Paying taxes can be enough of a worry, but for anyone dealing with paying US Expat Taxes, it can be even more concerning. And yes, those living abroad are still required to report and file, despite living outside of the USA. There are still forms to fill out and reporting that must be done. Americans are required to report their income regardless of where in the world they live and have earned that income.
That doesn’t mean that every American living abroad owes US expat taxes to the government, but it is still important to file in order to be sure that there are no misunderstandings, or worse, any possibilities of paying taxes on the same income more than once. If you haven’t filed in the past, talk to an accountant who can help you. You can still catch up
Some forms to be aware of
One form to look for in this situation is the Foreign Earned Income Exclusion (FEIE). Proper completion of this form allows the citizen to declare a certain amount of foreign income that was earned abroad and use their taxes paid to reduce their US expat tax obligation; however, to make the most out of tax season when living abroad, it is helpful to work with an accountant specializing in international tax law.
Foreign Bank Accounts
Another US expat tax form that must be filled out is the FBAR. This form requires US citizens to declare the amount of money held in any foreign bank account. The Foreign Bank and Financial Account Report requires any holder of a US account to report any foreign accounts exceeding $10,000 in total. That figure means that all foreign bank accounts of all types must be reported, and the balances in those accounts must be added together to get past $10,000. This is frequently misunderstood because many believe that only accounts with $10,000 or more in them need to be reported.
Things are not always the same wherever you go
Not everything that applies to residency or citizenship in one country will still apply in another country, and that is another reason why having a US expat tax expert on your side will help when it comes to understanding US expat tax regulations. A pension or savings plan that is tax-deferred in one country may not be in the US. It is helpful to check into this with your accountant.
So, once again, yes, it is necessary to file taxes, even for those Americans not living, working, or spending in the USA. In fact, as unpleasant and invasive as it may seem, filing US expat taxes is the law. Filing taxes ensures that American expats can return to the US with the full benefit of their citizenship. If you haven’t filed in many years, the best thing to do is catch up as soon as possible. But don’t do it alone. Paying taxes is worrying for a reason, but the benefits gained are worth it. Contact an international tax specialist and see how they can help with your situation.
Esquire Group, a boutique international tax advisory firm specializing in tax consulting, tax planning and compliance and helping corporate and individual taxpayers with Offshore Voluntary Disclosure Program, asset protection, and US expat taxes. To learn more about us, visit https://Esquiregroup.com/About.