Parent & Parent LLP: the firm that can handle it all
While it may be difficult to find a US tax preparation firm that can handle all of the issues that US expats in Germany have – we have expertise and a record of success in not just filing quality returns that are processed with little issue, but also – we are able to fully support our work in the unlikely event of an examinaiton.
And surely, US-German Expat returns can be full of surprises – as we discuss in this video below.
Contact us now to put us to work for you.
Information regarding US-German tax issues
The Germany-US double taxation treaty benefits
- Certain business profits sourced in Germany are not taxable by the US
- Research and development expenses get special treatment
- Lower rates apply for certain dividends in the United States; the double taxation agreement.
- Holding companies of real estate get no relief on sale of property
- Personal services by German sole traders in the United States will be exempt from paying the income tax in the United States. US sole traders will benefit from the same treatment in Germany.
- US and German employees are also exempt from paying the personal income tax if they are in the other country for 183 days maximum during a calendar year and if the income is paid by a non-resident company.
Are you a US person living in Germany?
The US taxes its persons on a worldwide basis. So what you earn in Germany, even if it is taxed by the German taxing authority, is subject to additional taxes by the IRS. This is true even if you have a “tax-free” account in Germany. However, you are entitled to a credit for taxes paid. In the alternative, there is a foreign income exclusion which will exempt a portion of your income from income taxes.
Are you a German person living in the United States? (Visa/Substantial Presence Test)
If you are a Green Card holder you are subject to universal taxing jurisdiction on all your income, anywhere in the world. If you are a visa holder the rules are a bit more complicated about when universal taxing jurisdiction is triggered.
Foreign Earned Income Exclusion
Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. In addition, you may exclude housing expenses, but with limits. There are limits and special rules about who qualifies for the exclusion, and we can help you understand if you qualify.
Foreign Tax Credits for Americans in Germany
This is a non-refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings. The foreign tax credit is available to anyone who either worked in a foreign country or has investment income from a foreign source. There are qualifying factors, and we can help you understand if you are eligible to tax advantage of this credit.
Offshore Voluntary Disclosure Programs
If you have made a mistake in previous IRS tax filings, or haven’t filed at all, we can help. We are the nation’s premier offshore disclosure firm. We have helped thousands of German-Americans and others from around the globe properly disclose to the IRS. We can help you too. Click here to visit our Offshore Disclosure summary page.
