8 Things You Need to Know About US Expat Taxes

US Expat Taxes

Most people never had to analyze their country’s tax regulations to understand how its tax system works. In fact, depending on education and such, most of the tax-related information is learned in either school or superior education.

However, US expats do not have it that easy. They must study not only the US tax code but also understand it. What is so difficult about this?

Well, tax attorneys can provide you with essential information regarding federal tax laws. For example, if you are from Scottsdale, only Scottsdale tax attorneys can tell you more about the particularities of tax laws and regulations in that state.

Naturally, this is only the beginning! Here are eight other things that you need to know about expat taxes!

When Must They File US Taxes?

According to the law, expats must consider a tax filing once they have an income or receive various credits while living in another country.

When speaking of income, it includes everything generated by rentals, wages, and interest. Those that are self-employed need to file a tax form once they surpass the $400 threshold.

Extension for Tax Filing

Expats are lucky enough to enjoy an extension in terms of tax filing. Instead of having to declare their income until April, they can do so until June 15.

However, any debt towards the US government must be paid until the original deadline, that of April 15.

The Majority of Expats Don’t Owe Taxes

No one would enjoy being subject to double taxation! Therefore the US has a couple of major exclusions in place that help its expats.

Here, we also refer to exclusion based on foreign housing, foreign tax credit, and foreign earned income. These help people avoid paying certain tax two times in two different countries.

FEIE – Elimination of US TaxesThe FEIE (mentioned above) can help people eliminate US-related taxes completely. For example, for the 2021 tax year, US expats can exclude up to almost $110k from what they warn in a foreign country.

The FEIE (and a few others) is Not Applied Automatically

To enjoy exclusion from various taxes, expats must first qualify for such exclusions and then also fill in some forms.

For the FEIE, for example, expats must fill forms 2555-EZ or 2555. Luckily, such forms must be completed only once!

Who Can Qualify as an Expat?

If you want to skip on taxation, you must also qualify as an expat. The requirements may not be so easy to meet by some, however!

For someone to become an expat, they need to spend 330 days inside a foreign country. Where’s the catch?

Well, time spent flying or on the sea is not added to those 330 days!

Expats Can File for Qualification Extensions

If you’re worried that you may miss on expat taxation benefits just because you’ve planned your move at a later date, you can file for qualifications extensions as well.

Extensions usually last up until October 15.

Renouncing Citizenship

Those who decide to move to another country permanently may find it easier to renounce their US citizenship and simply avoid its taxation system.

However, this can be done only if your taxes have been done properly in the previous five years up until your wish of renunciation – and can prove so as well!

The Bottom Line

One should know many more things about taxation for expats, but these are some of the most common ones.

You may encounter some of the situations mentioned above right now, whereas more complex scenarios will require you to study the tax code a bit!

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Peter is a digital nomad who largely writes from Asia, Europe, and South America. Always following the "vibe," he sets up shop in hostels and AirBNB's and continues to entertain us with wild stories from life abroad.

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