the US will take care of paying a portion of your required income tax on your behalf based on some paperwork you fill out when starting work.  However, it is up to you as an individual to submit an income tax return.  This is used to ensure that you did not end up under or overpaying based on what your company did on your behalf and any other circumstances that may impact your actual tax owed. In my experience, the process is similar in Europe.  I think anyone who has a family, a house or investments in Europe would need to file an income tax return as that is when things start to get complex. If your gross income is only $3000, then you don't need to file: https://www.irs.gov/pub/irs-pdf/p501.pdf That said, pay careful attention to: https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad You should be reporting ALL income, without regard to WHERE you earned it, on your US taxes. Not doing so could indeed get you in trouble if you are audited. Your level of worry depends on how much of the tax law you are willing to dodge, and how lucky you feel. Plenty of retired people do stay in the US for longer than 60 days and don't pay taxes. In this IRS document 60 days stay appears to be the test for having a 'substantial presence' in the US, which is part of the test for determining residency. However the following is also written: Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States.  In other words, if your property in the US is not your main one, you pay tax in another country, and you stay there less than half the year, you should be treated as a non-resident (I am not a lawyer and this is not advice). This IRS webpage describes the tax situation of nonresident aliens. As I understand it, if you are not engaged in any kind of business in the US and have no income from US sources then you do not have to file a tax return. You should also look into the subject of double tax agreements. If your home country has one, and you pay taxes there, you probably won't need to pay extra tax to the US. But again, don't take my word for it. I'll start with the bottom line. Below the line I'll address the specific issues. Becoming a US tax resident is a very serious decision, that has significant consequences for any non-American with >$0 in assets. When it involves cross-border business interests, it becomes even more significant. Especially if Switzerland is involved. The US has driven at least one iconic Swiss financial institution out of business for sheltering US tax residents from the IRS/FinCEN. So in a nutshell, you need to learn and be afraid of the following abbreviations: and many more. The best thing for you would be to find a good US tax adviser (there are several large US tax firms in the UK handling the US expats there, go to one of those) and get a proper assessment of all your risks and get a proper advice. You can get burnt really hard if you don't prepare and plan properly. Now here's that bottom line. Q) Will I have to submit the accounts for the Swiss Business even   though Im not on the payroll - and the business makes hardly any   profit each year. I can of course get our accounts each year - BUT -   they will be in Swiss German! That's actually not a trivial question. Depending on the ownership structure and your legal status within the company, all the company's bank accounts may be reportable on FBAR (see link above). You may also be required to file form 5471. Q) Will I need to have this translated!? Is there any format/procedure   to this!? Will it have to be translated by my Swiss accountants? - and   if so - which parts of the documentation need to be translated!? All US forms are in English. If you're required to provide supporting documentation (during audit, or if the form instructions require it with filing) - you'll need to translate it, and have the translation certified. Depending on what you need, your accountant will guide you. I was told that if I sell the business (and property) after I aquire a   greencard - that I will be liable to 15% tax of the profit I'd made.  Q) Is this correct!? No. You will be liable to pay income tax. The rate of the tax depends on the kind of property and the period you held it for. It may be 15%, it may be 39%. Depends on a lot of factors. It may also be 0%, in some cases. I   also understand that any tax paid (on selling) in Switzerland will be   deducted from the 15%!? May be. May be not. What you're talking about is called Foreign Tax Credit. The rules for calculating the credit are not exactly trivial, and from my personal experience - you can most definitely end up being paying tax in both the US and Switzerland without the ability to utilize the credit in full. Again, talk to your tax adviser ahead of time to plan things in the most optimal way for you. I will effectively have ALL the paperwork for this - as we'll need to   do the same in Switzerland. But again, it will be in Swiss German. Q) Would this be a problem if its presented in Swiss German!? Of course. If you need to present it (again, most likely only in case of audit), you'll have to have a translation. Translating stuff is not a problem, usually costs $5-$20 per page, depending on complexity. Unless a lot of money involved, I doubt you'll need to translate more than balance sheet/bank statement. I know this is a very unique set of questions, so if you can shed any   light on the matter, it would be greatly appreciated. Not unique at all. You're not the first and not the last to emigrate to the US. However, you need to understand that the issue is very complex. Taxes are complex everywhere, but especially so in the US. I suggest you not do anything before talking to a US-licensed CPA/EA whose practice is to work with the EU/UK expats to the US or US expats to the UK/EU. Instead of SSN, foreign person should get a ITIN from the IRS. Instead of W9 a foreigner should fill W8-BEN. Foreigner might also be required to file 1040NR/NR-EZ tax report, and depending on tax treaties also be liable for US taxes. "The IRS taxes worldwide income of its citizens and green card holders.  Generally, for those Americans genuinely living/working overseas the IRS takes the somewhat reasonable position of being in ""2nd place"" tax-wise.  