RegisterSign In
RegisterSign In
Expat Info Desk
  • Home
  • Expat Destinations
    • Amsterdam
    • Auckland
    • Bangalore
    • Bangkok
    • Barcelona
    • Beijing
    • Berlin
    • Brussels
    • Buenos Aires
    • Cape Town
    • Chicago
    • Delhi
    • Dubai
    • Hanoi
    • Hong Kong
    • Houston
    • Islamabad
    • Istanbul
    • Kuala Lumpur
    • Lisbon
    • London
    • Los Angeles
    • Madrid
    • Melbourne
    • Moscow
    • Mumbai
    • New York City
    • Paris
    • Rome
    • Seoul
    • Shanghai
    • Singapore
    • Sydney
    • Tokyo
    • Toronto
    • Vancouver
  • Expat Services
    • International Health Insurance
    • Investment Advice for Expats
    • Booking Travel for Expatriates
    • Expat Moving Services
    • Property Rental
    • Country Visa Services for Expats
    • Online Global Health Insurance Quote
    • Foreign Exchange for Expatriates
    • Expat Mobile App
  • Expat’s Manual
  • Expat Blog
  • Expat Forums
  • Directory
  • News
Expat Info Desk
  • Home
  • Expat Destinations
    • Amsterdam
    • Auckland
    • Bangalore
    • Bangkok
    • Barcelona
    • Beijing
    • Berlin
    • Brussels
    • Buenos Aires
    • Cape Town
    • Chicago
    • Delhi
    • Dubai
    • Hanoi
    • Hong Kong
    • Houston
    • Islamabad
    • Istanbul
    • Kuala Lumpur
    • Lisbon
    • London
    • Los Angeles
    • Madrid
    • Melbourne
    • Moscow
    • Mumbai
    • New York City
    • Paris
    • Rome
    • Seoul
    • Shanghai
    • Singapore
    • Sydney
    • Tokyo
    • Toronto
    • Vancouver
  • Expat Services
    • International Health Insurance
    • Investment Advice for Expats
    • Booking Travel for Expatriates
    • Expat Moving Services
    • Property Rental
    • Country Visa Services for Expats
    • Online Global Health Insurance Quote
    • Foreign Exchange for Expatriates
    • Expat Mobile App
  • Expat’s Manual
  • Expat Blog
  • Expat Forums
  • Directory
  • News
Skip to content
  • Home
  • Expat Destinations
    • Amsterdam
    • Auckland
    • Bangalore
    • Bangkok
    • Barcelona
    • Beijing
    • Berlin
    • Brussels
    • Buenos Aires
    • Cape Town
    • Chicago
    • Delhi
    • Dubai
    • Hanoi
    • Hong Kong
    • Houston
    • Islamabad
    • Istanbul
    • Kuala Lumpur
    • Lisbon
    • London
    • Los Angeles
    • Madrid
    • Melbourne
    • Moscow
    • Mumbai
    • New York City
    • Paris
    • Rome
    • Seoul
    • Shanghai
    • Singapore
    • Sydney
    • Tokyo
    • Toronto
    • Vancouver
  • Expat Services
    • International Health Insurance
    • Investment Advice for Expats
    • Booking Travel for Expatriates
    • Expat Moving Services
    • Property Rental
    • Country Visa Services for Expats
    • Online Global Health Insurance Quote
    • Foreign Exchange for Expatriates
    • Expat Mobile App
  • Expat’s Manual
  • Expat Blog
  • Expat Forums
  • Directory
  • News
overseas worker
Wednesday, 9th,April 2014

5 Things You May Not Know About US Taxes for Expats

Find Out If you Know These 5 Things About US Taxes for Expats

Whether you are considering a move overseas or already living the expat lifestyle, it is important to remember that US expats must file a US tax return each year, regardless of where you live. The US is one of only a handful of countries that requires you to report your worldwide income, even when you are not a US resident. Expat taxes are often overlooked in an overseas move, so we wanted to take this opportunity to outline 5 things you may not know (but need to know!) about US taxes.

