Frequently asked U.S. expat tax questions.

If you are a U.S. citizen or hold a green card, you are required file a U.S. tax return on an annual basis to report your worldwide income (over certain threshold amounts), whether or not you owe tax to the U.S. government.

For the 2022 tax year, you must file if your income was at least:

Single

• Under 65 – $12,950
• 65 or older – $14,700

Head of Household

• Under 65 – $19,400
• 65 or older – $21,150

Married Filing Jointly

• Under 65 (both spouses) – $25,900
• 65 or older (one spouse) – $27,300
• 65 or older (both spouses ) – $28,700

Married Filing Separately (any age)

• Any age – $5

 

The requirement to file applies regardless of whether you spent time in the U.S. during the year or had income from U.S. sources. Meaning, even if you spent the entire year abroad and earned all of your income abroad and paid tax on the income to your country of residence, you’re still required to file a U.S. tax return.

This may sound scary and even costly, but keep in mind that although you must report the income you earn, very often your U.S. federal tax liability should be minimal (if not zero) due to various exclusions and credits you can take – and this is where we can help!

The answer depends on your situation. The most typical form required outside the IRS Form 1040 is the FBAR, since most expats hold non-US bank or pension accounts by virtue of living abroad.

In addition to the Form 1040 and FBAR, expat taxpayers may be required to file certain other federal tax forms depending on their activities and income amounts.

We prepare any and all forms that an expat taxpayer may need to file, including the following:

• Form 8938 (FATCA reporting of foreign financial assets)
• Form 3520 and 3520-A (beneficiary or ownership of a foreign trust)
• Forms 5471 and 8992 (ownership of a foreign corporation)
• Form 8621 (ownership of a passive foreign investment company)
• Form 8865 (ownership of a foreign partnership)
• Form 8858 (ownership of a foreign disregarded entity)
• Form 8833 (tax treaty position)

For more information, please see the Services & Pricing section of our website.

In general, U.S. individuals need to file their returns by April 15th. However, if your permanent residence is outside the U.S. on April 15th, you are entitled to an automatic extension until June 15th. If you need additional time to file, you may file an extension (Form 4868) and your due date will be October 15th. Note that if you intend on filing an extension and you owe taxes, you must still make a payment by April 15th. The extension only extends your deadline for submitting your return but not for paying your taxes. If you do not have the funds to pay the taxes you owe, it is still recommended to file an extension since failing to file a return will result in higher penalties and interest.

The FBAR filing due date is April 15th, but with an automatic extension for a 6-month period ending on October 15th.

In order to avoid double taxation, U.S. expats are generally entitled to several benefits related to the income they earn while overseas and the taxes they pay to foreign countries:

Foreign Earned Income Exclusion – Each year, U.S. expats are allowed to exclude from their income a fixed amount of their foreign earnings. For 2022, this amount is $112,000. In order to claim this benefit you must meet certain criteria and attach Form 2555 to your return (included in our standard package!). In order to qualify for this exclusion, you must meet the following criteria:

• Tax home test – you must have a tax home abroad and no abode in the United States; and
• Bona fide residence test – you must be a bona fide resident of a foreign country for the entire year; or
• Physical presence test – you must be present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

Foreign Housing Exclusion/Deduction – While living overseas, you may be able to exclude or deduct certain amounts equal to the amounts you paid for your housing expenses. Housing expenses generally include rent, utilities, repairs and parking, among others. Whether you can take an exclusion or deduction depends on whether you’re a salaried employee or self-employed. To claim an exclusion/deduction, you must attach Form 2555 to your return. Our experts can help you determine whether you’re eligible.

Foreign Tax Credits – The foreign tax credit rules allow U.S. expats to reduce their U.S. federal income tax liability on a dollar-for-dollar basis based on the taxes paid on such income to a foreign jurisdiction. Note that U.S. expats will be entitled to a credit only with respect to foreign income taxes paid and not for other types of taxes. In addition, the credit can be used only to offset foreign source income (and not amounts earned in the U.S.). To claim the credit, you must attach Form 1116 to your tax return (included in our standard package!).

Yes. In order to take advantage of this benefit, you need to provide a statement to your employer indicating that you expect to qualify for the foreign earned income exclusion under either the bona fide residence test or the physical presence test.

Although not mandatory, Form 673 is an acceptable statement for this purpose. The statement essentially provides the employer with a declaration on your part under penalties of perjury.

