Are Expatriates Exempt from United States Taxes?

No They Are Not. Don’t Fall Behind on your Tax Reports!

Many expatriates operate under the misconception that because they are not living within US boundaries, they are not required to pay US income taxes. If only escaping from taxation were so easy. Expatriates will typically pay the normal taxes required by their host country and assume, incorrectly, that US taxes no longer apply to them. Except in the case of special situations, the US will indeed require expatriates to file their income taxes.

Whether you are living in the US or not, the IRS mandates that you file your income taxes if you meet any of the following income descriptions:

  • If you are single and earn and income over $9,350
  • If you are married and jointly filing, with a combined income that exceeds $18,700
  • If you are married, filing separately, and individually earn incomes beyond $3,650

No one likes to be on the IRS’s bad side, but this could easily become the case if expatriates do not pay careful attention to what is required of them. If you as an expatriate fail to correctly file your income taxes, you will quickly find yourself behind on your taxes and within the crosshairs of the IRS. This can easily happen without proper attention to the US laws that dictate your status: just ask Elizabeth K. who has lived in Denmark since 2007.

It made sense to Elizabeth that, if she was already paying the taxes required in her host country and if she was not living within the US, that there was no requirement to file US Federal or State tax returns. Elizabeth had always been responsible with her taxes, but while living abroad it had not crossed her mind that the IRS would still require her income to be reported for tax purposes. Unfortunately, she discovered that she ended up falling behind on her taxes by over 3 years. Not only does falling behind mean extra charges and a blemished record, but it also means that she was now responsible for catching up on what she owes. This kind of status with the IRS is enough to make anyone nervous about what will happen.

Fortunately, Elizabeth more than made up for her oversight when she got in touch with an expat CPA expert who was able to walk her through the process she needed to do to set the record straight with her taxes. Normal taxation is difficult enough for the average citizen to follow, so expat taxation laws can seem particularly daunting. However, expat CPAs are accountants who are particularly experienced in expat tax laws and procedures – they can provide assistance and support for expats looking to save on their US taxes, no matter how behind they might have become on their filings. If you are in Elizabeth’s situation and have discovered you’re currently behind on your US taxes, then following Elizabeth’s lead and contact an expat CPA to get back on the right track.