Living abroad doesn’t mean you’re off the hook when it comes to U.S. taxes. If you’re a U.S. citizen or green card holder living overseas, you’re still required to file a federal tax return. But expat taxes come with their own set of rules, timelines, and potential benefits.
This guide distills the most critical information you must know – without the lawyer jargon – so you can stay compliant and surprise-free.
Knowing Your Filing Requirements as an Expat
Even if you haven’t set foot in the U.S. for years, the IRS still expects you to report your worldwide income. What changes, however, are the resources and deadlines you have to assist you in reducing double taxation.
You Still Have to File – Even Overseas
Few expats know that their tax obligation travels with them when they leave the country. If you earn income – from a foreign employer, self-employment, or investments – chances are good that you must file. You may owe nothing, thanks to expat-friendly deductions and credits.
Deductions and Credits That Can Reduce Your Tax Bill
It is a real concern being double taxed on the same funds – but there are ways that the IRS can mitigate that burden. Knowing which benefits you are eligible for can make all the difference.
Foreign Earned Income Exclusion (FEIE)
If you qualify, the FEIE lets you exclude a certain amount of income earned abroad from your U.S. tax. To qualify, you’ll have to meet the physical presence test or the bona fide residence test. It’s not something that you can elect – you must select it on your tax return.
Foreign Tax Credit (FTC)
Paid taxes in your foreign host country? You can claim a dollar-for-dollar credit against your U.S. tax liability. This is especially helpful if your foreign tax rate exceeds the U.S. rate. You can sometimes use this in combination with the FEIE to achieve maximum relief.
Let Barnes Preston Global Make Tax Preparation Easier
Expat taxes may be complex – but they don’t need to be complicated. At Barnes Preston Global, we help U.S. citizens abroad simplify tax preparation and ease anxiety. We see past the forms to teach you about your obligations and capture all tax-deductible items and credits that are yours to claim.
If you’re abroad and can’t figure out your filing status, deadlines, or documents, don’t let tax season turn into a nightmare. Call us now to get expert help with your expat tax preparation – and eliminate the uncertainty of staying in compliance.