Under the “stacking” rule, when determining your tax bracket (which, in turn, determines your tax rate), you are required to include the amount exempt under the foreign earned income exclusion.

For example, if your foreign earned income is $114,000 and you exclude the full $112,000 (for tax year 2022), you will pay tax on the $2,000 balance. Your tax bracket is determined based on your total income of $114,000 before the excluded amount.

Under U.S. tax law, you can exclude a gain of up to $250,000 realized from the sale of your home ($500,000 if married and filing jointly), provided you meet the “ownership test” and “use test.” This exclusion is not limited to homes in the U.S. and can therefore apply to the sale of a home overseas.

However, if your profit from the sale exceeds the $250K threshold, you will be required to pay capital gains tax (20% maximum rate) in the U.S. even if your country of residence does not impose a tax on the sale.

Yes. The tax code does not distinguish between a home in the U.S. and a home abroad, provided the basic requirements are met. These requirements are: (i) the mortgage must be a loan secured by a qualified home in which you have an ownership interest; and (ii) a qualified home is either your primary residence or a second home.

You can choose which home you want to treat as your second home for purposes of the deduction. In addition, in order to claim the deduction on your return, you will need to itemize your deductions.

U.S. expats who are self-employed are generally required to pay self-employment taxes including social security taxes if they have earnings of $400 or more from self-employment. Unfortunately, the foreign earned income exclusion cannot be used to exclude income from self-employment taxes. However, if the U.S. has a “Totalization Agreement” with your country of residence, then you may be able to exclude your foreign earnings from self-employment taxes.

FATCA stands for “Foreign Account Tax Compliance Act.” FATCA was initially enacted in 2010. Its objective is to require U.S. citizens to report their holdings in financial accounts and assets overseas as part of the U.S. government’s focus on combatting offshore tax evasion. As part of enforcing FATCA, the IRS requires certain U.S. citizens to report the total value of their “foreign financial assets.” Generally, FATCA reporting applies to any account in a foreign financial institution and to stock or securities issued by a non-U.S. entity. If you reside outside the U.S. and have a bank account or investment account in a foreign financial institution, you are generally required to include Form 8938 with your U.S. federal income tax return if you meet the following thresholds:

1. You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
2. You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Most likely yes – but it depends on the state. Generally, as long as an individual maintains his “ties” as a resident of a particular state, he is required to continue and file a tax return in such state (assuming the state requires an income tax return to begin with). Ultimately, each state has its own set of rules that determine if and when an individual has broken his ties with the state.

In some states, the threshold is very low and a person can very easily break his ties with the state. In other states, such as California, the threshold can be very high and an individual may physically move overseas but nevertheless still be considered a resident of California. Keep in mind that even if your move is sufficient to sever your ties with the state and terminate your resident status, if you move in the middle of the year, you will still be required to file a return for the part-year period in which you still lived in the state.
 

Our state tax return service helps US expats who have a continuing obligation to file.

 

The main reason to use an amnesty program is that it allows you to catch up with your U.S. tax filing obligations without suffering penalties. These can include failure to file, failure to pay, and accuracy-related penalties (which together can amount to 70% of any tax owed), as well as late information form penalties (which are generally $10,000 per form per year).

Late filing can have significant legal ramifications as well. For example, under the passport revocation rule, taxpayers with a “seriously delinquent tax debt” of $50,000 or more may have their U.S. passports denied, revoked, or otherwise limited.

With the advent of FATCA and bank information sharing between governments, keeping your head under the sand is becoming an increasingly untenable solution. The amnesty programs represent the U.S. government's soft approach to encourage taxpayers to voluntarily come forward. The IRS incentivizes taxpayers to catch up by limiting or eliminating penalties for those willing to come forward.

Some late filers choose to abandon the amnesty programs and instead try their luck with alternative approaches, such as “noisy” disclosure (filing late returns with a statement explaining the reasons for the delinquency), “quiet” disclosure (filing late returns without any statement of explanation), or "prospective" filing (ignoring past delinquencies and complying only with respect to tax years moving forward).

We do not recommend these alternative approaches for a number of reasons. First, the IRS frowns upon attempts by taxpayers to circumvent the programs specifically designed to benefit delinquent taxpayers. Second, the outcomes associated with the alternative approaches can vary so greatly and can potentially lead to disastrous results. Third, we have yet to encounter a situation that justifies the risks associated with these approaches in contrast to the IRS amnesty programs, which offer the taxpayer certainty and a clean record moving forward.

