In this section, learn about filing and paying taxes for US expats. Plus, foreign income and the exact forms you need to file your expat taxes, and what to do if you made a mistake on your tax forms as an American expat.
Factually stating, living as a US citizen abroad does not prevent you from your US tax duties. Filing an annual tax return if you make over the filing threshold is an obligatory task to do. Plus, you may be liable to pay US taxes, which we’ll get into below.
Any foreign sourced income you make is able to be taxed at the same marginal rate as any other regular income being earned within the country.
To avoid double taxation – which is when the US and foreign country you live in both place tax on your income – the IRS allows expat tax benefits. The Foreign Earned Income Exclusion (FEIE) can exclude up to $107,600 of foreign earned income for tax season 2020 (in year 2021). The Foreign Tax Credit can be used as a credit for specific types of incomes – unique to each foreign country, allowing you to offset US income taxes with the income tax you paid to a foreign country
To learn more about paying taxes on US and Foreign income, please see this blog here.
In addition to those two commonly used expat tax benefits, there are also a number of US tax treaties that prevent double taxation on certain types of income.
US Tax Forms for Filing
As a US American abroad, these are some of the most common forms you will be using to optimize your US expat taxes
- Form 1040 – US Individual Income Tax Return +
- Form 1040, Schedule 1 (For Foreign Earned Income Exclusion)
- Form 1040, Schedule 2 & Schedule 3 (For Foreign Tax Credit)
- Schedule A – Itemized Deductions
- Schedule B – Interest and Ordinary Dividends
- Schedule C – Business Income
- Schedule D / Form 8949 – Capital Gains Income
- Form 2555 – Foreign Earned Income
- Form 1116 – Foreign Tax Credit
- Form 8812 – Additional Child Tax Credit (For US Tax Refunds for Families Abroad)
- Form 8833 – Treaty-Based Return Position Disclosure (For Tax Treaty Benefits)
- Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax (If you need the extra time!)
- (FBAR) / Form 8938 – Report of Foreign Bank and Financial Accounts / FATCA
Don’t worry if you feel like you have to manually fill them all out. Our expat tax software has all the forms you need and makes the US tax filing process much faster.
What happens if you made a mistake when filing?
The IRS Form 1040X can be your saving grace to amending a mistake via your federal tax form. This form can correct forms 1040, 1040-A, 1040-EZ, 1040-NR, or 1040-NR EZ. Plus you can change the income amounts that were previously adjusted by the IRS, and make a claim for a carryback from a loss or unused credit.
Form 1040X allows you to file for an amendment within three years from the original due date you submitted your return. For example, you made a mistake on your 2019 tax return, you have until 2022 to make the necessary changes.
Additionally, the IRS uses a highly intelligent technological system to process tax returns. It can identify missing income, mathematical errors, required schedules, and more. So if you made a mistake on one of your tax forms, the IRS system can accordingly adjust the income/numbers, and you will receive a notification that changes have been made.
Then, if you missed filing a tax schedule, the IRS will notify you in two ways: Send you a request to file the schedule, or will ignore your missing schedule and process your return.
If you made a mistake or put in the wrong information through the MyExpatTaxes process, we will help you amend your taxes in our middle or higher tiers of service.
Tax deadline if you filed for an extension
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