Everything You Want to Know About US Expat Taxes

US Expat tax is a complex topic. It is therefore imperative that you understand the ins and outs of the US expat tax system. United States is one of those two countries in the world that tax its citizen for income earned by them in any part of the world. US citizens living abroad have to pay the expat taxes for the income by them abroad

Understanding the US tax code can be a daunting task. And for US citizens living abroad, the information of expat taxes are even more complex and confusing. Here are some of the things that have to be taken into account about US expat taxes:

1. Expats must file American taxes if they have income, received certain credits or other special situations that might apply. If you are an American citizen earning over a certain amount of foreign income abroad then you are bound to file US tax return. If you are legally US citizen, you have a tax obligation to the US.

2. Most American expats do not owe US taxes: There are varieties of mechanisms in place to prevent US expats from being double taxed on foreign earned income. In most situations US expats can offset foreign earned income with – Foreign tax credit, Foreign earned income exclusion and Foreign Housing exclusion.

3. Expats might still have to pay US state taxes: Living abroad does not automatically exclude American expats from paying state taxes and it depends on the state you live in prior to moving abroad. It is recommended that you consult an expert and professional American expat tax services if you are if you have state tax obligation or not.

4. If you are US expat and not filing taxes can result in losing of your passport, being charged with fines and other penalties to jail for serious tax evaders.

5. Claiming children as dependents will give you few perks on your US expat taxes. However, while you are abroad, your eligibility can differ. If you claim FEIE, you are not able to claim the refundable portion, meaning the child tax credit will not lead to refund on your return.

6. If you are a US expat and has never filed a tax return, then IRS understands that is it a complex topic and show lenience with genuine mistakes. With streamlined filing compliance procedures the expats can get caught up on multiple years of US expat taxes.

7. You may qualify for COVID 19 stimulus checks if you fall within the income threshold, have a social security number and file taxes as an expat. All the non filers and retired expats who live abroad also qualify.

8. The US government and the country where the US expats are living provide them with the variety of aids to prevent them from double taxation. These aids include tax treaties, the foreign earned income exclusion and the foreign tax credit.

9. If you retire abroad you may still have to pay US expat taxes on your retirement income and social security payments.

10. When filing for expat taxes, certain investment accounts or retirement plans owned abroad may not be treated the same as your US counterparts, changing your liability drastically.

Know about new US tax extension deadline for the year 2020

 Recently moved to another country for work? What you need to know about US Expat tax preparation before you go to that country. Taxpayers American living abroad have to file a US tax return if they meet certain income thresholds even if they don't owe any tax. If you are a US citizen or green card holder, then you must file a US tax return if you meet the filing thresholds.

Let's know about the tax year 2019 thresholds:

Filing Status Gross income

·         Single (under age 65) $12,200

·         Married filing jointly (under age 65) $24,400

·         Married filing separately (any age) $5

·         Head of household (under age 65) $18,350

·         If you are self-employed and had at least $400 in self-employment income, you also have to file.

To get the stimulus payment from the CARES act for COVID 19 relief, you must have filed a 2018 or 2019 tax return. Keep in mind that the more you know about the US expat tax preparation requirements before you move abroad, the better prepared you will be able to file an accurate tax return and maximize your savings. Also gather as much information as you cab before moving abroad as you want to be prepared to file your US expat taxes during the next tax year. There are certain things you must know.

·         You get special tax credits and exclusions when filing Abroad.

·         How to ensure you get your mail and leave the junk behind

·         Each state has individual regulations

·         The US filing dates

·         How your US income will be treated compared to overseas income.

Let's know about new US tax extension deadline for the year 2020

The typical extension deadline for filing US Tax Returns For Non Residents was June 15. There was the option of filing for an even greater extension to Oct 15. You will need to fill out a specific form to do that. You can use tax software for filing all your extension forms as well. But, the internal revenue system (IRS) tax authorities have initiated a new rule for tax season 2018. In addition to this, the IRS stated that the US tax extension deadline was July 15 and this goes for both filing and paying US taxes from overseas.

This July 15 deadline was for now only for this year. Now we are into 2021 taxes paying and filing deadline have moved back to their original places. If you have to file for an extension, you can do so to free via expat ts software. You need to sign in and the software will file the tax return on your behalf and fill in the right information.

Federal tax for non residents living in Canada

 Do you know your income tax obligations as an individual in Canada are based on your residence status? If you are a non resident, then the requirements for filing tax can differ from resident individuals. If you are classified as a non resident of Canada, then you are only obligated to pay Federal tax for non residents living in Canada you receive from sources in the country. This includes part XIII tax or part I tax.

