How First-Time Expat and Gen Z Filers Tackle Their Taxes

Navigating the complexities of tax filing is a universal hurdle, yet it presents unique challenges for different demographics. In this study, we shed light on the experiences and tax literacy of American expatriates and Generation Z, groups often overlooked in tax discourse. To do this, we surveyed these demographics to discover their challenges and the resources shaping how they approach tax season.

First-Time Filing Overseas

Filing taxes can be a daunting task, but even more complicated for Americans living abroad — especially if they’re first-time filers. Below, we explore how expats navigate these challenges.

• Nearly 1 in 3 American expats are unaware of their requirement to file US taxes.

• Among those aware of their requirement to file US taxes, a small fraction (3%) feel they understand their tax responsibilities extremely well. 40% only feel somewhat well informed, and 1 in 10 don’t understand their taxes at all.

• The primary sources they use for tax information are tax advice websites and online resources, with 48% using platforms like IRS.gov and online documents like tax forums.

• 39% have sought professional advice for filing taxes, and 20% plan to.

• 1 in 10 use TikTok for information on US expat taxes.

• 25% of American expats are unsure about filing and paying US taxes, and the same percentage are unwilling to do so.

Additional Concerns of Filing US Taxes as an Expat

• Understanding US tax laws while living abroad: 62%
• Potential double taxation: 53%
• Finding reliable tax advice/services: 43%
• Reporting foreign income/assets: 42%
• Complying with deadlines/filing extensions for expat tax returns: 25%

A Gen Z Perspective

As the youngest tax-paying Americans, Gen Z is confronting their own set of obstacles when it comes to taxes.

• Nearly half of Gen Z taxpayers don’t know how to file taxes, with a significant portion (27%) of them having already gone through the process at least once before.

• A third of Gen Zers feel anxious or overwhelmed about the tax process, and more than a quarter feel unprepared for the upcoming tax season.

• Gen Z is most likely to ask friends and family for information about filing taxes.

• Only 10% of Gen Z know the exact tax rate applicable to their income level, 42% have a general idea but are unsure of the precise rate, and 49% don’t know.

Gen Z’s Tax Terminology Gap

• Nearly 1 in 5 Gen Z don’t know what a “W-2 form” means.
• 1 in 5 Gen Z don’t know what “401(k) contributions” means.
• 2 in 5 Gen Z don’t know what the tax term “deductible” means.
• More than 1 in 2 Gen Z don’t know what the tax term “write-off” means.
• Nearly 2 in 3 Gen Z don’t know what a “child tax credit” means.
• Other terms Gen Z are not familiar with, by percentage not knowing the meaning:
  • Nontaxable income: 66%
  • Tax credits: 64%
  • Capital losses: 63%
  • Adjusted gross income: 63%
  • Tax deductions: 56%
  • Filing status: 48%
  • Tax brackets: 46%

The Tax Learning Curve

American expatriates and Gen Z face significant challenges in navigating the labyrinth of tax responsibilities. Expats often find themselves surprised by their obligations to the IRS, with many lacking full comprehension of the complexities involved, leading to a reliance on various information sources and professional advice. Similarly, Gen Z is confronting a widespread lack of understanding of basic tax concepts, from W-2 forms to deductibles, revealing a substantial knowledge gap.

Methodology

We surveyed 393 Americans living overseas who are likely to be filing their taxes as expatriates for the first time, aiming to understand their perspectives and knowledge about the tax filing process in this new situation. We also surveyed 726 Gen Z Americans to explore their understanding and feelings about paying taxes. Note: Some percentages don’t total 100 exactly due to rounding.

About Greenback Expat Tax Services

Greenback Expat Tax Services specializes in providing expert tax solutions for Americans living overseas, offering services that range from straightforward tax return preparation to more complex tax strategy planning.

Fair Use Statement

We invite readers to share these insightful findings for noncommercial purposes, ensuring that knowledge about expatriate tax complexities reaches a wider audience. If you choose to share this information, please remember to credit the source by providing a link back to this page.