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Expat Filing Requirements

Expat Tax Blog | Tax Tips for US Americans Abroad

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The phrase “tax season” generally triggers some amount of stress which may or may not be accompanied with eye twitching. This tends to compounded even more when you are filing as an expat. However, fear not, below is our handy list of must-know filing requirements for our fellow American expatriates. This will hopefully ease some of your stress as we embark on this filing adventure together.

Need to File US Expat Taxes?

Generally speaking, most U.S. citizens or resident aliens living or traveling outside the United States are still required to file income tax returns, estate tax returns, gift tax returns, and pay estimated taxes in the same way as those residing in the United States. Your income, filing status, and age among other factors will determine whether you must file a tax return. In most cases, you must file a tax return if your worldwide gross income.

Here are the most common filing requirements for your reference

Filing Status

You must file if your worldwide
gross income is at least:

Single

$10,400

Head of Household

$13,400

Married Filing Jointly

$20,800

Married Filing Separately

$4,050

Qualifying Widow

$16,750

Of course, if you are under 24 or over 65 or have any disabilities, the filing requirements can differ slightly.

Gross Income

Your gross income is the amount of money you earn before anything is taken out for taxes or other deductions. So gross income includes all the income you receive that year in the form of money, services, goods, and property that is not exempt from tax. As an expat, this is crucial information as yes, your foreign earned income is included in the gross income definition but can actually be exempt from taxes up to the annually updated threshold. The 2017 year’s exclusion threshold has increased to $102,100.

Getting Paid in a Different Currency

The amounts you report on your US tax return must be in US dollars. So if all, or part of your income, is in foreign currency or if your expenses are in a foreign currency, you are required to translate that into US dollars on your tax return. The IRS prefers that you use the spot exchange rate at the time of payment. We realize this can be difficult to track, so we use the Yearly Average Currency Exchange Rate in our tax calculations for you.

The FBAR

If you had a financial interest in, or signature or authority over a bank, securities, or other financial accounts in a foreign country, in which the total combined value exceeds $10,000 at any point in the year, you must file FinCEN Report 114, Report of Foreign Bank and Financial Accounts (“FBAR”). The only exception to this, is if the assets are with a U.S. military banking facility operated by a U.S. financial institution.

The FBAR must be filed by April 15 each year, with a maximum extension to October 15. However bear in mind, the FBAR form is not a tax return, so do not attach it to your Form 1040.Instead, you will need to file it electronically to the Financial Crimes Enforcement Network. Many expats overlook this additional form, which can result up to a penalty of $10,000 for each non-willful violation (so even if you just forgot!). Keep in mind that now many foreign banks are required to report U.S. account holders to the IRS.

Something worth mentioning, if you have an interest in specific foreign financial assets with a value above the reporting threshold (ranging between $50,000 to $600,000 based on filing status and where you currently reside) , you may be liable for filing Form 8938, Statement of Specified Foreign Financial Assets.

File US Expat Taxes Today

Does it still sound confusing? We understand. As we expressed in the beginning, we know that tax season is extremely stressful even when you live in America, more so when you’re not in America anymore! It seems like all the software solutions out there forgot about us American expat taxpayers and personalized services want to charge us upwards of $500 – $800 just to file! This is why we founded MyExpatTaxes because we know that moving abroad is hard enough, but your taxes shouldn’t be…

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Expat Tax Tips

We scour and examine the complexities of IRS and state tax laws to make filing taxes as a US expat easy.

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