Part XIII tax applied to sources of income tax like dividends, pension payments, benefits, rental & royalty payments, old age security pension, RRSP payments, retiring allowances, Canada pension plan and Quebec pension plan, management fees, annuity payments, registered retirement income fund payments.

To make sure that the right portion of tax is deducted by your Canadian payers. You must notify them that you are a non resident of Canada for tax purposes and your country of residence. This let's the tax payers deduct the part XIII tax when income is paid to you at a rate of 25% unless there is a tax treaty between Canada and your country residence. Also, these amounts are non refundable and you don't have to file the Canadian tax return to report the income unless you want to. Generally, taxpayers would elect to file a return if they had Canadian rental income. If you believe an incorrect amount of part XIII, tax was deducted, you can contact the CRA directly for further investigation.

Part I tax deducted by the payers for certain types of income too. These types of income include employment income and income from a business. If anyone stops being a resident during the year, that person may be required to file a Canadian tax to calculate his or her final tax obligations for the year that you ceased to be a resident.

Canada Child Benefit

As a non resident, you are not eligible to get the Canadian child benefit unless you are the spouse or common-law partner of a deemed resident and you meet the Canadian child benefit eligibility needs.

Tax filing due date: your tax return has to be filed on or before - June 1 of the year after the tax year, June 15 of the year after the tax year if you or your spouse or common-law in partner carried on a business in Canada instead of a business whose expenditure are in connection with a tax shelter.

Taxpayers American living abroad fill out the same tax forms any American who live in the home country. They are obligated to report their income in US dollars like people who live domestically even if they are paid partly or in full in another country. Once you have figured out what you owe or what you can get back as a refund, there are some options for filing taxes. You can file electrically with a company that handles tax returns filed by American living abroad or you can use the internal revenue system free system if you have an adjusted gross income below $64,000.

What is the American tax for US residents living in Hong Kong?

If you are an expatriate American residing and earning for living in Hong Kong, then you must be yearning to know and understand the American tax for US residents living Hong Kong, its rules, and obligations that are applicable to you.

Just like every country, America also has its own tax structure, especially for expats. Most US expats do not owe US expat tax return. The government has put several vital deductions, exclusions, and credits in place to ensure that the individual is not subject to double taxation on the same income. Most of the expats are able to offset all of their foreign earned income under various restrictions and concessions levied by the government. 

Hong Kong is one such country; that allures many individuals from all across the globe. The higher-earning and great career progression are some of the vital reasons that rope in so many professionals to expat life in the city. The good quality of life, salubrious weather, good career opportunities, and safety has made many US Citizens to decide to earn their living in Hong Kong and that's why tax filing for us citizens living abroad is important.

 

What is taxes for US citizens living in Hong Kong?

 

Hong Kong has its own preferential expat taxes treatment for US citizens living in Hong Kong; which will benefit the US expatriate tax return of the individual expat. In fact, for most of the US expats, the treatments will reduce your US taxes to zero. 

Below are some of those preferential tax benefits for the US expat in the country:

1. If you are an American resident and residing in the US, you are required to file US returns for all the years that you are residing. However, when it comes to US expat tax in Hong Kong; you may qualify to minimize your US taxable income up to a number of your foreign earnings; that is adjusted annually for inflation. Also, you can deduct certain foreign housing amounts; which is known as foreign earned income exclusion.

 

2. When it comes to American tax for US residents in Hong Kong, most of the expatriates worry about the weapon of double taxation, i.e. paying the taxes in two different countries- the U.S. and Hong Kong for the same income. However by claiming of foreign credit via Form 1116, expat can reduce taxable income and double taxation. However any foreign income cannot be fully offset via foreign earned income exclusion, housing exclusion or housing deduction, foreign tax credit paid, or accrued can be used as deduction or credit on US tax return. It is the choice of the taxpayers whether they want to deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is beneficial to take foreign income taxes as a tax credit.

 

How to file American taxes in Hong Kong?

Filing the taxes in Hong Kong as an expat, requires the following of certain steps. It is advisable to take help and guidance of professional American taxes specialist in Hong Kong to help you in transpiring the procedure:

1. First and foremost step is to register online and finish off the tax organizer.

2. The service provider will assign you the right advisor for your tax work

3. The tax experts, who are tax attorneys, CPAs and enrolled agents help you in filing your taxes

4. Pay the tax and review the return

5. Lastly, your tax return will be filed with IRS. If IRS calls for audit or questions certain aspects, the professional tax specialists of US expats will help you out with support and proper answers.


