While Preparing Your US Expat Taxes, Prepare Back-Up Records, Too!
It’s June 15, which means that many Americans living abroad are filing their US expat taxes today. And as you know, completing your tax returns is something that often requires digging through a fair amount of documentation even if you enlist the help of a professional. So while the information is easily at hand, why not take a few steps to safeguard your critical records in case of an emergency, natural disaster, or simply misplacing a file or a box when moving?
Create electronic back-ups of your files
In the past, people may have kept spare copies of essential files in a safe in their home or in a safe deposit box in their bank in order to preserve them in case of a fire or other loss. These days, they might keep copies in similar places, but the way they store them is far different, and much easier to maintain!
Scan paper copies of bank statements, tax returns, insurance policies, birth certificates, documents related to citizenship and the country where you currently reside, and other relevant papers, then save to your computer. Many financial institutions, such as your bank or credit card company, already offer online account information that you can download securely to your personal computer. For Greenback customers, you can download your return and the supporting documentation from your secure ShareFile folder as well. Once your documents are in electronic form, you can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD. Some storage devices allow you to password-protect them, which is a good idea in this age of identity theft.
It is smart to create two back-ups, one that can be stored at a remote location and one that is kept in a safe but easy-to-remember place in case you suddenly need to leave your home, so you have your important info on hand no matter what. If you don’t have a safe deposit box or a secure place to store them away from your home, consider swapping password-protected devices with a trusted family member who lives in a location far away from you and would therefore be unlikely to be impacted by a natural disaster in your area. This way, you keep their records, they keep yours, and they promise to send your backup to you in a time of need.
How many years’ worth of documents should you save?
We recently published a blog article titled Managing Your Documents After You File that explains which documents you should keep and how long you should keep them according to the IRS. These are the documents you might be expected to produce if you are ever audited and they will be useful if you need to estimate what you may owe for US expat taxes in the future. As a general rule, you should keep tax returns for at least three years after they are filed.
Don’t stop with basic finances: document your valuables
To further prepare for disaster, consider taking the time to photograph or videotape the contents of your home, especially items of higher value. A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. As with your electronic files, photos should be stored with a friend or family member who lives outside the area.
The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.
If the worst happens, ask for help!
If disaster strikes, you can call 1 (866) 562-5227. The IRS has specialists on hand who are trained to handle disaster-related issues. Back copies of previously-filed tax returns and all attachments, including your W-2 forms, can be requested by filing Form 4506.
For help with your US expat taxes, talk to the experts
We at Greenback Expat Tax Services specialize in helping Americans living overseas with their US expat taxes. If you have questions or would like to get started on preparing your tax returns, complete the form available on our website at www.greenbacktaxservices.com.