US Expat Tax FAQs
US citizens, nationals, resident aliens and Green Card holders living abroad are required by law to file a US tax return and declare both their US income and their worldwide income.
Taxback.com specialises in international tax law and can minimise you tax bill while ensuring your meet your US and international tax filing obligations. Our Certified Public Accountant (CPA) in Chicago checks and signs every US expat tax return we file to ensure it meet all the requirements of US tax law.
If you are a US Citizen, National or Resident Alien living outside the US you will be taxed on your worldwide income. This includes, but is not limited to:
- Foreign dividends
- Rental income earned abroad
- Foreign pension income
- Foreign capital gains or losses on stocks, bonds, real estate
- Foreign royalties
- All other foreign income
- All other US source income
- Residing outside the USA may permit the application of special tax laws and regulations, when certain qualifications are met. These rights of offsets are the result of the integration between the Foreign Earned Income Exclusion, Housing Exclusion or Housing Deduction and Foreign Tax Credits. Our primary objective is to use these interplay of mechanisms, in combination, to wipe out any US tax. In addition, international income tax treaties may also serve to reduce or eliminate your US or foreign tax liabilities.
This will depend on a number of factors such as your US citizenship renouncement date, long-term US residency termination date, your gross income and your income tax liability. Taxback.com can advise you on whether you will need to pay expatriation tax.
The forms needed to prepare you income tax return will depend on the complexity of your tax return. The may include, but are not limited to:
- Social Security Card(s)
- Dependents' full names, Social Security Numbers and dates of birth
- Last year's federal and state tax returns
- Records of foreign income and foreign taxes paid
If you have any of the below listed US source income or expenses you will also need to provide the relevant statement:
- Wage Statements - Form W-2
- All applicable 1099 series
- All applicable 1098 series
- Record of Commissions Received or Paid
- Lottery or Gambling Winnings (Forms W-2G)
- Receipts showing Lottery or Gambling Losses
- Record of rental income and expenses.
- Schedule K-1 – Showing income from partnerships, corporations, trusts, and estates
- Documents showing IRA Contributions
- Documents showing alimony paid or received
- Record of child care expenses and provider information
- Record of medical, eye care, and dental expenses
- Record of cash and non-cash charitable donations
- Record of purchase or sale of residence
- Record of real estate and personal property taxes paid
- Record of state or local sales taxes paid (if not shown on the W-2)
- Records of certain business expenses made, casualty and theft losses
- Records of estimated taxes paid
The tax year for the majority of taxpayers is same as the calendar year. US federal income tax returns are due by April 15th in the year following the tax year during which the income was earned. US citizens, nationals and resident aliens living abroad on the filing date are entitled to a 2-month extension on the filing deadline.
If you aren't able to file your US federal individual income tax return by the due date, you can be granted with an automatic 6-month extension. To apply for an extension you will need to file Form 4868 by April 15th. There are special regulations that apply to individuals living outside the US once the automatic 6-month extension is up. Please note that the extension of time to file a US federal tax return does not grant any extension on the time to pay any tax liability.
There is no penalty for failing to file a US tax return if you are due a refund, but by waiting too long you can lose your refund altogether. In order to receive your US tax refund, your tax return must be filed within 3 years of the due date.
If you owe taxes, failure to file a tax return or filing late can be costly and may result in penalties and interest charges that could increase your tax bill by 25 percent or more. Interest will be charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent.
If you are living outside the US an electronic refund cannot be transmitted through the IRS e-file system so you will need to file a paper tax return.
You may be required to file a separate US state return even if you have no income from any of the states in the US. Whether or not you need to file a state tax return depends on particular state. Often the state's residency criteria differs from the federal one.