The warm winds, pristine beaches and breathtaking coral reefs of the twin islands of Antigua and Barbuda keep tourists coming back again and again. But it’s also a tranquil yet exciting destinations for expats. English is the official language, so US expats will feel right at home! And just like ‘home’ in the US, you will need to file tax returns each year. Let’s take a closer look at your US expat obligations while living on this beautiful island.
How Working in the Antigua and Barbuda Impacts US Taxes
Americans must file US expat tax returns each year, even from the sandy beaches of Antigua and Barbuda. You must report your worldwide income to the IRS, which includes any income earned on the island.
However, there are several deductions and credits available to help lower your taxable income in the US and reduce or eliminate the dreaded dual-taxation:
- Foreign Earned Income Exclusion (FEIE)
- Foreign Tax Credit (FTC)
- Foreign Housing Exclusion
With the FEIE, you can exclude $99,200 of your income (in 2014) if you meet the residency requirements of either the Physical Presence test or Bona Fide Residence test. Because the IRS understands that living abroad may result in higher-than-average living costs, the Foreign Housing Exclusion allows you to deduct a certain amount of your living expenses, which further reduces your US tax liability..
The Foreign Tax Credit may not be very useful for those in Antigua and Barbuda, as the overall taxes are generally quite low. But the FTC is a dollar-for-dollar tax reduction against what you pay in your host country and may be able to help offset some of your US tax liability.
What is the income tax rate?
Personal income tax was re-introduced in 2005 and the current tax rates starts at 10% and increases to 25% based on the total income.
The tax year is the same as the US, running from January to December. You must obtain an Inland Revenue for an Individual Taxpayer Number prior to employment to ensure the correct amount of taxes are being withheld.
Who is a resident?
Individuals who have their permanent residence in the country or who are present for at least 183 days a year will qualify as residents of Antigua and Barbuda and will be subject to tax on their worldwide income. If you are only in the country temporarily, you will only be taxed on income arising in or derived from Antigua and Barbuda.
What if I am self-employed?
If you are self-employed, you will still need to register with the Inland Revue and get a tax ID number. You will pay 1% of your gross income exceeding the personal allowance by the last day of each month. Tax returns must be filed by March 31 each year.
A person who is self employed is obliged to register with the Inland Revenue and obtain a tax number. Every month the individual must pay 1% of their gross income over and above the personal allowance by the last working day of the month or pay an amount which has been calculated from information given on a tax return. Tax returns must be filed by the 31st March every year following the year that the income was earned.
What is the personal allowance?
Every employee and self-employed individual has an allowance of $36,000 each year—earning less than that means your income is tax-free!
The tax brackets are as follows:
- 0-$36,000 – 0%
- $36,001-$48,000 – 10%
- $48,001-$120,000 – 15%
- $120,001-$180,000 – 20%
- Over $180,000 – 25%
What about sales tax?
Sales tax in Antigua and Barbuda is similar to VAT (value-added tax) and remains at 15%. There are some exceptions to the sales tax, such as hotel and holiday accommodations, which incur a 10.5% or 12.5% tax.
Are there property taxes?
You will pay property tax on properties in Antigua but not in Barbuda. The taxable value is based upon the property’s current market value construction replacement cost with the applicable tax rate. These tax rates vary based on how the property is classified—residential or commercial.
However, there are no capital gains taxes or inheritance taxes. But remember, capital gains must be reported to the US and there will likely be a tax liability.
Need help filing your US expat tax return?
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