Top 7 Tax Tips for US Expat Taxpayers

This article is merely an overview of an overwhelming amount of US expat tax information. 

US Expat Tax Payer Tip 1

If you are residing in a foreign country on the last day of the taxable year, you are considered a US expat and receive an automatic filing extension to June 15th.  The extension is only for filing US expat taxes; if you owe any taxes to the IRS you are still required to make a payment by April 15th to avoid penalties and interest.  You are also required to report all foreign bank accounts to the US Treasury Department if your total foreign account balance is over $10K.  This information is reported on Form TDF 90-22.1 and must be sent by June 30th to avoid a $10K non-filing penalty.


US Expat Tax Payer Tip 2

You are allowed to claim a Foreign Earned Income Exclusion (FEIE) of up to $92,900 for 2011 (amounts decrease for previous years if you are required to file back taxes).  The FEIE applies only to income earned outside of the United States, and this exclusion requires a US expat to have lived in a foreign country for a minimum of 330 days out of a full 365 day period.  This exclusion can be claimed on Form 2555 and filed with your US expat tax return.  If you are married and both you and your spouse have foreign earned income, you are both able to claim the maximum allowance amount.

US Expat Tax Payer Tip 3

If you earn more income than you’re able to claim on the FEIE, you are able to claim a Foreign Tax Credit on your US expat tax return.  The Foreign Tax Credit allows you to credit the dollar for dollar amount you paid in foreign taxes and apply the credit to your US taxes.

US Expat Tax Payer Tip 4

The United States currently has more than 40 active tax treaties with countries around the world.  Not only do these treaties contain a number of provisions pertaining to each country’s right to taxation to help expats avoid being taxed on the same income twice, but they also allow the United States and the country with which the treaty is held to trade taxpayer information to ensure that all tax liability is met on both sides of the sea.

US Expat Tax Payer Tip 5

If you are living and working abroad and you are married to someone who is not a US Citizen, you can elect to file as ‘married filing separately’ so that your spouse is not required to report income and pay taxes to the United States IRS.

US Expat Tax Payer Tip 6:

If you are a US expat living outside of the US and you have children you may get a social security number assigned to them by visiting and filling out Form SS-5-FS and submitting it to the Social Security Administration.  If you are a self-employed US expat or you have questions about other countries’ agreements with the United States Social Security Information read about US Social Security treaties

US Expat Tax Payer Tip 7:

If you live or lived in a state in which you are required to pay income taxes before accepting an overseas assignment and you want to avoid paying US state taxes while living abroad, you must take certain actions.  You can choose turn in your driver’s license and other documents required by your state (and possibly sell off major assets) and terminate your residency in that state.  All states have different requirements, and some states such as California, New Mexico, South Carolina, and Virginia make it extremely difficult to terminate its residents’ tax domicile.  If you happen to live in Florida, Nevada, Texas, or Washington you will not have to worry, as these states do not assess personal income taxes.

For additional help, please contact the tax experts at Taxes for Expats today!


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I.J. Zemelman, EA is the founder of Taxes for Expats

She may be reached at: +1-646-397-2887


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