Facts about Hong Kong

• Hong Kong is one of the world's most heavily populated destinations.
  
  
• American Tax for US Citizen Living in Hong Kong.
   
• Hong Kong is home to the world's second-highest number of billionaires.
  
  
• Hong Kong is the 10th-largest exporter and 9th-largest importer in the world.
  
  
• Hong Kong is the city with one of the world's largest per capita revenues.

What You Need to Understand about US Expat Taxes

What You Need to Understand about US Expat Taxes


One of the few countries that taxed people on their worldwide income is- The United States, no matter where that income is earned and where you live. This informative post will help you make sense of the complicated issues related to US expat taxes.

This post mainly focuses on the major areas that you have to be aware of. So take a look at them.

• The Foreign Earned Income Exclusion

 If you are a qualified US citizen live and work abroad then you can save a big amount of money on your expatriate tax return by filling out the form of the foreign earned income exclusion. A US resident or citizen alien should have earned income in a foreign country, should meet the bona fide residence or physical presence test or a regular place of business outside the US. The exclusion is claimed on form 2555 as well as attached to form 1040. You may qualify for the foreign housing credit in case you qualify for the foreign earned income exclusion on your US expatriate tax return that will let you deduct up to $27450 of your housing cost.

• Do You Need To File State Taxes?

Each state varies in how they find out the filling needs of your US expat taxes. In addition to this, some states have no personal tax like Texas, Washington, and Florida while some States like Virginia and California consider whether you have retained certain rights as a citizen of US like financial accounts, ownership of assets and a driver's' license to find out your future. If they find that you intend to return to the state you resided in previously, they still need you to file a big tax return

•  Foreign Bank Accounts

A US citizen who has one or more foreign account(s), as well as the cumulative balance of these accounts, exceeded $10,000 at any time during the calendar year, in this case, that person has to file Form TDF 90-22.1 Report of Foreign Bank plus Financial Accounts (FBAR) by June 30 every year. Keep in mind that this form is filed separately from your US Expat taxes, and must be received by the Treasury on June 30th.

• Dates For Filing

Generally, as a US citizen, you are required to file your US income tax returns by April 15. But, a US Citizens Living Abroad Expat Taxes gets an automatic extension to file their US Expat taxes until June 15. In spite of the automatic extension, all US Expat taxes need to be paid by April 18 to avoid any late charges. You will get an automatic extension to file their US expatriate taxes by attaching a statement to Form 1040 when filed by June 15. Via Form 4868, an additional extension to October 15th can be requested.

The above is meant to be a general idea only- consult with a tax professional for filing your US expat taxes.

Why Hire A Specialized CPA To File Your Expat Taxes

One important thing that all the US expats must know is that the US uses a citizenship-based taxation system thus living in any other country does not exempt US expats from filing a tax return every year. You must report all your worldwide income on your taxes and also required to report your foreign bank accounts as well as financial assets like bonds, shares, etc., via FBAR ( foreign bank account report) or FATCA from 8938 if exceed the income threshold.

For US citizens living abroad, the tax return time is very stressful. This is where expat tax professionals can make a huge difference. In this post, we have mentioned a few reasons why one should hire a professional to file your tax return.

1. You Have To File US Taxes

It does not matter where you live and what currency you were paid as well as what taxes were paid to other countries or where the income earned, you are liable to file US expat taxes if earned over the minimum threshold.

2. Taxes Are Very Complicated

You may have to fill form 1040 but your tax return is going to require form 2555 and form 1116 for the foreign earned income exclusion, foreign housing exclusion, and deductions and foreign tax credit. Such forms can be confusing to interpret for taxpayers.

3. Currency Exchange

The internal revenue system (IRS) requires that your income is reported in US currency. Also, the IRS lets the opportunity calculate your income yearly, monthly and daily exchange rate. It can translate into big tax savings if the income you paid in fluctuated over the best year. A professional tax preparer can make sure that the right conversion rates are used and eliminating the hassle of looking for rates as well as converting your income and deductions.

4. States Taxes

We know that every state is different from another in terms of how they tax their citizens who live abroad. In addition to this, some states have no tax and so need no return for expats. While other States may still have you pay taxes as your domicile is in this state caused by a valid driver's license, bank account, voter registration on property. A professional tax preparer will know what each state needs and how to cut ties to avoid taxation with the state if desired by their clients.

US Citizens Living Abroad Expat Taxes have a responsibility to file their income tax return on time and are subject to civil or criminal penalties for failure to file. It can be tempting for US ex-pats to put off dealing their taxes as qualified tax help can be very hard to find outside the US.

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

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.