Expatriate Tax Basics for U.S. Citizens

Posted by on in Travel

The United States is one of the few countries that tax a citizen on their worldwide income, regardless of where the income comes from. Finding accurate, easy-to-understand expatriate tax information is difficult. U.S. citizens will need to file taxes no matter if they reside in Italy, Singapore, or China. Read up on some things that you need to know about your expatriate tax.

Foreign Earned Income Exclusion

If you qualify for the Foreign Earned Income Exclusion, you can offset some or even all of your U.S. expat tax liability. In order to qualify, you are required to be employed full-time inside a foreign country for an entire calendar year, or work outside of the U.S. at least 330 of any 365-day period. This means that a person left the U.S. for business and has not returned for more than 35 days throughout the past 12 months. Learn more about the Foreign Earned Income Exclusion.

Foreign Tax Credit and dual taxation

Some expatriates are prone to being double taxed in the U.S., and also in the country of residence. The Foreign Tax Credit reduces the burden of being double taxed on your expatriate tax. If you are a U.S. person who has financial authority over one or more foreign account(s), you may need to file the FBAR. Similar to the Foreign Tax Credit, the U.S. has arranged tax treaties with more than 50 countries in an attempt to avoid dual taxation of U.S. citizens on their U.S. expat taxes. Find more about this from IRS Publication 901.

Joint tax files with a spouse

If you are married to a non-U.S. citizen, you may file jointly on your U.S. expatriate tax, and must do so in future returns as well. Make sure that you apply for the Individual Taxpayer Identification number before filing your U.S. Expat taxes so that your spouse can receive worldwide income and allows the Foreign Earned Income Exclusion to be doubled. The automatic extension to file U.S. expat taxes is granted simply by attaching a statement to Form 1040 when filed by June 15th. An additional extension to October 15th may be requested via Form 4868.

Tax filing dates

Normally, U.S. citizens are required to file their U.S. income tax returns by April 17 (usually the deadline is April 15th but has been extended to the 17th this year). However, a U.S. citizen living abroad on April 17 is entitled to an automatic extension to file their U.S. expat taxes until June 15. Despite the automatic extension, all U.S. Expat taxes still need to be paid by April 17 to avoid any penalties or interest. Also, as an expatriate, you are still entitled to Social Security benefits.

Tests you need to know:

Forms you need to know:

  • Form 2555
  • Form 1040
  • Form W-7
  • Form 2350
  • Form 90-22.1
  • Report of Foreign Bank and Financial Accounts (FBAR)

Terms you need to know:

  • Foreign Earned Income Exclusion
  • Individual Taxpayer Identification number (ITIN)
  • IRS Publication 901
  • Foreign Tax Credit



  • facebook
  • twitter
  • pinterest
  • rss


Get bleeding-edge content delivered right to your door, or to your inbox. Sign up, it's that easy.