If you’re an American living abroad, you might assume you don’t have to worry about filing your taxes when the time comes. However, you are still required to file a US federal tax return if you have lived in the US and later moved abroad. In this post, we’ll discuss the tax considerations for US Expats.

Should US Expats file taxes?

Yes, if your overseas income exceeds the filing thresholds, which are roughly equal to your filing status’s standard deduction, you will be required to pay taxes in the United States. US citizens are required to report overseas earnings to the IRS. Their citizenship status determines a person’s tax status in the United States, not where they live. That means if you’re a US citizen, you have to pay taxes no matter where you live.

How to Avoid Double Taxation?

You can avoid paying double taxation on the same income by claiming a foreign tax credit in the US if you have to pay taxes on that income. Form 1116 must be submitted to the IRS together with your Form 1040 if you wish to claim any of these tax credits. That way, you can get a tax refund in the United States that’s equal to the amount of money you paid in income taxes abroad. If you are a US citizen but living in Australia, you can discuss with an Australia expat tax consultant to have a clear conception. 

IRS filing dates for US Citizens living abroad

American expats have until June 15 to submit their tax returns to the Internal Revenue Service. The goal is to buy you some extra time to complete any overseas tax filings. US citizens living abroad who face a foreign tax reporting deadline later than June 15 can also file Form 4868 to obtain an automatic six-month extension until October 15. 

Even if you haven’t filed your tax return yet, you must pay any US tax you owe by April 15 to avoid interest charges. If you’re self-employed, working abroad, or otherwise not having federal taxes taken from your paycheck, you’ll need to make estimated quarterly payments to the IRS to cover your US social security tax liability.

What happens if any US Expat fails to file taxes? 

Penalties, interest, and even criminal charges may be levied against US citizens who fail to file US taxes while residing outside the country. For both late filing and late payments, the IRS levies penalties. If you intentionally failed to file your US tax return while living abroad, you could face more severe legal implications.To make yourself safe from the penalties, you must have to take a Financial advice from the experts.

How do I avoid paying US taxes when living and working abroad?

According to current US tax legislation, renouncing your US citizenship is the only option to avoid submitting a US tax return and paying US taxes while living overseas. The choice to renounce one’s US citizenship is one that should not be made lightly. However, as a US citizen or green card holder, you must file a tax return every year, even if you are currently residing outside of the US.