Top Things to Know About US Expat Tax

Sep 18, 17 Top Things to Know About US Expat Tax

The word expat is a shortened version of expatriate. An ex-pat typically refers to a person who lives in a different country than the one they were born and raised in. In general, expats are considered to be people who are only temporarily residing in their host country and have the intention to return home at a later date. However, some expats never leave their host countries for one reason or another. They may experience a higher quality of life in their host country, or they may fall in love with its culture and customs. They may even fall in love with a person from that country, get married, and never return to their country of origin.

There are many US expats worldwide. But all US expats are responsible for paying US Expat Tax, something many people don’t think about while they’re thinking of living somewhere other than the United States.

What is Ex-Pat Tax?

The United States is one of only two countries (the other is Eritrea) that taxes its citizens no matter where they live; if you’re a US citizen living in another country, you are obliged to file US taxes and pay US Ex-Pat Tax. If you haven’t been paying US taxes but are an ex-pat, you may actually owe the government money; unpaid taxes can lead to hefty fines and even jail time, so don’t delay in contacting an international tax lawyer as soon as possible. Make sure you know how to file and pay your Ex-pat tax!

The good news is that, in order to prevent the double taxation of income that is earned by US citizens living in another country, the US tax code has provisions that can reduce or even eliminate an ex-pat’s duty to pay US taxes. For example, there is a provision called the Foreign Earned Income Exclusion (FEIE), which allows expats to exclude a certain amount of income that they earned abroad. In 2015, this number was just over $100 000. Ex-pats also have the opportunity to apply paid foreign taxes as a credit against their US taxes.

However, even if you don’t owe any taxes, you must file a US income tax return every year. However, filing ex-pat tax can be a complicated process; if you want to claim the FIEE or any foreign tax credits, you’ll need to file specific forms along with your tax return. In certain cases, if you’re late filing these forms you may be barred from making the claims. You may also be charged late penalties.

What if I don’t make a lot of money? Do I still have to pay ex-pat tax?

It doesn’t matter how much income you make; you are still obligated to file an annual US tax return. You may not have to pay any ex-pat taxes, but it’s critical that you file your tax returns every year, even if you have no plans to return to US soil.

What if I’ve never filed a tax return before? Will I face severe penalties?

Don’t despair. What many US expats don’t realize is that the US government has introduced certain programs, known as the Streamlined procedures, which allow non-willfully or delinquent taxpayers to file their taxes without incurring any penalties. If you’re deemed someone who hasn’t paid taxes for unintentional reasons, you may only be required to file the last three years’ worth of tax returns. The IRS introduced the Streamlined procedures to make it more attractive for non-willful delinquent taxpayers to file their taxes without fear of penalty.

If you’re a US ex-pat, you will need to comply with US ex-pat tax laws. It’s as simple as that. However, filing US taxes can be a complicated and frustrating procedure, so it’s best to work with professionals who can help you save money and time. Professional tax consultants pride themselves in knowing international tax law in-and-out, and they can help you protect your assets and income from over-taxation and undue penalties. If you haven’t filed your US tax returns yet, it’s time to do so. Contact an experienced US expat tax consultant ( right away to set up a consultation; they’ll sit down with you to go over all your options and the best solutions for you.