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Everything You Want to Know About US Expat Taxes

Posted on by USA Expat Taxes

US citizens living abroad

US citizens living abroad

Everything You Want to Know About US Expat Taxes

US Expat tax is a complex topic. It is therefore imperative that you understand the ins and outs of the US expat tax system. United States is one of those two countries in the world that tax its citizen for income earned by them in any part of the world. US citizens living abroad have to pay the expat taxes for the income by them abroad

Understanding the US tax code can be a daunting task. And for US citizens living abroad, the information of expat taxes are even more complex and confusing. Here are some of the things that have to be taken into account about US expat taxes:

  1. Expats must file American taxes if they have income, received certain credits or other special situations that might apply. If you are an American citizen earning over a certain amount of foreign income abroad then you are bound to file US tax return. If you are legally US citizen, you have a tax obligation to the US.

  2. Most American expats do not owe US taxes: There are varieties of mechanisms in place to prevent US expats from being double taxed on foreign earned income. In most situations US expats can offset foreign earned income with – Foreign tax credit, Foreign earned income exclusion and Foreign Housing exclusion.

  3. Expats might still have to pay US state taxes: Living abroad does not automatically exclude American expats from paying state taxes and it depends on the state you live in prior to moving abroad. It is recommended that you consult an expert and professional American expat tax services if you are if you have state tax obligation or not.

  4. If you are US expat and not filing taxes can result in losing of your passport, being charged with fines and other penalties to jail for serious tax evaders.

  5. Claiming children as dependents will give you few perks on your US expat taxes. However, while you are abroad, your eligibility can differ. If you claim FEIE, you are not able to claim the refundable portion, meaning the child tax credit will not lead to refund on your return.

  6. If you are a US expat and has never filed a tax return, then IRS understands that is it a complex topic and show lenience with genuine mistakes. With streamlined filing compliance procedures the expats can get caught up on multiple years of US expat taxes.

  7. You may qualify for COVID 19 stimulus checks if you fall within the income threshold, have a social security number and file taxes as an expat. All the non filers and retired expats who live abroad also qualify.

  8. The US government and the country where the US expats are living provide them with the variety of aids to prevent them from double taxation. These aids include tax treaties, the foreign earned income exclusion and the foreign tax credit.

  9. If you retire abroad you may still have to pay US expat taxes on your retirement income and social security payments.

  10. When filing for expat taxes, certain investment accounts or retirement plans owned abroad may not be treated the same as your US counterparts, changing your liability drastically.


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