Stranded Abroad? Here’s What You Need to Know About Filing U.S. Taxes Overseas

As of this year, over 6.8 million Americans are living abroad. As U.S. citizens, each one is expected to pay international tax. Unfortunately for those millions of expats, living in any foreign country does not exclude you from paying taxes. According to the Internal Revenue Service (IRS), American citizens living abroad must still file income tax returns, should their gross annual income be greater to or equal to applicable exemptions and standard deductions.

Filing Taxes From Overseas

What about the local tax laws of whatever country you reside in? Unfortunately, you must still pay local tax and international tax, which occasionally leads to double taxation.

But here is the kicker: you may not pay any taxes when you file with the IRS, but you must report your income no matter what.

If you fail to file with the IRS, you are ineligible to claim the foreign income exclusion, which may allow you to exclude up to $100,000 in annual income if you qualify. A big part of the qualification process is filing your income taxes on time.

Noteworthy International Taxation FAQs

You likely have questions about international taxation if you spend significant time living overseas.

Will I owe the IRS money on income earned overseas?

Not always, no. Most residents living abroad wind up paying nothing to the IRS because of the taxes paid to the host country, along with the many available deductions expats can take advantage of annually.

Is there a statute of limitations on tax returns?

For filed tax returns, the statute of limitations is three years. If you can’t file, there is no statute of limitations on your returns. It is in your best interest, even abroad, to file your income tax returns on time to avoid an audit later on.

How long must I live abroad to qualify?

According to the IRS, they allow an expat to live and work in multiple foreign countries in a single year. To qualify, you must live abroad for a minimum of 330 out of 365 days.

When Are Taxes Due While Living Abroad?

Any American living and working abroad should ideally file their taxes with the IRS by April 15th for the previous year. The IRS is forgiving when it comes to expats. They offer an automatic extension to June 15th to file U.S. income tax returns.

Do you have international tax-related questions while living in a foreign country? Contact MKS&H for a consultation to discuss filing your income taxes today!