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.
Paying Taxes on Foreign Income and US Income in 2023
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 it 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 can be taxed at the same marginal rate as any other regular income being earned within the country.
To avoid double taxation – when the US and foreign country you live in both place tax on your income – the IRS allows expat tax benefits. $112,000 of foreign earned income for tax season 2022 (filing in 2023). The Foreign Tax Credit can be used as a credit for specific types of income – 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, read Paying US Taxes as an American Abroad.
In addition to those two commonly used expat tax benefits, there are also several 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
Schedules 2 & 3
|US Individual Income Tax Return +|
For Foreign Earned Income Exclusion
For Foreign Tax Credit
|Interest & Ordinary Dividends|
|Capital Gains Income|
|Worldwide Rental Income|
|Self-Employment Tax |
(For expats who cannot utilize the Totalization Treaty)
|Foreign Earned Income|
|Foreign Tax Credit|
|Additional Child Tax Credit |
(For US Tax Refunds for Families Abroad)
|Treaty-Based Return Position Disclosure (For Tax Treaty Benefits)|
|Report of Foreign Bank and Financial Accounts / FATCA|
|Application for Automatic Extension of Time to File US Individual Income Tax|
Don’t worry if you feel like you have to fill them all out manually. Our expat tax software has all the forms you need, making 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 amend 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 previously adjusted by the IRS, and claim 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, if you made an error on your 2020 tax return, you have until 2023 to make the necessary changes.
Additionally, the IRS uses a technological system to process tax returns. It can identify missing income, mathematical errors, required schedules, and more. So if your tax forms has a mistake or two, the IRS system can adjust the income/numbers accordingly, and you will receive a notification that changes have been made.
Then, let’s say you’ve missed filing a tax schedule, the IRS will notify you in two ways: Send you a request to file the program, or will ignore your missing plan and process your return.
Or maybe 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.