Did you know that when you live and/or work in another country but you’re a citizen of the United States, you’re still required to file a US tax return each year?
There are many circumstances in which an expat could still have US tax filing obligations, so you should be prepared to file in order to cover the requirements.
Expat Filing Requirements
To be clear, an expat is defined as a person who lives outside of their native country. For the U.S. this refers to anyone who is a citizen or a green card holder who is currently residing in a foreign country outside of the US.
Many individuals will move abroad for work or study purposes but as a citizen of the US, you still have a certain obligation. Here are some circumstances that would require filing US taxes as an expat.
- You receive personal income in the US, such as wages, commissions, royalties, etc.
- You are not receiving income but a spouse is or did
- You have income from foreign sources
- You fall into the relevant income thresholds for a Form 1040
You are still be required to file taxes as a US citizen even if you are being taxed by the foreign country already.
Filing Deadlines for Expats
As an expat, your filing deadline is extended from April 15th to June 15th so you are granted a little bit of extra time to file. You also have the ability to file an extension to the October 15th deadline set forth by the IRS.
However, be aware that any taxes due are still due by April 15th. If you wait until the June 15th deadline to pay any taxes due, you will also owe interest that began accruing as of April 15th. This is also true of filing an extension.
What Will You Need?
Expats will have some specific forms that will need to be filed that are not typical for US citizens living and working in the US.
You will file the traditional Form 1040 as required based on income thresholds of your global income. You may also be required to file state returns as well. Some expats are also required to file FinCEN Form 114, which is also known as FBAR. This is the Foreign Bank Account Report.
In order to file the appropriate forms, you will need the following items.
- Pay stubs or provided tax forms from your employer with income details
- Evidence of any other income (rental, royalties, etc.)
- Investment account statements if applicable
- Financial statement for foreign accounts
- Any other applicable income information
Understand Deductions and Credits
There are several available deductions and credits from the IRS for expats as well. The most common are the Foreign Tax Credit and the Foreign Earned Income Exclusion.
The foreign tax credit allows for offsetting US tax with income that has already been taxed within a foreign country.
The Foreign Earned Income Exclusion allows for excluding up to a certain dollar amount of foreign income from US taxes. When filing taxes as an expat you should definitely check to see if you qualify for either of these and any other deductions or credits available. They may help avoid double taxation and save some money.
Summary
In closing, if you are an American citizen and live or work outside of the US, you are still obligated to file US taxes as an expat. Tax payments due are due as of April 15th each year but the official tax filing due date is June 15th or October 15th with an extension.
Be sure to check for possible deductions and credits and understand what documentation you might need in order to file.
