The IRS sends millions of notices to taxpayers every year. Reasons for sending these letters vary. The following list contains ten simple steps you should take when this notice arrives.

1. It shouldn’t be ignored. The IRS mostly sends letters and notices in connection with federal tax returns. The letter or notice will tell you why the contact has been made and give you instructions on how to respond.

2. Don’t panic! It is usually sufficient to respond to the notice in a simple manner.

3. Read the entire document carefully and completely. IRS letters usually contain specific instructions and information about what you need to do to resolve a particular question or problem.

4. Make sure you have filed your taxes. The purpose of these letters is typically to inform the taxpayer of a change or correction to their tax return. Compare the information in the letter with the tax return.

5. Don’t reply unless it’s absolutely necessary. This type of notice is usually informational and does not need a response. If you have to respond, you will be told exactly what to do in the notice. Do not reply unless the notice asks you to or if payment is required.

6. In the event that you need to respond, do so immediately. Despite your disagreement, you should reply. Write a response letter that explains why you disagree, and send it to the address listed in the notice. If the IRS needs more information or copies of documents to consider your position, make sure to include it. You will then need to wait a minimum of 30 days to receive an IRS response.

A date on the notice usually indicates one of three things:

– To preserve the right of appeal for the taxpayer;

– To ensure that the tax return is processed in a timely manner;

– Minimise penalties and interest;

7. Call only when necessary. The IRS usually does not need to be contacted in most cases. Before you call, ensure that you have the relevant tax return and notice at hand.

8. Your IRS letter may have arrived late. Whenever you receive a notice with a due date and the due date has passed or is too close, you should contact the IRS immediately to inform them of the late receipt and request an extension of time to respond. For overseas taxpayers with unreliable mail services, this is of particular importance. A one-month extension from the IRS is usually given right away, but you must contact the IRS to get one.

9. Please keep the notice. Make sure to keep a copy of all IRS notices and letters.

10. Need help from a professional? If you need professional tax assistance, notify the IRS that you have hired an accounting firm to assist you, and you would like time to allow your representatives to assess and respond on your behalf.

Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.

Are you looking for US tax accountants and advisors in London or the UK?  View our fees and packages for UK and US tax return services.

What are the most common reasons for not filing an IRS Tax extension?

– IRS may raise a red flag when you extend, increasing your audit risk
– I’m always late filing my tax returns
– I may be late in October as well if I file an extension.
– Everything I need for my taxes is in order, I just need to complete the tax forms.
– If I won’t use the extension, why file it?

No matter what the reasons are, they don’t matter, your tax return must either be filed on time or an extension must be sought.

Extending a deadline will postpone both the filing and payment deadlines. This is often misunderstood. The extensions will only extend the filing deadline, not the payment deadline.

The tax deadline for US citizens and residents residing inside the United States is April 15th, 2022. Filing a Form 4868, if you are unable to file by the deadline, will extend your tax return for six months until October 15th, 2022. To avoid late payment penalties, taxes must be paid by April 15th.

US Expats living in the UK have until June 15th, 2022, to file their taxes. US citizens living abroad receive an automatic extension of their tax deadline by two months. Filing Form 4868 can extend your deadline to October 15th, 2022, if you are unable to file your tax return by June 15th. To avoid any late-payment penalties, tax dues should be paid by April 15th.

It’s important to keep on top of the ever-changing tax laws, requirements and obligations, especially if you’re an expat who lives abroad in London, UK or elsewhere. Our experience allows us to provide effective solutions for almost any situation. We continue to investigate ways to help reduce your tax burden because at the end of the day, it all comes down to one thing; you’re entitled to keep what is yours! With our unique expertise in U.S. expat taxes, Xerxes Associates LLP shall ensure your interests are served correctly.

Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.

Is it necessary to file a 1040 if my income is below the Foreign Earned Income Exemption (FEIE)?

If the total income of a US citizen exceeds the standard deduction and exemption, you are required to file a US tax return. It is likely that there will be no tax due if the total income from foreign earnings falls under the FEIE limit, but a tax return needs to be filed in order to report the income and claim the exemption, since the relief is not automatic.

