Everything You Need to Know About the Foreign Earned Income Exclusion
If you are a U.S. national who is residing outside of the country, you may find yourself facing a tricky situation surrounding the taxes on
Recovering Overpaid Taxes for a U.S. Expat Client Living Abroad
Client Background:
In early 2024, SDG Accountant was approached by a U.S. expat living permanently in the Czech Republic who sought assistance with her 2023 tax filing. The client and her husband, both U.S. citizens, operate online digital businesses in the United States while residing abroad. Their lifestyle and business model as remote digital entrepreneurs prompted us to explore expat-specific tax benefits that might apply to their circumstances. During the initial consultation, our team conducted a review of the client’s prior year returns and identified potential opportunities for tax savings that had been missed in previous filings.
Challenge: Identifying Opportunities for Tax Refunds in Prior Year Returns
As part of our assessment, SDG Accountant’s lead tax preparer, Sami Ghaith, EA, advised the client to engage our team for a comprehensive review of her past filings. Given the client’s status as a U.S. expat with foreign-earned income, we identified that applying the Foreign Earned Income Exclusion (FEIE) and other relevant tax benefits could yield significant tax savings. With her approval, we proceeded with an in-depth analysis of the last two years of returns to determine if tax benefits specific to expatriates had been applied.
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Solution: Amending Prior Returns on a Contingency Basis
To provide the client with the most advantageous service, SDG Accountant offered to handle the amendments on a contingency basis, charging 33% of any tax refund successfully recovered. This approach minimized the client’s immediate expenses while allowing our team to focus on achieving meaningful results.
Our team promptly began amending the client’s prior year returns by filing IRS Form 1040X for each year identified as eligible for amendments. With a signed power of attorney, we worked directly with the IRS, submitting the necessary forms and leveraging our expertise in expat tax law to ensure the client received maximum refunds.
Outcome: Significant Refunds and Client Satisfaction
After a five-month review and regular communication with the IRS Taxpayer Advocate Service, the SDG Accountant successfully secured the client’s refunds. Two refund checks were issued, totalling over $30,000 in returned taxes for previously overpaid amounts.
The client was extremely pleased with the outcome, expressing her gratitude to the team in a personal email. She further demonstrated her satisfaction by referring her family members to SDG Accountant for their tax needs as well.
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Dealing with tax refunds while residing overseas can be challenging. Seeking advice from a tax accountant who focuses on expatriate taxation can assist you in optimizing your refund and adhering to relevant tax regulations. Contact SDG today to schedule a free consultation and let us help you achieve financial clarity and security.
BOOK AN APPOINMENTConclusion: Commitment to Client Success
This case highlights SDG Accountant’s dedication to identifying and applying beneficial tax laws for expatriate clients, along with our commitment to transparency and client-centred service. Through proactive strategies and expert knowledge of expat tax laws, Sami Ghaith and the team at SDG Accountant provided this client with a significant financial recovery while strengthening our reputation as a trusted advisor for U.S. citizens living abroad.
The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situations.
— Sami Ghaith
CPA, CGA, MBA
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