Know the Deadlines

us taxes for expats

Most Americans are well aware of the April 15th tax deadline, but one of the benefits of being an expat is that you receive extra time to prepare your US expat tax return. Here are your expat deadlines:

  • June 16th – Deadline to file your US expat tax return, but you can file for an extension until October 15th.
  • June 30th – FBAR must be filed electronically via FinCEN Form 114 and there are no extensions. (Read more about FBAR below!)
  • October 15th– Final deadline for US expat tax returns to be filed with the IRS.

File FBAR if you are required

If you haven’t heard of FBAR (Foreign Bank Account Report), it’s time to get acquainted! FBAR was created as part of the IRS’ crackdown on tax evaders. By requiring US citizens to report their foreign accounts’ balances, the IRS can identify those who may be hiding money overseas to avoid US taxes.

FBAR must be filed if you have $10,000 or more in a foreign bank account at any point during the tax year. Even if you only hit that balance one day in the year, FBAR must be filed. Keep in mind this is an aggregate amount—meaning, if you have a combined total of $10,000 in more than one account, you must file.

In past years FBAR was filed via Form TD 90-22.1, and it had to be mailed to the IRS. Filing is now done electronically via FinCEN Form 114 (which goes to the US Treasury, not the IRS), and there are no extensions. Penalties for failing to file FBAR can be steep, so it is important to file if you must do so.

FATCA reporting is important, too!

FATCA, the Foreign Account Tax Compliance Act, is yet another reporting requirement developed by the IRS to lure tax evaders out of hiding. With FATCA, you are required to file Form 8938 along with your US Federal Tax Return if you have offshore assets that exceed certain thresholds, which vary depending on your filing status.

The types of assets that must be reported are foreign pensions, foreign bank accounts, foreign mutual funds or stockholdings, or foreign partnership interests. You are not required to report your home on Form 8938. Here are the thresholds for your filing requirements as a US expat:

  • Filing Single: Balance in these accounts was over $200,000 on the last day of the year or over $300,000 at any point during the year.
  • Married Filing Jointly: Balance in these accounts was over $400,000 on the last day of the year or over $600,000 at any point during the year.

If you file for an extension on your US tax return, you are granted an extension on Form 8938, as well.

us taxes for expats

Take advantage of US exclusions, deductions, and credits.

US expats are often worried about the dreaded dual-taxation, where you pay taxes to your host country and then again to the US. Thankfully there are several ways you can offset your tax liability.

The Foreign Earned Income Exclusion- This exclusion allows you to deduct $97,600 of your foreign income from your US tax return (for the 2013 tax year). It’s possible to eliminate your entire tax liability with this exclusion alone! However, to be eligible, you must qualify as a US expat by passing one of two residency tests.

The Physical Presence test requires you to earn foreign income and be outside of the US for 330 of any 365 day period. (Most expats qualify this way—more details can be found here.) The Bona Fide Residence test requires you to live outside the US for at least one year and have no plans to return to the US.

Foreign Tax Credit – This is a dollar-for-dollar tax reduction on the taxes you pay to your host country. So if you paid $2,000 to your host country, you could deduct $2,000 from your US tax liability. The only catch is that you can’t apply the credit to income you have already reduced using the Foreign Earned Income Exclusion—you can’t get a ‘double-benefit’ by using both deductions on the same income.

Foreign Housing Exclusion- This exclusion allows you to deduct a certain amount of housing expenses, as the IRS recognizes that living abroad can be more expensive. The amount you can deduct is tied to the Foreign Earned Income Exclusion (which adjusts each year for inflation), and certain cities receive higher allowances for their increased cost of living. To find out if your host city qualifies for a higher allowance, see the IRS publication right here.

us taxes for expats

Obamacare may impact you.

Obamacare, or the Affordable Care Act, went into effect in 2014, and while it may be surprising, you may still be required to comply with the provisions while living overseas. Here’s the scoop: Obamacare requires all Americans to hold the ‘minimum essential coverage’ outlined by the plan, or a penalty tax will be assessed. If you qualify for the Foreign Earned Income Exclusion via one of the residency tests above, you are exempt from Obamacare.

Also, expats covered under a qualifying US expatriate health plan are exempt. If, however, you are overseas on a short-term assignment or don’t yet qualify as an expat, you may be subjected to the tax, which is the GREATER of $95 per adult and $47.50 per child (up to $285 for the family) OR 1% of your family for 2014. The penalties rise in 2015 and 2016, but you will like to qualify for the Foreign Earned Income Exclusion and be exempt if you are still overseas.

