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10 U.S. Expat Tax Rules You Need to Be Aware of

Even if you’ve chosen to reside outside of the United States, you are still required to do expat tax filing. Today we are outlining 10 essential expat tax rules that you need to know about and abide by.

1. The tax return deadline

  • The tax return deadline for expats is extended to June 15th.
  • You must pay tax owed by 15th April to avoid interests

2. The foreign earned income exclusion amount

The foreign earned income exclusion for 2017 is

  • $102,100 of the annual income for employed individual
  • $204,200 of the annual income for married couples filing jointly, where both spouses work as employees.

3. Obligations and rights related to a foreign corporation or an LLC

  • You need to file special IRS forms if you own 10% or more of a foreign corporation or an LLC to avoid large penalties and criminal prosecution. This may require you getting expat tax help to ensure everything is done correctly and on time.
  • When forming a foreign business entity you should make the right tax election to save yourself a considerable amount of taxes. An experienced expat tax accountant would be able to advise you correctly.
  • A Subpart F income tax applies to US shareholders of a foreign corporation.
  • Investors in a foreign corporation may be required to file a PFIC form in addition to their return and may incur further taxes on their income. Contact a certified expat tax accountant to explain these forms in detail and guide you through all the applicable expat tax rules in your particular situation.

4. Reporting all financial assets

  • By FATCA law, you are required to report all of your financial assets held in the US and abroad if they exceed $50,000. But if you are an Expat the limit goes up to $200K and doubled if married.
  • You must do that in your expat tax return.
  • Failure to do so may result in a fine of $10,000.

5. Tax credits

  • You can get tax credits used towards your US tax if you pay taxes in the country you reside in.
  • Tax credits can help you bring your US tax to a minimum and there are IRS tax programs for those who are in arrears to reduce the burden of repayment.

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6. Deductions you can claim

If you exceed the foreign earned income exclusion amount you can deduct housing expenses for:

  • Rent
  • Utilities
  • Maintenance

7. Self-employment expat tax rates

  • The self-employment expat tax rates are 15.3%
  • In a small number of countries, in which you may reside, you may be allowed to pay your social security locally, rather than in the U.S.

8. Foreign trusts

You are required to submit the forms 3520 and 3520A in addition to your expat tax return if you are an owner or a beneficiary of:

  • A foreign trust
  • A foreign non-profit organization
  • A foreign foundation


9. When to file FBAR

As a US expat, you are required to file FBAR form:

  • If at any point during the year the total sum of your foreign account balances equaled or exceeded $10,000
  • By April 15th (previously June 30th)

Failure to do that can result in serious IRS penalties and you should consult with an expat tax accountant to prevent potential fall into debt due to fines and interests.

10. Dodging won’t work

If you think you dodge expat tax filing and get away with it, you should reconsider. The IRS works with an increased number of specialists, employed specifically to go after expats who don’t file or pay their taxes in the US. When you eventually get caught, you may suffer severe consequences, including criminal charges.

Be smart and contact us today at support@fascpaconsultants.com. We can give you expert US expat tax advice and quite possibly save you a good chunk of money.

Like this article? Join our U.S. Tax Expat Facebook Group: US Expats Tax Intelligence

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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