US Tax for Expats in the Most Popular Expat Destinations: Part One

US Tax for Expats in Popular Destinations

If you’ve been contemplating a move abroad, or perhaps you’re already an expat looking for your next destination, there are a number of countries that really shine for a number of reasons. One thing is certain, regardless of where you decide to live: you will need to file a US Tax Return to stay compliant with the IRS while living overseas. In this article, we’ll share the top 3 places you’ll want to consider as well as some implications for US tax for expats you should know if you choose to live in any of these countries. And be sure to stay tuned for the next 3 places in our post on Wednesday!

1. Germany

The beautiful country of Germany is a popular destination for US expats, whether it’s for business or pleasure – or both! With a number of big cities with equally big businesses, moving to Germany for work is quite common for Americans. Not to mention, three cities – Munich, Dusseldorf and Frankfurt – made Mercer’s 2017 top 10 cities for quality of living! You’ll be able to take advantage of many cultural experiences while living in Germany, and it’s easy to travel around the country and explore different areas. When it comes to US tax for expats, there are a few things you should know about living in Germany:

  • Germany’s tax rate is relatively high. Taxable income in Germany includes employment income, post allowable and standard deductions.
  • You’re considered a resident of Germany if you arrive with the intent to stay longer than six months.
  • Germany follows the same tax year as the US – January 1 through December 31. The deadlines differ, though: You must file your German taxes by May 31 of the year following the tax year, unless you have your taxes done by a professional (which buys you until December 31 automatically!).
  • Tax residents of Germany must pay taxes on worldwide income, but fortunately, the US-Germany Tax Treaty typically resolves tax matters and you’ll only owe taxes to one of the two countries.

For more about tax specifics in Germany, read this article featuring our Germany country guide.

2. Thailand

With a low cost of living and gorgeous tropical surroundings, it’s no wonder expats flock to Thailand. It’s a place where English is commonly used, since it’s a popular tourist destination. Also, the tax system is friendly – which, as an expat, is something you’ll come to appreciate!

  • Thailand taxes residents and non-residents. You must live in the country for more than 180 days in a calendar year in order to be considered a resident. For the time you’re considered a non-resident, you’ll pay Thai tax only on income earned in Thailand.
  • Thailand taxes worldwide income, similar to the US, and you may be allowed some deductions depending on the category of income you receive.
  • There is a US-Thailand Tax Treaty in place, which helps remedy double taxation.
  • Similar to the US, Thailand uses a calendar year for taxation purposes, and your income tax return must be filed by March 31 following the tax year.

Check out the specific tax details for Thailand in this article.

3. Ecuador

Known for its great cost of living and sky-high points on a scale of happiness, living in Ecuador is sure to be an adventure of a lifetime. With many cultural and historic sites to see, it’s a wonderful place for individuals and families alike to live as expats (don’t just take our word for it – check out this site for everything you need to know about living in Ecuador as an expat!). The US tax for expats situation in Ecuador might be a little bit tricky, so here’s what you should know:

  • You’re considered a resident of Ecuador if you’re present for at least 183 days in a calendar year.
  • Residents are taxed on worldwide income, but non-residents will only pay taxes on income sourced in Ecuador.
  • Tax rates are progressive – up to 35% on income, though non-residents pay a flat 22%.
  • There is no tax treaty in place between the US and Ecuador, which means there’s a possibility of double taxation. You should consult with an expatriate tax professional to find the most savings on your taxes while living in Ecuador as an expat.

To learn more about taxes in Ecuador, be sure to check out this article.

These are just three of many wonderful countries where US expats can have the adventure of a lifetime. No matter where you choose to live abroad, it’s a good idea to consider all aspects of the move, including how your US tax for expats will be affected. Check out our tax guide for Americans working overseas for more helpful details regarding filing expat taxes – and be sure to come back on Wednesday to learn more about the next three best countries for expats!

Need Help with Your US Tax for Expats While Abroad?

We can make filing expat taxes a more hassle-free experience, so you can have more time to enjoy your adventure abroad. Get started with one of our expat-expert accountants on your expat taxes and make stressing about taxes a thing of the past!

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