Filing your U.S. taxes while living abroad can be a new and confusing process for many. However, with the correct information and guidance, it can be a smooth process.

The deadline for filing your federal U.S. taxes while living abroad is June 15, 2021. If you think you may need to file an extension, check out this FAQ about filing an extension while living abroad.

These facts about filing your U.S. taxes while living abroad are a good starting point in learning the ins and outs. Be sure to consult with our firm if you need additional assistance.

Q: What do I need to claim?

A: Rental income, wages, interest, and dividends are all taxable foreign income for U.S citizens living abroad. If you are an American citizen and make over a certain amount of income while living abroad, you must file U.S. taxes.

Q: Will I owe U.S. taxes?

A: Most U.S. citizens living abroad do not owe federal taxes. Be sure to check in about state taxes in the state you lived in before moving abroad. There are mechanisms in place to ensure that U.S. citizens do not get double taxed on federal taxes.

Q: How do I avoid being doubled-taxed?

A: The U.S. has numerous aids available to help U.S. citizens avoid double taxing:

The Foreign Tax Credit is used to claim a credit on taxes paid in your residing country from the money you earn through employment.

Foreign Earned Income Exclusion: To qualify, you must pass the Physical Presence Test or Bona Fide Residency Test and be living and working abroad. FEIE can help you exclude over $100,000 of your foreign income earned.

Some countries also have tax treaties with the U.S. to help prevent double taxing.

Q: What happens if I do not file my U.S. taxes?

A: Unfortunately, if you do not file your U.S. taxes while living abroad, you may lose your passport or incur fines. If you have participated in ongoing tax evasion, you could potentially face jail time.

Q: What if I have not filed multiple years of U.S. taxes?

A: Many U.S. citizens living overseas are not aware of their U.S. tax obligations or have overlooked them. Thankfully, the IRS acknowledges that the tax obligations of U.S. ex-pats are a confusing process and has designed the Streamlined Filing Compliance Procedures. This allows U.S. ex-pats to file multiple years of U.S. taxes at one time. The two qualifying factors are that you can confirm that not filing your U.S. taxes was an honest mistake and that you lived in a foreign country for at least 330 days during one of the past three years.

Q: Do I still qualify for U.S. benefits and stimulus packages while living abroad?

A: During the Covid-19 pandemic, legislation was enacted to financially assist U.S. citizens with various emergency benefits and stimulus packages. If you are a citizen of the United States living in a foreign country, fall within the designated income bracket, and have a Social Security number, you could qualify for benefits and stimulus packages available in 2020 and 2021.

If you need assistance filing your U.S. taxes while living abroad, contact our firm today.