Tax Guide for US Citizens Living in the UAE

The United Arab Emirates (UAE) has about 9.5 million expatriate population and is globally known as the center of finance and commerce in the Middle East. The UAE is also increasingly promoting itself as a tax haven too. If you are American and working and living in the UAE, then you continue to be subject to US expat taxes. This post will help you know taxes for US citizens living in the UAE and your tax responsibilities as an US expat in Dubai, Abu Dhabi or any other place in the UAE. 

Let's know about taxation of US expats in the UAE

No matter whether you are an US citizen or permanent resident, you have to file US expat taxes with the federal government every year whether you live in Abu Dhabi, Albuquerque. Also, you have to file an informational return on your assets held in overseas bank accounts

How can you reduce your tax liabilities?

    • The Foreign earned income exclusion lets you decrease your 2020 taxable income by the first $105900 earned as a result of your labor while a resident of an overseas country. 

    • The foreign tax credit lets you lower your tax bill on your remaining income by certain amounts paid to an overseas government.

    • A foreign housing exclusion lets you additional exclusion from taxable income for certain amounts paid for household expenses that happen as a consequence of living overseas.

Many US expats ask a very common question that is " If I leave the US and come to UAE or any part of it like Abu Dhabi, Albuquerque or Dubai, do I need to file American tax for US citizens living in UAE?

When we think of the UAE, the first thing that comes to our mind is no income tax. Remember, coming from the US and living in the UAE doesn't mean no tax to pay. It's not that easy. The US has citizenship based income tax filing needs  that means if you are a US citizen or Green Card Holder as long as you earn some income, you have to file a tax return.

What if I don't pay US taxes while living in the UAE?

Being taxable means you are on the internal revenue system (IRS) radar, and not paying taxes, opens you a broad range of potential penalties. If you fail US expat taxes, you can receive a penalty for not filing taxes even if you don't owe it. Keep in mind that failure to file a penalty can be thousands of dollars.

If you any questions, doubts or are confused about your US expat tax filing, you must contact to a professional US expat service company.