What US Income Tax For US Citizens Living Abroad Must Need To Know About

US income tax for us citizens living abroad

Most of the Americans living abroad agree that US expat taxes can be daunting. There are the only two countries in the world (The U.S. and Eritrea), which impose taxes on their citizens despite their residence. Taxes are a complicated matter, but it’s even more difficult for US expats as they need to comply with 2 different tax systems and keep an eye on ever-changing US tax laws as well. Tax situations become more complicated when Americans abroad haven’t been filing for years. In this article, we’re going to tell you a few things about US income tax for us citizens living abroad you must know about

Deadlines And Extensions

Americans living abroad can receive 3 filing extensions in a tax year: 1) Automatic filing extension until June 15th. Taxpayer does not need to file any form or submit any letter to the Internal Revenue Service (IRS) as long as he or she resides abroad.

2) If anyone is not ready to file before June 15th, then he or she can file for an additional extension until October 15th. Also, you will need to file and send Form 4868 before June 15th. The form is an Application for Automatic Extension of Time to File U.S. Tax return.

3) The final extension available will push the deadline to file a US expat tax return to December 15th. In order to get one, send a letter to the IRS explaining why you need the additional two months. You have to do this by October 15th.

Have To File A State Income Tax Return If Living Overseas

If you are a US Citizen living abroad, then you have to make sure that you file an income tax return with the IRS every year if you meet the minimum filing requirements,  then you may have to file a state tax return. You may have to file a non-resident state income tax return even if you are living abroad depending on which state you most recently lived in before your move. Do not assume that as you have left the US you are not obligated to file a state tax return. Keep in mind that each state has its own set of rules about whom it considers a “resident” as well as their minimum filing requirements. In the US, most states allow the foreign earned income exclusion in determining taxable income

What Else To US Citizens Living Abroad Need To Report?

US citizens living abroad are required to report their foreign bank accounts and investments only if their combined total values exceed certain value thresholds. In addition to this, the rules for foreign account (FBAR) reporting are complex, and penalties for not doing correctly, accurately and fully are high, thus it’s not a requirement that Americans with foreign-registered bank or investment accounts should pay no attention to. You may have to report your foreign-registered businesses and financial assets as well.

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