Source: Taxes for Expats
WHAT YOU NEED TO KNOW:
No matter where you reside – you must file. All US citizens and Green Card holders must (if they meet minimum filing thresholds) file an annual tax return reporting their worldwide income.
While all must file – most don’t owe. The good news is that most expats don’t end up paying any taxes to the IRS. There are many tax deductions available which allow taxpayers to deduct more than $100,000 from their taxable income. But – they must continue to file. Failure to do so can lead to penalties.
WHAT’S DIFFERENT ABOUT EXPAT RETURNS?
- The aforementioned deductions are not automatic. In order to benefit from the myriad of exclusions available – the Foreign Earned Income Exclusion (FEIE), Foreign Tax Credit, Foreign Housing Exclusion, Treaty exclusions, and many more – your tax return must be prepared correctly and tax saving tools utilized properly.
- Factoring self-employment complications, foreign pension treatment, treatment of employer contributions, taxability of foreign passive investment corporations, totalization agreements, and digging through the dense web of tax treaties, the world of expat taxes is difficult and can make the most astute of regular CPAs throw their hands up in defeat.