As you can see, there is much to learn about US expat taxes! The US tax system is complex, and the laws are ever-changing. Staying informed will help you save money on your US expat tax return and avoid costly (and unnecessary) penalties!

 

This post was written by David McKeegan, co-founder of Greenback Expat Tax Services. Greenback specializes in the preparation of US expat tax returns for Americans living abroad. Greenback offers straightforward pricing, a hassle-free process, and CPAs and IRS Enrolled Agents who have extensive experience in the field of expat tax preparation. For a more in-depth look at your US expat tax obligations, download one of our free US tax guides right here!

If you’d like Greenback to prepare your US expat tax return, click here to get started or visit www.greenbacktaxservices.com for more information.

ExpatInfoDesk
Author: ExpatInfoDesk

Blog, Expat Tax Foreign Bank Account Report, living the expat lifestyle, US expat tax return, US tax return, US taxes, US Taxes for Expats
Post navigation
← Expat interview: Writing is therapy
New Tips on How to File FBAR →

Recent Posts

  • Common Challenges Living Abroad & 7 Ways Life Coaching Can Help
  • Why are Expats Retiring in Thailand?
  • Top Tips for Applying for an Italian Work Visa
  • 6 ​​Tips for preparing your child to move abroad?
  • How do you compare to other US expats?

Recent Comments

  • Rosemary Ann COOK (nee Davies) on Five Steps to Giving up Your Australian Passport
  • Brenda Owen on US Federal Tax Liability: Expat Tax USA
  • David Tompkins on Relinquishing US Citizenship
  • MEINELT sybille on Trailing Spouse
  • Jose Suarez on Retirement Finances

Archives

Categories

  • Blog
  • Budgets
  • Citizenships & Visas
  • Digital Nomads
  • Expat Cities
  • Expat Destinations
  • Expat Events
  • Expat Health
  • Expat Investments
  • Expat Jobs
  • expat kids
  • Expat Parenting
  • Expat Relationships
  • Expat Tax
  • Expat Tips
  • Expat Wife
  • Expats in Asia
  • Expats in USA
  • Global Nomads
  • International Health Insurance
  • LGBTQ
  • Mental Health
  • Moving Abroad
  • News
  • Registration
  • Relocation Advice
  • Repatriation
  • Retire Abroad
  • third culture kid
  • Trailing Spouse
  • Uncategorized

Tags

American expat American expatriate American expats asia expat China Cost of Living culture shock digital nomads expat Expat Book Review expat destination guides expat destinations Expat Explorer expat guide Expat Interview Expat Interviews expat life expatriate expatriate community expatriate life expatriates expats expat tax FBAR global citizen global nomad global nomads hong kong International Health Insurance life abroad life overseas live abroad living abroad Living overseas move abroad move overseas moving abroad moving overseas singapore trailing spouse United Kingdom United States US Citizens US expats Working Overseas

Twitter

Tweets by @commercegurus
Expat Info Desk

We provide valuable information, interaction and resources to expatriates around the world at no cost.

Explore

  • About Us
  • Corporate
  • Expat Authors
  • Guide content
  • FAQs
  • In The Press
  • Advertising Opportunities
  • Contact Us
  • Mobile application
  • Newsletter
  • Write For Us
  • Cookies Policy
  • Facebook
  • Twitter
  • Instagram
  • LinkedIn
  • Site Map
  • Privacy Policy
  • Terms of Use
  • Terms of Service
© 2008 - 2020

Whilst all reasonable care has been taken in the preparation of this publication, the owner of Expatinfodesk.com does not accept any responsibility for any loss suffered by any person acting or refraining from action as a result of relying upon its contents.

Top
We use cookies to make sure the website can function, to measure traffic and to support the marketing of our services. By clicking on "Allow" or using the website, you agree to our use of cookies, our Privacy Statement & Legal Terms of Use & Service. Please read our Cookie Notice for further information about our use of cookies. You may change your consent by rejecting optional cookies in the settings or by blocking cookies in your browser.
Allow cookiesDecline
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT

become digital nomad

Would you like to know more about international health insurance & get a free global health insurance quote?
Choose a custom global medical plan which meets your needs and budget