If you are a U.S. citizen or Green Card Holder who lives and works outside the United States, you still have a requirement to file your US individual income tax return annually which includes your worldwide income. You may however qualify to exclude some or all of your foreign earned income from U.S. taxation if you qualify for the foreign earned income and housing exclusion.
If you have not filed tax returns or FBAR’s in some time, you do not need to worry as the IRS currently has special programs available to delinquent taxpayers living abroad. You may be eligible to qualify under the streamline process where you are only required to file the last 3 years of tax returns and last 6 years of FBARs to bring your filing position current with the IRS.
There is a requirement for Americans and Green Card Holders to declare all bank accounts abroad if the aggregate value of the accounts is over $10,000. This declaration is for information purposes only and there is no associated tax with declaring foreign bank accounts and highest account balances. Non-compliance with reporting however may lead to heavy fines.
The Foreign Account Tax Compliance Act (FATCA) is a relatively new development that now requires foreign banks to begin sharing financial information with the U.S. government. Foreign banks are now required to start sharing information of American account holders with the US authorities regularly.
FATCA is different from FBAR as FATCA information is reported by banks where as individuals are required to report FBAR information.
The “foreign earned income exclusion” (“FEIE”) is a benefit to individuals living abroad which allows a general exclusion of up to USD 101,300 for tax year 2016; this amount is adjusted annually for inflation. In addition to (or in lieu of) the FEIE, you may elect to exclude from income a housing cost amount based on your foreign housing expenses (the “housing cost exclusion”). To claim these exclusions, you must meet certain requirements
US citizens and Green Card Holders who own a business outside the US generally have additional filing requirements to go along with filing of personal tax return. Certain U.S. individuals who own more than 10% of stock in a foreign corporation must include additional forms (Form 5471) with their federal tax return.
I pay income tax in a foreign country. Do I still have to file a U.S. income tax return even though I do not live in the United States?
You are still required to file a US tax return. However you may be eligible to take a credit for taxes paid in a foreign country.
The due date for filing a federal individual income tax return generally is April 15 of each year if your tax year ends December 31st. Your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15.
However, if you are a U.S. citizen or resident alien living abroad, you are allowed an automatic 2-month extension until June 15 to file your return and pay any tax due.
Capital gains are included in your worldwide income for US tax purposes. Gift, real estate and inheritance taxes all apply to US citizens and Green Card holders regardless of where they were located. You will also be taxed on any income from dividends or investments overseas and may face increased reporting requirements on foreign mutual funds or investment vehicles.
For vast majority of cases, we can e-file your tax return with the IRS on your behalf and therefore you are not required to mail in the tax returns. There are some cases in which the IRS does not allow e-filing, such as if you are filing late and/or for multiple tax years at one time. In that case, we will inform you and provide you with instructions to file a signed paper version. Then, you will need to sign the form, and submit directly to the IRS.
You may be eligible to contribute to an IRA even if you are living abroad. However you may be able to contribute only to a certain type of IRA (i.e. Traditional IRA or a Roth IRA). To determine which IRA you are eligible to make a contribution to, various factors such as your residency, exclusion amount, income have to be reviewed.
We help Americans living in over 15 countries file their tax returns with the IRS remotely. We have a simple and an effective process in place where we collect information from individuals remotely regardless of where they live. and help them prepare and file their tax returns. That’s right, there is no requirement to visit a tax preparer’s office any longer as we can help you file your taxes from the comfort of your home.