There must be hundreds, if not thousands, of Caymanians and residents in Cayman who are also deemed as a US person under the new FATCA (Foreign Account Tax Compliance Act) regulations. This means we have an obligation to file taxes to the IRS (Internal Revenue Service) but where do we go for the forms and for help in completing them if we can’t afford to pay $400+ an hour to a tax lawyer here?
Auntie’s answer: There is an old expression that says, “Nothing is certain except death and taxes”. While some people may actually prefer the former to paying the latter, you are right that with the new FATCA regulations in place, it is near impossible to hide any taxable bank accounts if you are an American citizen or “US person” residing outside the US.
I also am sure that most people probably hate filling out tax forms and going over a year’s worth of accounts to hand over to the IRS. I never met anyone who said, as the 15 April filing date approached (actually, those living overseas can get the deadline automatically extended to 15 June, which is why this answer can still help), that they were excited and happy to be filling out their tax stuff. But there really is no way around it.
Understandably, paying expensive lawyer fees to get the deed done would not be a popular choice for many people.
After checking around, I found a great non-attorney resource to help you through the process. And it is the IRS itself that offers people living outside of the US assistance in filing their taxes. Here is the link to the Taxpayers Living Abroad section of the IRS website.
Scanning through the section, the information seems comprehensive, and includes parts on requirements for filing, residency status, income, credits and deductions. There are also links to forms you will need and how to file electronically.
While I will freely admit that I did not read through everything – there is more information on taxes and tax-related issues contained on the site than anyone could possibly want or need to know – what I did look at actually seemed pretty straightforward and easy to understand.
I’m not saying that any of this will make filling out your tax forms anything less than pure drudgery, but at least you can do it for free this way.
Most average joes should just do their own taxes. Do a little research. Download the forms from the IRS website, fill them out, keep a copy for your records and send the original signatures through registered mail and you’re done. Most people do not need the help of a tax lawyer.
Get a time machine, go back 20 years and start complying with your legal obligations. And be nicer to your neighbors in the past too. Because maybe, just maybe, they have tipped of the IRS so they can get a cut of your back taxes . . . .
The IRS have an excellent reporting and commission system. Just report everyone you know with a US passport, sit back and hope some cash comes in.
There are KPMG, E&Y, Deloitte and PwC who all have tax departments and don’t charge $400/hr for preparation of tax return and related forms
Oh, like $350? Still unaffordable for the regular Joe. If I could pay $150 to have mine done I’d jump at that chance. And mine are simple!
All the forms are on the IRS website and can be downloaded with instructions. If you live in Cayman you get a two month filing extension to June 15 without doing anything. If you filed an extension form you automatically got 6 months. It’s now too late to get the automatic 6 months this year. Either way the money was due by April, only the form-filing day can be extended. Forget the lawyers and buy Turbotax online, it’s about as easy as it can get. Much better than trying to fill out the forms manually using the IRS instructions.
Those online companies don’t take Foreign Tax returns. If you don’t know what you are doing, you’ll end up owing taxes when you shouldn’t. I used TaxAct and it took me three weeks to get it right. TurboTax didn’t work at all. It’s easier to manually do your taxes.