The United States of America – A Nation of Forms
As it stands, there are a number of normal investments prohibited to U.S. citizens living abroad. U.S. citizens living abroad will likely find it much more difficult to find an accountant or tax prep person to help them with their taxes. There are at least three reasons:
1. Paid Tax Preparer Registration Required – Effective for the 2011 tax year, the IRS is requiring all “paid tax preparers” to register with and pay a fee to the IRS. For many this will require the taking of an exam.
(Whether this can be applied to preparers outside the U.S. or not, it will certainly reduce the number of people willing to take this on.)
2. Professional liability – Who would want the risk of making a mistake? I know at least one Canadian CA who will not take American clients. Who would want the problems? In addition to the 1040, there is the problem of the FBAR, the new 8938 form, the appropriate RRSP election form, and a host of possible other forms (see below).
3. Too much work for too little money – The work is so substantial that, that I expect the minimum fee will be in the range of $1000 (for somebody who has no assets or issues). Although this I small change for some taxpayers, it is clearly too expensive for most taxpayers.