American Expatriate Taxes Return Filing Requirements – The Short and Simple Guide

Wriiten By IJ Zemelman, EA, Taxes for Expats LLP.
 
As an american expat you must still file USA expatriate taxes return.
 
The United States requires all citizens and permanent residents (that is, green card holders) to file the U.S. Federal income tax returns.
 
The U.S. is fairly unique in this regard, so take note: you must still file your federal tax return even if you move out of the country and are currently living abroad. Even if you have not earned any U.S. income!
 
How much money are we talking about?
 
Filing requirements are based on total income before exclusions or deductions. In 2010, the cutoff was $9,350 for filing individually or $18,700 for married and filing jointly.
 
expatriate-taxes If you file a return, that does not automatically mean you owe taxes! There are a number of exclusions provided in the tax return system to take advantage of. To start, Form 2555 provides a Foreign Earned Income Exclusion section which allows you to exclude up to $91,500 of foreign salary. This exclusion can be increased based on your overseas housing costs. (Typically, the baseline is around $40.11 per day, so any costs in excess of this can be deducted.)
 
Form 1116 provides yet another method of reducing or eliminating your U.S. tax bill, Foreign Tax Credit. Depending on how much you paid in foreign income tax, you can claim up to the entirety of your U.S. foreign source income tax. This means you could owe zero U.S. income tax! This credit will be reduced if you also claim the FEIE exclusion, however.
 
However, you can only take advantage of these credits and exclusions if you file a tax return! And consider: it’s possible to earn over $100,000 and pay no U.S. tax, so it’s in your best interest to apply. Your exclusion may be denied if this is a first time claim and your return is late, so be aware of deadlines
 
Ok, so when is it due and where do I go?
 
Fortunately for USA expatriates, federal tax returns for those living outside of the U.S. are due on June 15, rather than April 15. No extra paperwork– you automatically get this extension if you attach a statement to your expatriate taxes return explaining that you had an extended deadline because, as an american expatriate, you were out of the country as of April 15th.
 
Still need more time?
 
You can file Form 4868 for an automatic extension until October 15 or, in case you need extra time to qualify for the foreign earned income exclusion, form 2350.
 
You can submit your USA expat tax returns in a number of ways:

  • Through your nearest U.S. Embassy or Consulate. This may not be the most reliable method, so make sure the personnel there know where to send your return.
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  • Mail or delivery service. You can prepare your paperwork yourself, using software such as H&R Block Tax Cut or TurboTax. Expatriate tax returns should be sent to a different address than domestic ones! If no payment is due, file with the IRS in Austin, TX 73301-0215 USA. If you do owe a payment, file with IRS, P.O. Box 1303, Charlotte, NC 28201-1303, USA.
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  • Electronically filing. This is the fastest method: you can be aware it was processed within a few days, and if you use direct deposit as well, you can get your tax refund in under 10 days. With an income of less than $58,000, you can file for free with the IRS. If you use a tax professional, many will also provide this as a free additional service.

Information about e-filing, as well as all of the IRS forms are available online through the IRS website.
 
But what about state taxes?
 
Well, if you move out of the country, you’re most likely no longer a resident of your state. Therefore you are not subject to state tax unless you earn money in that state. State income includes any salary or income earned in the state, as well as any income from interest in a partnership or corporation with operations in the state. For example, if you rent out your old home, you will probably have to file a state income tax return.
 
Of course, state regulations and requirements may vary. While these claims are usually unsuccessful, a few states (such as California) try to claim you may still want to come back although currently you are out of the country. You’ll probably want to check out your state’s income tax website or ask a tax return professional.
 
So how difficult is this going to be?
 
It’s true that expatriate taxes returns can get more complicated than regular returns. They can get especially complex if you have significant foreign income taxes.
 
Fortunately, there are a few resources to make your life a little easier. For one, see if you can take advantage of the IRS’s “EZ” forms. If you earn less than $91,500 (that’s salary and bonuses), you may be able to use Form 2555-EZ. However, there are a still a number of complications that make expatriate taxes filing more complicated than just filing a form.
 
The best solution – in our view – is to contact a professional firm in american expatriate taxes. One established player in this field is New York based Taxes for Expats LLP. Their only focus is American expats – which allows them to provide best in class service at very competitive prices.
 
Visit www.taxesforexpats.com To learn more
 
And obtain an instant no-obligation quote.