Retirement; like your parents, but way cooler
In 1991 Billy and Akaisha Kaderli retired at the age
of 38. Now, into their 4th decade of this
financially independent lifestyle, they invite you
to take advantage of their wisdom and experience.
How to File
U.S. Expat Taxes
For Americans Abroad
United States citizens and Green Card
holders living overseas still have to file a U.S. tax return every year. Always
remember that your worldwide income is subject to U.S. income tax, regardless of
where you reside. Filing a tax return is already tricky enough, and filing as an
expat can be doubly challenging, especially with the IRS distributing stimulus
checks. Here are a few things you should know as an expat when preparing your
U.S. tax return.
What is an expat?
An expat is a United States citizen or a
permanent resident (more commonly known as Green Card Holders) living or working
abroad. Even if you reside abroad you still need to file a tax return with the
IRS yearly. As an expat you should know certain rules to avoid tax issues.
For instance, U.S. citizens and permanent
residents living outside of the U.S. should consider Foreign Bank and Financial
Accounts Report (FBAR) or Foreign Account Tax Compliance Act (FATCA)
requirements when reporting your worldwide income.
Do American expats have to pay taxes?
Yes, American expats still have to pay
taxes even if they live abroad. You can take advantage of exclusions,
deductions, and credits to ensure you do not pay the same tax for the same
4 important things you need to know:
1. If you already paid foreign taxes to a
foreign country on your income, you may be eligible to claim the Foreign Tax
Credit (FTC) to prevent double taxation.
2. You may reduce or eliminate your U.S taxes
with the Foreign Earned Income Exclusion (FEIE). However, you need to meet
specific requirements to claim this exclusion. For instance, you need to fulfill
the Physical Presence Test. It requires that you physically live in a foreign
country for at least 330 days within 12 months.
3. Americans living abroad may be eligible for
COVID-19 stimulus payments under the American Rescue Plan Act. Make sure you
donít miss your checks.
4. If you have dependent children, you may be
eligible for child tax credit and child and dependent care credit.
Iím an expat and Iíve never filed taxes before
Many U.S. expats think they only need to
pay taxes to their country of residence. However, you still have tax obligations
to the United States, wherever you are in the world.
If you haven't reported your foreign
financial assets and paid U.S. taxes, you may do so using
When to file if Iím an expat?
U.S. taxpayers residing outside of the U.S.
receive an automatic 2-month extension from April 15th to June 15th. If you're
an American expat, you have until June 15th to file your U.S. tax return.
How to file expat taxes?
You can always prepare your tax return
yourself. However, U.S. expat taxes can be incredibly complex, and you may miss
out on credits and deductions if you're not well-versed in tax laws and
procedures. The easiest and safest way to do it is to leave it all to the
TFX (Taxes for Expats), we have been
preparing U.S. tax returns for Americans living abroad for over 25 years. With
our team of specialists, you will never have to worry about mistakes on your tax
return. You also get to save more money as our CPAs know all the nuances of the
US tax code, especially for those residing in Italy. If you have not yet
received your COVID-19 stimulus payments, we can help, too.
About the Authors
Early Lifestyle appeals to a different
kind of person Ė the person who prizes their
independence, values their time, and who doesnít
want to mindlessly follow the crowd.
Retire Early Lifestyle Blog
About Billy & Akaisha