Expatriate Tax Services

What is Expatriate Tax?
In the U.S., every person is liable to file their tax returns from their worldwide income. If you have no income, then you’re not legally bound to file for the taxes. The expatriate tax is necessary, especially when you’re moving out of the U.S.
Our company has special experience in filing income tax returns for our clients in the U.S. Discuss your situation with us to get a personalized consultation.
Earned Income Tax Exclusions
If you’re a U.S. citizen or a permanent resident, you are requested to file income tax returns as per the U.S. government policies. Even if you live abroad, you are required to file your taxes based on your worldwide income. A person who is living abroad may qualify for the exclusions in income by the IRS due to inflation. The exclusion does not only apply to the ‘earned income’. The rental income, capital gains, etc. are not termed as ‘earned income’ as per the IRS, hence, they are not included in your income and are subjected to the tax.
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All U.S. citizen or permanent resident are required to file a U.S. tax return each year. Although you file and pay taxes in your residence country, you still need to file U.S. income tax return with the US government. If you are a US citizen or a resident alien of the US and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation from IRS. The earned income exclusion for year 2015 was $100,800 and it will be increased to $101,300 for year 2016.

Please note, this exclusion is only for “earned income”. Some of the other types of income such as rental income, interest income, dividend income, capital gains, etc are not considered as “earned income” according to IRS and so these types of income cannot be included in the earned income exclusion and will be subject to US tax.

In addition, the expatriate earned income exclusion only can be claimed if you file a timely U.S. tax return and are not automatic if you fail to file your Form 1040 for the applicable year (as well as the appropriate forms claiming this exclusion).

As an expatriate living abroad, you are automatically granted an extension to June 15 to file your return. However, you must pay any tax that may be due by April 15th in order to avoid penalties and interest. You do not have to file a special form to receive this extension. However, some people may still prefer to file Form 4868 to ensure that there’s no problem. However, you must attach a statement to your tax return explaining what situation qualified you for the extension. In addition, you can also obtain an additional extension until Oct 15 to file your return by filing Form 2350.

There are other forms which must be filed if you have a foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.

If you have any questions on your particular situation, please feel free to contact us. We look forward to helping you on any tax concern.