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U.S. Personal Tax filing requirement for Americans living abroad

U.S. citizens, U.S. Residents, and American Greencard holders must file their annual personal income tax returns [1040 Tax Return] reporting their worldwide income and declaration for Foreign Bank Account Fincen114 (If maximum balance $10,000 threshold exceeds).

All sources of payment/Income received (i.e., Wages, Interest, Dividends, Rental, etc.) must be reported while filing the U.S. Personal tax returns, regardless of which country the U.S. Citizens have earned it. Therefore, the U.S. tax law process for expatriate tax returns reporting is quite rigorous and different from domestic returns.

There are several reasons why people leave the U.S. to go and work abroad, such as the opportunity to work in a new environment and learn new cultures as you interact with new people. Notably, overseas jobs usually come with desirable perks such as six-figure salaries, housing allowance, holiday allowance, stock options. Some Citizens live and work in high-tax countries like United Kingdom, Europe and some in low-tax countries as Hong Kong, Singapore, etc. Some countries have treaty ties with the USA, giving double tax payments benefits, etc, which need to be captured correctly on your U.S. tax return filing.

If you are a U.S. Citizen living and working in a foreign country, not earning the U.S. dollar income, or not receiving your Form W2/1099, etc does not relieve you of your obligation from U.S. tax filing to IRS. It's important to note here that it is an obligation to all U.S. taxpayers to taxes if minimum filing thresholds are exceeded unless an American citizen relinquishes their American citizenship.

American tax returns are prepared and submitted using Form 1040. One of the advantages that expats have while filing their returns is a 2-month extension that allows them to file their income tax by the latest 15th June instead of April.

What tax reliefs and deductions are available to expats?

Foreign Earned Income Exclusion (FEIE)

To avoid double taxation, expats have a tax relief provision that allows them to exclude part of their foreign income from their IRS taxable income. However, to be eligible for this provision. U.S. Citizens need to meet certain thresholds since not every expat gets to enjoy this tax relief program. An experienced professional can analyze the best possible option.

Foreign Housing Exclusion

Suppose you are a U.S. citizen working for a foreign company outside of the United States. If you pay your housing rent, you are eligible to claim a benefit that enables you to deduct that expense from your taxable income.

Foreign Tax Credit

If you are an American citizen and pay foreign tax in your country of residence, you can claim the credit to offset taxes. Suppose the taxpayer has any excess foreign tax credit, he or she has an option for the unused foreign tax credit to be carried forward to ten tax years.

To analyze best the benefits mentioned above and ensure that you are fully compliant. It would be best to seek guidance from people who know the trade's ins and outs. They are best suited to help you while filing your Form 2555/1116.

Furthermore, to avoid penalties that may arise from improper 1040 tax return filing, it is essential to let American Tax service experts guide you. Otherwise, you may end up paying more simply because you don't know the tax reliefs, deductions, and exclusions that are available for you, some of which you probably qualify.

Our team specializes in international expatriate U.S. personal tax return service. If you need assistance with US 1040 filing for refund claim/FATCA Compliance work/FBAR FINCEN114 Filing, ITIN/ Form W7 Application/EIN/Form W8BENE or Certified Acceptance Agents [CAA] services/1040NR U.S. tax filing for refund claim of excess 1042S / 8288A/ 8805/ W2/ 1099. We are happy to assist our clients in a timely, efficient, and cost-effective way


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