Frequently Asked Questions
Tax FAQ’s
I received a letter or notice from the IRS. What do I do?
Upload it securely to your portal and email us right away. We’ll review it and help you respond appropriately. Don’t ignore it, and don’t panic—most notices just ask for clarification. We're here to help you navigate it.
What’s the difference between tax prep and tax planning?
Tax Preparation is filing your taxes accurately and on time. We gather your information, complete the forms, and file your return to keep you compliant and stress-free.
Tax Planning is proactive. It includes one or more strategy meetings where we project your tax liability and recommend steps to minimize what you owe.
Tax prep reports what already happened; tax planning helps shape what’s next. You win the tax game with a good tax plan.
What are the tax deadlines I should be aware of?
Individual Tax Deadlines:
● April 15: Tax return due
● October 15: Return due if extension was filed
Note: Extensions extend the time to file, not the time to pay.
Business Tax Deadlines:
● March 15: S Corp and Partnership returns due
● April 15: C Corp returns due
Quarterly Estimated Tax Deadlines:
● April 15th (1st quarter estimated taxes due)
● June 15th (2nd quarter estimated taxes due)
● September 15th (3rd quarter estimated taxes due)
● January 15th (4th quarter estimated taxes due)
How do I pay income tax I owe for last year online?
Go to irs.gov/payments. You can pay by bank draft, debit/credit card, or schedule a future payment. Here’s a video on how to do that:
Who needs to pay federal estimated taxes?
Anyone who meets these two conditions:
1. Expects to owe $1,000+ in taxes after subtracting withholdings and credits
2. Withholdings/credits will be less than:
● 90% of current year’s tax, or
● 100% of last year’s tax (110% if AGI > $150,000)
This includes:
● Self-employed individuals
● Business owners (LLC/S Corp)
● People with rental, crypto, or investment income
Estimated taxes are paid at the individual taxpayer level. Even if you own a LLC or S Corp, you pay the tax owed at the individual as those businesses are pass through entities, meaning the income passes through to the owners and they pay tax on the business profits.
If you own a C Corp, then you would pay estimated tax from the C Corp bank account as a C Corp pays it’s own taxes and it is not a pass through entity.
*If you live in a state that has state income tax, you will also need to also pay state estimated taxes to avoid underpayment penalties.
How do I pay federal estimated taxes online?
Go to irs.gov/payments, click "Make a Payment" > "Estimated Taxes."
Here’s a video on how to do that: Video tutorial
If your state has income tax, you will need to pay state estimated tax on your state’s website too.
What happens if I miss a tax deadline?
You will have penalties and interest on any unpaid taxes.
There is a failure to file penalty which is 5% of tax owed per month (max at 25% of tax owed).
There’s a failure to pay penalty which is 0.5% per month (max of 25% of tax owed).
On top of all of that, the IRS will charge you interest on the taxes you owed because they see it as they are lending you money since you owe them money. They currently charge 7% interest compounded daily.
An example of this sad situation is below:
Let’s say you owe $10,000 of tax on April 15th. Life get’s crazy so you don’t talk to us and so you don’t file an extension and you don’t pay any tax on April 15th and you didn’t pay any estimated tax in the prior year.
Let’s say you’re anxiety builds as you know you need to pay and file taxes but it’s too scary and stressful to think about so you go on with your life for a whole year trying not to think about it and hoping it will be okay without doing anything.
In this scenario (a very common one), after a year of not addressing the tax situation, this would be how much you owe with all penalties and interest.
Do I need to file extensions? Will you do that for me?
Yes—if you're our client and notify us at least a week before the deadline, we’ll file it. Remember: extensions give more time to file, not to pay.
I moved or work in multiple states—how does that affect my taxes?
You may need to file in more than one state. We'll review your residency and income sources to determine what states you will be required to file a return in.
Do I need to sign my return?
No. We use the electronic PIN method. When you sign the tax engagement letter with us, you acknowledge the use of this method so there is nothing more you need to sign. We will always send you a final draft of the return for you to approve before we file the return.
How long does it take to finish my return?
2-6 weeks depending on how quickly you upload your documents and fill out the organizer form we send to you. The quicker you get that done, the quicker we can finish preparing your return.
When can I expect my refund?
Typically 3–6 weeks if filed electronically and you chose direct deposit.
But the IRS is extremely slow currently so it can take longer. You can go to this site to track your refund: Track your refund
What’s the difference between a deduction and a credit?
A deduction reduces your taxable income. A credit reduces your tax bill dollar-for-dollar. Here’s a video for a more in depth explanation: Video explanation
For Digital Nomads (U.S. Citizens/Green Card Holders) FAQ’s:
Do I need to pay U.S. taxes if I live abroad?
Yes. The U.S. taxes citizens and green card holders on worldwide income regardless of where you live.
