Tax season is upon us again, so now is the time to start pulling together your information and getting your forms prepared and filed. With the excitement of expatriate life comes the added burden of tax forms that you wish you never knew existed. Some expats have the added struggle of trying to collate information in an exotic location with a difficult mail system! You may feel like you have lost before you ever got started. Never fear! With the clever use of extensions and the other tips below, your 2018 tax season can be painless.
Filing US Expatriate Taxes
What comes as a surprise to many is that if you’re a US citizen or permanent resident, you’ll need to file US taxes on your worldwide income regardless of where you are living. US tax filing obligations can easily be put on the backburner or forgotten about completely while overseas. Without constant reminders, the tax scenario can be “out of sight, out of mind.” As tedious and painful as taxes can seem, keeping on top of them and filing on time will keep you in the IRS’ good graces and away from the nasty world of interest and penalties.
Reporting Foreign Financial Accounts
Part of living and working in another country can mean having to set up a local bank account and/or other financial account to deal with your day-to-day living expenses. Did you know that you may have some reporting obligations to satisfy for those accounts? Chances are, you have heard of Foreign Bank Account Reporting (FBAR) as well as FATCA reporting (using Form 8938), but do you know when you have a filing requirement? Let’s take a closer look at both.
If you had any financial accounts located outside the US with a total balance that exceeded $10,000 at any point during the year, you must file an FBAR. This applies to any individual who is a US person, regardless of age or circumstance.
FATCA Form 8938
Form 8938, Statement of Specified Foreign Financial Accounts, must be filed by US citizens with foreign financial accounts exceeding a specified amount, and is used to satisfy FATCA reporting obligations. Types of accounts that must be reported include everything from bank accounts to stock of foreign issuers and others in between.
- If you’re single or married but filing separately, you will need to file Form 8938 if the total value of your foreign assets is greater than $200,000 on the last day of the tax year or more than $300,000 at any point during the year (while living outside of the US).
- If you’re married and filing jointly, you’ll need to file if the total value of your foreign assets owned by you and your spouse is greater than $400,000 on the last day of the year or more than $600,000 at any point during the year (while living outside of the US).
Something that expats may not realize is that this obligation to file Form 8938 does not just disappear once you have returned home to the US. If you maintain these financial accounts, you need to be aware of the following filing thresholds:
- If you’re single or married but filing separately, you will need to file Form 8938 if the total value of your foreign assets is greater than $50,000 on the last day of the tax year or more than $75,000 at any point during the year (while living inside the US).
- If you’re married and filing jointly, you’ll need to file if the total value of your foreign assets owned by you and your spouse is greater than $100,000 on the last day of the year or more than $150,000 at any point during the year (while living inside the US).
2018 Deadlines for US Taxes for Expats
One of the main challenges when it comes to filing US taxes for expats is meeting the filing deadline. Most Americans are familiar with Tax Day, which rolls around every April – but US expats actually receive an automatic extension if living abroad on Tax Day. Below are the important dates you should know:
April 17, 2018: Federal Tax Deadline
This is the federal filing deadline for US citizens who are not currently living abroad. If you moved back to the US prior to this date, you will need to file your taxes by this date. As mentioned above, if you are living abroad on this date, you’ll receive an automatic two-month extension to June 15. Note that any taxes owed will begin accruing interest if not paid by April 17.
April 17, 2018: Foreign Bank Account Report (FBAR) Filing Deadline
The due date for Form FinCEN 114 now falls on Tax Day. It must be filed online using the BSA e-filing system, and extensions are available until October 15, 2018.
June 15, 2018: US Expat Tax Deadline (without extension)
This is the deadline for US expatriate taxes and also the deadline to file an additional extension until October 15. Remember, if you are required to file FATCA Form 8938 it must be filed along with your US expat tax return. If you file for an extension, the extension applies to Form 8938, as well.
October 15, 2018: Final US Expat Tax, FBAR, and FATCA Deadlines
If you filed an extension prior to June 15, this is the final deadline for your US expatriate taxes, FBAR, and FATCA filing.
Ways to Save on Your Expat Taxes
Since you’re required to file taxes in the US even if you must also pay taxes in your host country, the US does provide special provisions to help protect expats from double taxation.
Foreign Earned Income Exclusion: This allows you to exclude up to $102,100 of foreign earned income from your 2017 US expat taxes and $103,900 for 2018.
Foreign Tax Credit: This allows you to offset on your US expat taxes the taxes you paid in your host country dollar for dollar.
Foreign Housing Exclusion: This allows you to exclude certain household expenses that are incurred as a result of living abroad.
If you plan ahead for the upcoming tax season, you’ll be able to take advantage of all the savings available to you and avoid penalties by filing on time. Now is a great time to begin preparing so you can get ahead of the curve! To learn more about expat tax tips and savings, download our guide for Americans working overseas.
Ready to Begin Your US Expatriate Taxes?
Our team of expat-expert CPAs and IRS Enrolled Agents are here to help make filing your US expat taxes a hassle-free process, so you can get back to what you do best: enjoying your adventure abroad. Get started today!