We look at the reasons to read “US Taxes for Worldly Americans” and discuss other great expat tax resources for Americans moving abroad. Packing all your things and moving across the world is a once-in-a-lifetime adventure many people dream of.
As much as moving across the world might be an exciting adventure, the logistics of the move and the planning that comes with it can also be overwhelming at first.
Moreover, if you’re a US citizen, things can get even more complicated, and this is where the expat tax filing book “US Taxes for Worldly Americans” comes in.
“Before anything else, preparation is the key to success” – Alexander Graham Bell
If you start preparing early, you’ll find the entire process doable and it could help you avoid the build-up of stress and anxiety. To help make sure you’re prepared, we’ve curated these books about expat tax returns and other helpful resources to get you ready for an international move.
Why Are Taxes More Complicated for US Expats?
The United States is one of two countries that taxes its citizens based on citizenship. This means that you are taxed on your worldwide income regardless of where you reside.
As a result, you don’t just have to think about your visa, residency status, health insurance, foreign tax ID, and housing; you must also think about how you will handle your US tax obligations and that amounts to a lot.
Whether you are a United States citizen who lives abroad or are thinking about taking the leap and moving overseas, you should be aware of your filing requirements.
You’ll learn quickly that keeping your money in foreign bank accounts, running foreign corporations, and having residency or even citizenship somewhere else means there are now going to be rules that must be given special attention.
There are many factors that will affect your tax situation.
- have you established residency in another country?
- has the US signed a Social Security totalization agreement with this country?
- do you still derive income from the US? Or in another country?
- are you self-employed or a digital nomad?
- And many more…
If you don’t file correctly, you could be missing out on important opportunities to reduce your tax bill legally. Or worse, you could end up with your own government revoking your passport and coming after you. That is highly unlikely for most, but a $10,000 fine for failure to file 3520-A isn’t uncommon.
What Are the Best Books About Expat Tax Returns?
One of the best ways to understand your expat tax obligations is by reading one of these comprehensive books on the subject.
Guides like “US Taxes for Worldly Americans” will help you to understand expat tax returns so you know what to expect when you move abroad.
U.S. Taxes for Worldly Americans: The Traveling Expat’s Guide to Living, Working, and Staying Tax Compliant Abroad by Olivier Wagner
While taxes can sometimes seem dry, Wagner explains the complexities of the US tax system in a way that is simple and provides an entertaining read. It is a great introduction to US taxes as the book gets very detailed about specific regulations, forms, exemptions, and other tax information.
US Taxes for Worldly Americans will help you grasp the ins and outs of processing your taxes as an American expat.
The book is packed with information about the most important aspects of tax options for expats, retirees, students, digital nomads, and anyone spending significant time overseas. It gives you a comprehensive overview of your tax obligations. It also highlights that the 1040 isn’t the only form you need to file.
Throughout US Taxes for Worldly Americans, you will find plenty of valuable information to help you with your international adventure:
- advice about international banking
- how to establish residency in another country
- the consequences of investing in foreign mutual funds or owning a foreign corporation
- pros and cons of renouncing your US citizenship.
- how to go from non-compliance to being totally compliant in the easiest and the cheapest way possible.
A big part of the book is devoted to the most common expat tax forms. Wagner goes through each form line by line explaining the calculations and walking you through completing your Expat Tax Return.
The best reason to recommend US Taxes for Wordly Americans is most expatriates will be able to complete their own tax returns with this book in their hand.
The Complete US Expat Tax Book by Dan E Gordon
Gordon’s book is a fantastic introduction to US tax. The author talks about deductions, credits, and income exclusions you can claim on your US expat tax return. He emphasizes that each must be appropriately reported in order to take advantage of the tools that the IRS offers.
The book might leave you dissatisfied if you’re looking for practical guidance on how to complete your US Expat Tax Return. In which case, you’re probably better of looking at US Taxes for Worldly Americans.
However, you will surely have a better understanding of the credits, deductions, etc. you’re eligible for, allowing you to have better communication with your CPA.
U.S. Master Tax Guide by Cch Tax Law
US Master Tax Guide has been meticulously researched and it provides you with the most up-to-date tax law developments.
Wolters Kluwer’s book is loved by accountants and financial professionals when providing tax services to their business and their clients. It’s an invaluable resource that many professionals use to identify tax planning opportunities, ensure accuracy while preparing tax returns, and gain a complete understanding of the federal taxation changes.
Unless you’re a tax geek like us, you might find the book a little overwhelming and confusing. The 943 pages book will give you the comprehensive information you need to understand the evolving tax codes. Although, it is a heavy read.
Nomad Capitalist: How to Reclaim Your Freedom with Offshore Bank Accounts, Dual Citizenship, Foreign Companies, and Overseas Investments by Andrew Henderson
In Nomad Capitalist, Henderson provides interesting information about offshore tax planning and banking, obtaining another passport, and becoming a global citizen.
It’s an interesting read that illustrates a different perspective on the life of a US expat. It is tailored more towards investors that seek to cut ties with the US.
The big drawback with this book is Henderson doesn’t get into specifics; hence you might not be able to implement any of the great ideas mentioned without paying for his services.
Where Can I Learn More About Expat Taxes?
There are lots of different resources that can help you understand your tax obligations as an expat. The IRS and IRCS websites should give you all the information you need. However, in some cases, they can be quite technical.
That’s why 1040 Abroad has carefully put together its blog to be more accessible to expats, just like “US Taxes for Worldly Americans.”
The Internal Revenue Code codifies all the federal statutory tax laws on income, gifts, employment, estate, and excise taxes. These laws constitute Title 26 of the U.S. Code.
You must be experienced with the interpretation of the U.S. tax code if you’re looking to determine your filing obligation using the IRC. It is not an easy read.
The IRS provides a wide variety of resources on its website. You can find instruction letters for each form as well as published guidance, rulings, administrative manuals, and other items. We visit the IRS website regularly for the latest information and developments.
Here is an example of the instruction letter for form 1040. These are the first two pages of your federal tax return. That’s also where the name of our company comes from.
You can find all the information you need in order to complete the form as well as general information and guidelines for each line.
The IRC and the IRS website might not be the easiest to navigate. Those who are not familiar with interpreting tax code or the IRS’ manuals might struggle to find information relevant to US expatriates.
A new set of rules applies to those who live and work overseas.
The deductions, credits, and exemptions available to you vary significantly when you live in another country. They allow anyone to reduce the amount of income that can be taxed.
You’re probably already familiar with the most common examples of deductions (such as business expenses etc.). These categories get more complex when you take the world into account. Many expatriates miss the refundable credits because they didn’t know they were eligible for them.
Expat taxes are a complicated issue. Books like “US Taxes for Worldly Americans” do a great job at walking expatriates through their tax returns. Sometimes you need access to more information.
We have been breaking down the complicated tax issues such as form 5471 into simple words since 2012.
Depending on your situation:
- you may need to know about form 3520, and/or form 8621.
- if you own more than 50% of the stock of a foreign corporation, you must file 5471
- constructive ownership rules might apply
These are all things you need to consider, and 1040 Abroad is your go-to resource for everything to do with taxes for US expats.
Moving overseas is stressful in itself and the amount of misinformation online is overwhelming. However, there are many valuable resources if you’re interested in expanding your tax knowledge.