Even if all of my accounts are under the threshold of $10,000 (£7962.20), do I need to file an FBAR?

Possibly. If the total balance of all your non-US bank accounts combined is over $10,000 (£7962.20), an FBAR (Foreign Bank Account Reporting) is required. For example, if you have three accounts, each with a maximum balance of $4,000 (£3184.88), you must file. Whether or not this figure relates to the same funds that have been transferred between your accounts does not matter. All foreign bank accounts must be included in the FBAR, not just those that exceed the $10,000 (£7962.20) threshold.

My spouse is not a citizen of the United States, so does she need to file?

Not always. If they receive income from a US source, a spouse who is not a US resident has to file a US tax return. Being married to a US citizen does not obligate you to file US tax returns. A spouse in the US will simply need to file a ‘married filing separate’ tax return stating that their spouse is a non-resident alien who is not required to file taxes

What if I have missed years of filing my US tax return?

It’s never too late to file for past years. If US taxes are due, interest and penalties will continue to accrue until payment/submission, so it is best to resolve your affairs as soon as possible.

Exactly what is FATCA?

In the UK, many US citizens are being sent rather intimidating FACTA compliance packs from their UK (and other non-US) banks inquiring whether they have any connection to the US. FATCA regulations have brought about this.

In the US, a law called FATCA requires all banks and financial institutions to report to the IRS information about overseas bank accounts of customers who are US citizens or residents. The goal is to prevent tax evasion through offshore accounts.

US citizens who are behind on their US tax filing and foreign bank account reporting may find this very concerning. In addition to being a confusing and long form, the compliance packs sent by banks are also reported to the IRS who will be notified about accounts that are allegedly not disclosed.

The law is meant to go after very rich tax evaders rather than the average US taxpayer, but you should get caught up with US tax compliance sooner rather than later.

What is the cost to get my US taxes up to date?

We are very transparent about our costs and packages. Click here to view our current prices.

Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.

From simple to complex situations, we work with taxpayers from all over the United States who live in London or other parts of the UK.

We at Xerxes Associates LLP make the process of filing US income taxes for expats living in the UK, seamless and refreshingly simple. We have certified tax advisors who are familiar with all the dynamics involved in being a US citizen overseas. For expat tax planning, you only need to get in touch with our experienced, friendly tax advisors to start the ball rolling. Despite difficult tax jargon, we strive to help you easily understand US expat tax laws and rules. You can rely on us for expat tax advice, in addition to having a personal relationship with you, we will also make it easy for you to file US income taxes from the United Kingdom!

Why use a Xerxes Associates LLP Tax Preparation Service?

Professional assistance with US expat tax returns is essential.  Because some situations are similar, there are so many “do-it-yourself” tax software providers for people living in the USA.  Americans receive standard tax forms from their employers and financial institutions, such as W2s and 1099s, and their numbers are plugged into a program designed for people in similar situations.

Every expat tax return, on the other hand, is unique since every country has a different currency, different types of retirement accounts, and different agreements with the United States.  Additionally, customers’ personal tax situation adds a layer of complexity that electronic software vendors are unable to handle effectively!

Data entry is a big part of filing a tax return, so we try to automate and streamline this process as much as possible while passing the savings along to you.  We can help steer you through expat tax engagements using our experience and professional judgement. That’s why you should work with us!

Failure to file a foreign bank account report or another international informational return could result in a $10,000 or more penalty.  You can also be denied foreign tax credits or exclusions if you use them incorrectly. We engage with our clients proactively on these issues and help to ensure that they understand what the IRS requires.  The best way to ensure that you stay on the good side of the IRS is to file a professional, accurate, e-filed tax return!

Xerxes Associates LLP work closely with US and UK expats from all different backgrounds, circumstances and occupations as well as high-net worth individuals in order to help them through the complexities of US and UK tax compliance requirements (tax imposed on expatriates). If you have a query or would like a friendly no obligation chat about your requirements then please get in touch and we shall be happy to assist you.