That is, you are expected to pay taxes in the country you are living in, and these taxes can reduce the tax you would have owed in the USA.  Unfortunately, all of this has to be documented and tax returns are still required every year.  Your European friends may find this quite surprising as I've heard, for instance, that France will not tax you if you go live and work in Germany.   A foreign company operating in a foreign country under foreign law is not typically required to give you a W-2, 1099, or any of the forms you are used to. Indeed, you should be paying taxes in the place where you live and work, which is probably somewhat different than the USA.  Keep all these records as they may be useful for your USA taxes as well.  You are required to total up what you were paid in Euros and convert them to US$.  This will go on the income section of a 1040.  You should be paying taxes in the EU country where you live.  You can also total those up and convert to US$.  This may be useful for a foreign tax credit. If you are living in the EU long term, like over 330 days/year or you have your home and family there, then you might qualify for a very large exemption from your income for US tax purposes, called the Foreign Earned Income Exclusion.  This is explained in IRS Publication 54.  The purpose of this is primarily to avoid double taxation. FBAR is a serious thing.  In past years, the FBAR form went to a Financial Crimes unit in Detroit, not the regular IRS address.  Also, getting an extension to file taxes does not extend the deadline for the FBAR.   Some rich people have paid multi-million dollar fines over FBAR and not paying taxes on foreign accounts.  I've heard you can get a $10,000 FBAR penalty for inadvertent, non-willful violations so be sure to send those in and it goes up from there to $250k or half the value of the account, whichever is more.  You also need to know about whether you need to do FATCA reporting with your 1040.  There are indeed, a lot of obnoxious things you need to know about that came into existence over the years and are still on the law books -- because of the perpetual 'arms race' between the government and would be cheaters, non-payers and their advisors.  http://www.irs.gov/publications/p54/ http://americansabroad.org/" You will not be able to continue filing with TurboTax if you invest in foreign funds. Form 8261 which is required to report PFIC investments is not included. Read the form instructions carefully - if you don't feel shocked and scared, you didn't understand what it says. The bottom line is that the American Congress doesn't want you do what you want to do and will punish you dearly. "Read up on filing an ""amended tax return"".  Essentially you'll fill out the entire return as it should have been originally, then fill out form 1040X stating what has changed (and pay the additional tax due if needed).   According to TurboTax's website, they have partnered with Sprintax for non-resident tax prep.  I am not vouching for the service; just offering it as information." "Be mindful of your reporting requirements. Besides checking the box on Schedule B of your 1040 that you have a foreign bank account, you also need to file a TD F 90-22.1 FBAR report for any year that the total of all foreign bank accounts reaches a value of $10,000 at any time during the year. This is filed separately from your 1040 by June 30 of the following year. Penalties for violating this reporting requirement are draconian, in some cases exceeding the amount of money in the foreign bank account. This penalty has been levied on people who have been reporting and paying tax on the interest on their foreign bank accounts, and merely neglected this separate report filing. Article on the ""shoot the jaywalker"" punitive enforcement policy. http://www.rothcpa.com/archives/006866.php Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law. EDITED TO ADD" "IRS Pub 554 states (click to read full IRS doc):  ""Do not file a federal income tax return if you do not meet the filing requirements and are not due a refund. ... If you are a U.S. citizen or resident alien, you must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1-1 below. "" You may not have wage income, but you will probably have interest, dividend, capital gains, or proceeds from sale of a house (and there is a special note that you must file in this case, even if you enjoy the exclusion for primary residence)" If you're paying a foreign person directly - you submit form 1042 and you withhold the default (30%) amount unless the person gives you a W8 with a valid treaty claim and tax id. If so - you withhold based on the treaty rate. From the IRS: General Rule In general, a person that makes a payment of U.S. source income to a   foreign person must withhold the proper amount of tax, report the   payment on Form 1042-S and file a Form 1042 by March 15 of the year   following the payment(s). I'd suggest to clarify this with a licensed tax adviser (EA/CPA licensed in your State) who's familiar with this kind of issues, and not rely on free advice on the Internet or DIY. Specific cases require specific advice and while the general rule above holds in most cases - in some there are exceptions. To start with, I should mention that many tax preparation companies will give you any number of free consultations on tax issues — they will only charge you if you use their services to file a tax form, such as an amended return. I know that H&R Block has international tax specialists who are familiar with the issues facing F-1 students, so they might be the right people to talk about your specific situation. According to TurboTax support, you should prepare a completely new 1040NR, then submit that with a 1040X. GWU’s tax department says you can submit late 8843, so you should probably do that if you need to claim non-resident status for tax purposes. Transferring money you own from one place to another pretty much never has tax implications. It might have other implications, including requirement to report it. Being a US citizen has tax implications, including the requirement to file US tax forms for the rest of eternity.