Expat tax myths exposed, explained and debunked! We provide the facts that can help save you hundreds (if not thousands!) on your US expat taxes. Join us as we dispel the myths and rumors about US taxes for expats! We provide the facts that can help save you hundreds (if not thousands!) on your US expat taxes.
In this informative, in-depth webinar we will expose common myths, such as:
- You don’t need to file US taxes once you leave the USA
- You can make $100,000 abroad and it’s all tax-free
- If you file now, you might get arrested on your next trip home
- You are an expat so Obamacare won’t impact you
And we’ll give you the real truths about expat taxes!
- How to qualify for expat tax breaks
- How the Foreign Earned Income Exclusion can save you thousands of dollars
- FBAR & FATCA—why you need to know about them now
- And much more!
Still have questions? Check out the FAQs below.
If I am permanent resident or US citizen living abroad with a spouse and choose to file Married Jointly, does the IRS tax our combined income or only the income of me, as the US citizen?
Assuming the spouse is US resident/citizen, you are allowed to file jointly and the IRS will tax on combined household income. If the spouse is a foreign national, you have three options for filing on the US side:
1. Married Filing Separately (MFS) – the default status, and spousal income remains off the US return. Unfavorable tax rates in comparison to filing jointly.
2. Head of Household – if you are claiming dependents on the return. Spousal income remains off the US return, however, the tax rates are more favorable than MFS.
3. Married Filing Jointly – Must make an election to treat the spouse as a US resident, and spousal WORLDWIDE income becomes open to US taxation.
What is the threshold for Married Filing Jointly?
The filing threshold for 2013 Married Filing Jointly is $20,000 for the spouses’ combined income.
If I file my foreign taxes jointly with my spouse, is the Foreign Earned Income Exclusion amount $97,600 for each of us or is that for our combined income?
Should you wish to have your spouse treated as a US resident for tax purposes, and report their worldwide income on the tax return, you would each be eligible for the $97,600 exclusion. Note that in 2014, the amount you can each exclude is $99,200.
Why is it important to limit stays in the US to only 35 days a year?
If you wish to qualify under the Physical Presence Test (PPT) for the Foreign Earned Income Exclusion (which can save you a lot of money), it is important to be in a foreign country for 330 days out of a 365-day period. However, another option would be to qualify under the Bonafide Residence Test (BFR), where the number of US days does not matter as much.
If I am permanently living abroad and have been so for many years, can I return to the US for more than 35 days and receive the tax exclusion or am I restricted to 35 days?
In this case you may qualify under the Bona Fide Residence test, and you may exceed the 35 day rule, which is only specific to the Physical Presence test.
Does the IRS ever actually check to see that you have not been in the country for more than 35 days?
The IRS may at any point request to have travel records provided to substantiate positions. Every situation is different, and the reasons for the IRS requesting information vary. It is best to track your time in the US carefully in case documentation is ever requested.
What are the US tax implications of running a foreign business that has no ties to the US?
You are still required to report and pay US tax on the earnings, and are open to self-employment taxes from the United States (depending on the Social Security Agreement in place). The self-employment earnings are eligible for the Exclusion and Foreign Tax Credits as well.
Please note you may have additional reporting requirements if you set up an entity abroad to report interest in a foreign corporation or partnership.
When I finish my work abroad and return to the US, do I have any tax liability on income earned up to the final date of overseas employment?
You must report all income to the IRS. Even if earned abroad, you may still have a tax liability. However, foreign earned income is eligible for the Foreign Earned Income Exclusion and the Foreign Tax Credit, even if you repatriate. In this case, the exclusion would be prorated based on the amount of time spent in the foreign country.
Does my personal property need to be reported to the IRS?
Personal property held directly does not been to be reported on either Form 8938, Statement of Specified Foreign Financial Assets nor the FBAR (Foreign Bank Account Report).