The Primary Differences When Filing Expat Taxes

Americans have tax obligations whether they’re living in the US or living abroad. The US tax system differs from most countries because it taxes based on citizenship, whereas in many other countries taxes are centered around residence or taxes based on income coming from that country.

What most expats may not realize is that the US taxes all of its citizens on worldwide income, despite where they live.

Learn more about the primary differences when filing expat taxes and how to avoid filing mistakes in today’s blog.
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Declaring Your Worldwide Income

No matter where you reside or how your income has been generated, American citizens must report their worldwide income.

What does this entail? You’ll need to convert your income in USD, and you’ll need detailed documentation of any foreign income received in that calendar year.

Double Taxation

Double taxation is something that no one wants to encounter — expat or not! Because Americans are taxed on their worldwide income, they may be vulnerable to being taxed by the country from which it was generated, and again by the US tax system.

With the foreign earned income exclusion, Americans can reduce how much of their foreign wages are taxed in the US, while a foreign tax credit helps to reduce your tax liability in the US based on the income taxes you paid to the country you’re in.

Reporting More Than Income

Expats need to report more than just income — it’s important to loop the US government in on any investments, bank accounts, and other financial holdings in foreign countries.

Look more into:
 • FinCEN Form 114
 • Report of Foreign Bank and Financial Accounts (FBAR)
 • Form 8938 - Statement of Specified Foreign Financial Assets

The experts at Accutax Business Center can help you navigate the forms and documents you may need!

Filing A State Tax Return

In some situations, expats may be required to file a state return. If you’re a part-year resident or own a business or rental properties, this may subject you to a state tax return.

States including California, Colorado, New Mexico, and South Carolina have more stringent residency status in terms of taxes, so ensure you understand the rules if you have dealings in these states.

For a stress-free tax season as an expat, at the end of the day, you really just need to stay up-to-date and compliant in your taxes.

Don’t get lost in the complexities of filing as an expat and work with the tax professionals at Accutax Business Center today!
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