What is the Foreign Earned Income Exclusion (FEIE)?
It allows you to exclude up to about $130,000 (adjusted yearly) of foreign-earned income if you meet physical presence or bona fide residence tests. It only excludes Federal Income tax, it doesn’t exclude Social Security and Medicare taxes.
Typically people qualify by being outside of the US 330 days or more in a consecutive 365 days.
A general rule is if you’re in the U.S. a month or more then you wouldn’t qualify unless you live and are a resident and tax resident of another country. You would also potentially owe tax in that country. Each situation is different, talk to us for a free consultation.
This only applies to EARNED income. So passive income like rental income or dividend income it wouldn’t exclude tax on that.
What is a Foreign Tax Credit vs. FEIE?
The Foreign Tax Credit (FTC) and the Foreign Earned Income Exclusion (FEIE) are two tools the IRS provides to help Americans avoid paying tax twice on the same income when they live and work abroad—but they work in very different ways.
Foreign Earned Tax Credit:
The FTC gives you a dollar-for-dollar credit against your U.S. tax liability for income taxes you’ve already paid to a foreign country. So if you owe $10,000 in U.S. tax but already paid $7,000 in tax to your country of residence, you’d only owe the remaining $3,000 to the IRS.
● Best if you live in a high-tax country like the UK, Canada, or Germany
● Lets you use your full income, including wages and self-employment income
● Can offset taxes on both earned and passive income (interest, dividends, etc.)
● Can carry over unused credits to future years
Foreign Earned Income Exclusion (FEIE):
FEIE lets you exclude up to $130,000 (adjusts yearly) of foreign earned income from U.S. federal income tax.
● Best if you live in a low-tax or no-tax country, like the UAE, Thailand, or Mexico
● Only applies to earned income (wages or self-employment)
● Doesn’t reduce self-employment tax (Social Security & Medicare)
● Must pass one of two IRS residency tests:
● Physical Presence Test (330+ days outside the U.S. in any 365-day period)
● Bona Fide Residence Test (established residency in a foreign country)
You can’t apply both FEIE and FTC to the same income. You’ll need to pick the option that saves you the most money based on:
● Your foreign tax rate
● Your type of income
● How long you spend outside the U.S.
We help our clients compare both and choose the one that minimizes their overall tax. Every situation is different—reach out for a free consultation.
How do I pay myself from my LLC if I’m abroad?
If it’s a single-member LLC, you can transfer funds directly from your U.S. business account to your personal bank account.
For Non-U.S. Citizens & Residents FAQ’s:
Do I owe U.S. tax if I have a U.S. LLC?
It depends on whether your income is considered Effectively Connected Income (ECI) with the U.S. You're generally only taxed in the U.S. if you trigger ECI.
Here’s common ways that happens:
● You have employees physically working in the U.S.
● You (or someone else) run the business from inside the U.S.
● You have a warehouse or inventory stored in the U.S.
If you don’t do business from inside the U.S.—for example, you run an online service business from outside the country or use Amazon FBA or dropshipping for e-commerce—you likely don’t trigger ECI and won’t owe U.S. tax. (Yes, we Americans are jealous.)
However, even if you don’t owe tax, you still must file U.S. tax forms:
● Form 1120 and 5472 if it’s a single-member LLC
● Form 1065 if it’s a partnership
These forms are required every year, and the penalty for late filing is $25,000—even if you owe no tax. We help with all of this so you don’t have to worry. We don’t recommend doing this on your own—it’s not worth the risk.
Do I need an SSN/ITIN to start a business or open a U.S. bank account?
No. You can start a U.S. LLC and open a business bank account without an SSN. We can help you.
Do I have to file a tax return if I own a U.S. business?
Yes. If you have income, you must file:
● 1120 + 5472 for single-member LLCs
● 1065 for partnerships
● 1120 for C Corps (C Corps would owe tax)
Bookkeeping FAQ’s
When should I expect my monthly report?
By the 15th of the following month, assuming you’ve answered all transaction questions.
What does reconciling my bank account mean?
It’s comparing our bookkeeping records with your bank statement to ensure accuracy of the numbers.
Do I need physical receipts?
Digital copies are fine. We recommend just keeping all the email receipts you receive in a Google drive folder or in a folder in your client portal (if our client) so if it’s ever needed you can find them.
If you get a physical receipt then we recommend taking a picture of it and uploading it to that folder. Then you can throw the physical receipt away.
What’s an “Accountable Plan”?
It’s a formal reimbursement policy allowing you to be reimbursed tax-free by your business for personal expenses used for business (like home office, mileage, phone, etc.). We help you set this up.
Here’s a video from our YouTube channel explaining it:
Do I need a separate business bank account?
Yes. Mixing personal and business funds makes taxes harder and more expensive. Always keep business income and expenses in a separate bank account.
