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Taxes. The dreaded word everyone hates.
Even if you don’t have to pay much money in taxes, the prospect of filing them is stressful. No one likes taxes, especially not if you live abroad. That’s when things get really confusing.
As an expat in China and a travel blogger that makes a bit of US income online, my tax situation is ridiculously confusing. I never even got the experience of filing taxes in the US! I jumped straight into the deep end.
I know many of you have this issue too. Whether you own property, work for a US business abroad, or make income in multiple different countries, things can get REALLY messy.
Using H&R Block For Expat Taxes
Last year I used H&R Block’s free online software to file my taxes. I thought I did a pretty good job, considering I needed to file my Chinese and travel blogging income. I spent hours and HOURS going through every little detail, calculating my income, expenses, housing stipend, and more.
But I did it! I filed my own taxes! …Or so I thought.
My Messed Up Tax Return
It wasn’t until I started working on my taxes for this year that I realized H&R block was missing all of my China information. I was so confused! Where was my foreign income? Where was my foreign exemption form??
After spending DAYS (I’m actually not kidding) with the H&R Bock help chat, we finally figured it out.
I had filled out my foreign income exemption form (form 2555) without actually declaring my China income. I thought filling out that form WAS declaring my China income! Apparently not.
So rather than point out an error, H&R block just discarded my exemption form and only sent in my travel blogging income. Seriously??!!
When H&R Block finally showed me where to fill out my foreign income, the area was so vague and hard to find, I was absolutely shocked. Not only that, but no one on the help chat knew what I was talking about, or knew anything about declaring foreign income. I had to be escalated to an expert twice!
Re-Submitting My Taxes to the IRS
Because of this debacle, I had to re-submit my taxes to the IRS. Thankfully as an apology H&R Block let me download their 2016 software so I could re-do my taxes. The only annoying thing was that I also had to re-do my travel blogging income as well!
I literally wasted entire days on this. I will never get that time back!
H&R Block is Not Made for Expats
Companies like H&R block are great for US citizens. Filing my blog income with them was pretty straightforward (except the deductions part… figuring out what deductions fit into which category was enough to break my brain), but when it comes to declaring foreign income, finding deductions, declaring housing stipends and paid flights, and all the complications that come with working abroad, H&R block fails hard.
I was absolutely shocked to discover how little their staff knows about declaring foreign income. Seriously, the amount of time I spent on their help chat is actually criminal.
If you have a complicated tax situation abroad, you do not want to be working with a free software that can’t actually help you.
This is especially true if you have children that are citizens of multiple countries, own property or a business abroad, make income in multiple countries, or anything else of that nature.
If you’re like me, an expat with extra US income, things get really confusing too.
Taxes For Expats: Accountants Trained To Help You
Right around the time all of this was going down, I received a message from Taxes for Expats, an online accounting firm that specializes in taxes for expats and digital nomads. I decided to have them look at my taxes, while I filed them myself on H&R block, just to compare their service to what you can get for free.
It was Taxes for Expats who discovered that I hadn’t declared my China income in 2016 and gave me the instructions on how to amend my taxes with the IRS. Seriously, if my accountant hadn’t noticed this, I would’ve never known I didn’t file my China income!
How to File With Taxes For Expats
Similarly to H&R Block, Taxes for Expats allows you to fill out all of your tax information online by asking you helpful questions. However, you don’t need to worry about finding the spot to declare your foreign income. It’s all laid out for you.
For complicated issues, Taxes for Expats really makes the form clear too. For example, I left China at the beginning of November, which was a huge hassle on H&R Block because I didn’t spend “the entire tax year” in China. I spent a solid hour on this issue with H&R Block, whereas on Taxes For Expats I simply wrote it in a box.
You also have the ability to chat with a tax expert if you’re confused by any of the questions. It’s always better to ask rather than accidentally fill out the form incorrectly.
For an extra fee, you can even submit an excel or word document with all of your business expenses for the year, and the accountant will decide which expenses go where. For a busy digital nomad running her own travel blogging business with a TON of random miscellaneous deductions, this is a lifesaver.
For all you travel bloggers out there: imagine not having to worry about which category your new camera lens or hosting provider falls in. I spent HOURS on this with H&R block and had to google each category to see what expenses went where.
Working With a Professional Accountant
Once you’re done filling out the tax questionnaire, your accountant will have a look and get back to you. You’ll then be told how much you owe, which you either approve, or you can flag for questions.
