Filing Taxes as an American Taxpayer Living Abroad: What You Need to Know
Key Highlights :
Filing taxes as an American taxpayer living abroad can be a complex process, but it is important to understand the rules and regulations to ensure that you are compliant with the IRS. For those living and working outside of the U.S., the deadline to file your 2022 federal income tax return is Thursday, June 15th. This deadline applies to U.S. citizens and residents abroad, as well as those who are serving in the military outside the U.S. and Puerto Rico. For those needing more time beyond June 15th, you can request an automatic extension using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
When filing a return, American taxpayers abroad are subject to tax on worldwide income from all sources, and must report all taxable income and pay the appropriate taxes. However, there are special tax benefits that may be available to those living abroad. These benefits include the foreign earned income exclusion, which allows for an exclusion of your foreign earnings up to an adjusted amount for inflation, and the foreign tax credit, which is a credit for foreign taxes imposed on you by a foreign country or U.S. possession so that you aren't taxed twice on the same income.
In addition, U.S. citizens or resident aliens may also have to complete and attach to their return Form 8938, Statement of Specified Foreign Financial Assets. This form must be completed and filed if the aggregate value of foreign financial assets exceeds certain thresholds. It is important to note that these credits may differ depending on whether you lived in the U.S. for over half of 2022.
Those living abroad must also file a Report of Foreign Bank and Financial Accounts (FBAR). This requirement applies to anyone with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during the tax year. The FBAR is due April 15 following the calendar year reported, and you're allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15.
Finally, those who have relinquished their U.S. citizenship or ceased to be a lawful permanent resident of the U.S. during 2022 must file a dual-status alien tax return and attach Form 8854, Initial and Annual Expatriation Statement.
Filing taxes as an American taxpayer living abroad can be confusing and overwhelming. However, it is important to understand the rules and regulations to ensure that you are compliant with the IRS. For more information, check out the IRS website or contact the IRS at 267-941-1000 (this is not a toll-free number).
