US Taxes: Are Expats Exempt?

Expats Exempt

This article was first published on January 11, 2012. It was updated on June 18, 2014, with information relevant to the 2013 and 2014 tax years.

US taxes are for everyone – even if you live overseas!

One problem with US taxes for those living overseas is a misunderstanding of what must be filed to US authorities for each given year.  Many make the incorrect assumption that because taxes have been paid to their host country, US taxes are no longer a liability for them.  While this is true for some circumstances, you are most likely going to be required to file if you earned income overseas.

The IRS has very clear definitions of who needs to file US taxes. Many people think they are exempt from filing because they are not earning money in the United States.  This is an incorrect assumption.  The IRS requires that you file US taxes returns for any year where you earned over the following thresholds:

  • Single with income over $10,000 for the 2013 tax year
  • Married filing jointly with income over $20,000 for the 2013 tax year
  • Married filing separately with income over $3,900 for the 2013 tax year
  • Self-employed individuals with income over $400 need to file

Because many individuals misunderstand their filing requirement, many find themselves in the situation of being behind with their US taxes. This is exactly the situation of Michelle M., who resides in the Netherlands.

Michelle had been living and working abroad since 2007, all the time thinking she did not need to file US Federal Tax Returns or State Tax Returns as she was not in the country. When she found out that she was three years late on her US taxes, she was a bit nervous about how she should catch up and what the implications were.

Michelle made the right decision when she spoke with an expat CPA regarding getting caught up with her US taxes.  Expat CPAs know all the ins and outs of expat taxation and can help anyone save on their US taxes, regardless the number of years behind. If you are behind on your US taxes, talk to an expat CPA at your earliest convenience to avoid higher penalties.

Need Help With Your US Taxes?

Have a look at our “US Expat Taxes Explained” series, which we have designed to be a go-to resources for information about US taxes. If you have any other questions or would like to learn about our expat tax services, please contact us.