If for some reason the amount is lower or higher than you expected, I definitely recommend flagging your tax return. For example, my taxes came back much higher than I expected, and when I chatted with my accountant, he told me the tax was coming from my travel blogging income, which didn’t make much sense to me. How could I owe more tax than I actually made in profit?
Once I realized where it was coming from, I went back through the form and realized I’d forgotten to type a decimal, making $5,030.30 into $50,303. Whoops…
While that was a huge mistake and I definitely wouldn’t have accidentally paid $6,000 in taxes, it was nice having an accountant there to tell me exactly where he got the numbers so I could go back and fix it. I would’ve taken me forever if I had to go back through and try to find the error myself.
This was obviously much better than what I had to go through with H&R block who A) submitted my taxes without declaring my foreign income and B) couldn’t even tell me where to declare my foreign income!
What Other Services Do Taxes for Expats Offer?
In addition to filing your taxes, there are some other pretty helpful services that Taxes For Expats offer.
The first one I want to mention is tax projections for expats. This is a super helpful service because you can discover the approximate amount of tax you’ll pay if you move abroad. While this isn’t necessary for the average expat, it’s a great service for those planning on opening or moving a business abroad, or expats deciding whether or not to sell an international property.
Taxes For Expats will also check your own tax returns for errors (would’ve been helpful last year), or file amended tax returns to help you get a refund!
Is Taxes For Expats Worth the Cost?
For an average tax filing, the cost of working with Taxes For Expats is $350. Personally, I think this is pretty fair for their service. Many of my friends who work with accountants online pay about this much as well.
If you want them to compile and categorize your expenses for you, it’s just an extra $100. The best part is that they’ll only charge this fee if this process will save you more than $100 on your taxes, so you’re never paying for a service you don’t use.
If you’re completely overwhelmed by the idea of taxes, or if you have a confusing filing situation, I think the price is definitely worth it. If you have a lot of random expenses, own property or a business abroad, or make money in multiple countries, hiring Taxes For Expats can definitely save you money… or will at least save you from spending HOURS on a help chat with people who have no idea how to help you.
However, if you’re already comfortable filing your own taxes and you have a very straightforward expat situation, you’re probably fine using free software you’re comfortable with.
Ahhh! When Are US Taxes Due?
For those of you reading this and panicking (typically me), US taxes were due April 18th, 2018. However, as an expat, you have an extension until June 15th.
That said, June 15th is coming up fast, so you’ll want to start filing your taxes ASAP. If you’re literally having a panic attack right now, just consider getting in touch with Taxes For Expats, who can do the hard work for you.
Let’s Hear From You!
Have you ever filed taxes as an expat? Did you ever have a tax mishap like me? What tax services have you used from abroad? Let me know in a comment below!
If you have any major questions about filing taxes as an expat (that you think I’ll be able to answer), or on the process of filing taxes from abroad with both H&R Block and Taxes For Expats, be sure to get in touch by leaving a comment. I’m always checking for new comments and I’ll be sure to get back to you as soon as I can!
Thanks again to Taxes For Expats for having a look at my taxes in exchange for an honest review. As always, I wouldn’t promote or mention a company I didn’t trust, especially not with something as important as your taxes and finances. Again, if you have any questions about my experience let me know!
4 comments on “Taxes For Expats: How to File Your US Taxes From Abroad”
April 1st, been trying to do my expat taxes and this year they a bit tricky, because I worked abroad, and the main players (hrblock, turbotax) out there can’t handle expat stuff; I’m sure if like you said, if I were to spend hours, it would work, but I already spent about 2 days trying to figure out the forms…so yea, found your site and tried the 25 coupon link, but nothing happens after submitting my details. Tried different browsers too, and even changed my connection to an american line….anyway, will try to signup on their normal site and see how it goes.
Wow thanks for letting me know! I’ll get in touch with them and see if I can get the coupon working. They definitely are helpful though. I speak from experience, taxes for expats and digital nomads are so confusing!
Sounded like you did figure out online filing. Would you consider helping an expat out and explain how to properly fill it out with h&r.
Great question! So I was able to use H&R block to file internationally until recently. I married an Australian and we don’t live in the US, but H&R block and many similar companies refuse to acknowledge that there are US citizens who are married to people who don’t have US taxpayer ID numbers. Even though we’re filing separately they won’t let me submit without a taxpayer ID number for my husband… so I’ve been using Taxes for Expats now, especially with my income streams coming from multiple countries now.