The most popular and advantageous of the IRS amnesty programs currently is the Streamlined Procedures. Under this program, a late filer can catch up with potentially no penalties by submitting a non-willful certification and filing tax returns, with all required information returns, for the prior 3 years, and any delinquent FBARs for the prior 6 years.

Other programs include the Voluntary Disclosure Program (for taxpayers who are concerned that their delinquency might be viewed by the IRS as willful and who seek to avoid potential criminal penalties) and the Relief Procedures for Certain Former Citizens (for accidental Americans who have renounced or plan to renounce their US citizenship and want closure with their IRS filing obligations).

For taxpayers who have been filing tax returns but who have not been filing FBARs, the IRS currently offers the Delinquent FBAR Submission Procedures (for taxpayers who need to submit late FBARs only).

It is important to keep in mind that the IRS has given no certainty that it will maintain its tax amnesty programs on a permanent basis. In fact, with respect to the Streamlined Procedures, IRS officials have repeatedly expressed that the program will end when it feels that there’s no way a taxpayer who would want to participate couldn’t have heard about the process (rendering the taxpayer willfully delinquent by default). For this reason, if you are a delinquent taxpayer living abroad, it is critical that you consider coming clean sooner rather than later.

No. One of the strongest benefits of entering a tax amnesty program is the ability to become completely compliant without having to disclose your entire past. The IRS recognizes that gathering financial information about the distant past can be cumbersome, if not impossible, so in order to encourage disclosure, it generally limits the tax years that require filing.

Under the Streamlined Procedures, for instance, taxpayers are required to file only the prior 3 years of tax returns, including required information returns, and 6 years of FBARs.

No. In recent years, the IRS has made it clear to taxpayers that it is more interested in disclosure than in punishing late filers or non-filers. Over the years, the IRS has expanded its more lenient program, the Streamlined Procedures, allowing taxpayers to participate if they can explain in a written statement how their delinquency was not intentional. This lenient approach has allowed many delinquent taxpayers to successfully enter its amnesty programs.

The answer depends on the amnesty program. For the Streamlined amnesty program, if the IRS accepts your Streamlined submission, they will not contact you or us to acknowledge the acceptance. This is also true of the form-based amnesty programs.

For other programs, such as the Voluntary Disclosure Program and the Relief Procedures for Certain Former Citizens Program, the IRS does notify successful participants.

Yes. The open-endedness of the Streamlined program, in particular, should make participants very wary of falling out of compliance. The IRS may take the subsequent non-compliance to mean that the taxpayer was not genuine in expressing remorse over past late filings. It can then reject the original Streamlined submission, opening the floodgates to severe penalties for the many years of past non-compliance.

Successful participation in an amnesty program doesn't mean you’ve won the favor of the IRS. In fact, the opposite is true. A delinquent filing past most likely means the IRS will likely be paying closer attention to your filing compliance than the average filer. For this reason, it is very important that amnesty participants stay current each year moving forward.

To put it simply - not all expat services are created equal. We offer the most reliable, efficient and rigorous online service for U.S. expats across the globe. Even with the convenience we offer our clients, we stand behind the quality of our work and the level of service we provide.

Here are 6 specific reasons why choosing Expat Tax Professionals is the right decision for you:

1. Expertise – We focus our tax expertise on U.S. citizens living abroad, which means we have a thorough understanding of U.S. international taxation and your unique situation.
2. Experience – We only employ U.S.-trained and licensed CPAs, EAs, and U.S. tax attorneys. A CPA manager reviews and signs every return we file.
3. No Outsourcing – Unlike other companies, our expert staff does all your work in-house. We never outsource anything to a third party.
4. Easy – We understand you’re busy, so we’ve made it easy for you to work directly with a CPA using email and our secure online client portal and tax questionnaire to give us your information and upload documents. Your CPA is there to guide you every step of the way.
5. Safe and Secure – We take data security very seriously. All clients are granted access to our secure site where you can upload your sensitive personal information without any worries or hassles. You can rest assured that your information is always protected.
6. Competitive Pricing – Our prices are competitive and transparent. We make sure to communicate our fees in advance so that you know exactly what your fee is going to be.

One of our licensed U.S. CPAs or authorized EAs will prepare your U.S. tax return. All of our tax preparers are employees of our firm and work in one of our offices. We do NOT outsource your tax return (or personal financial information) to third-party contractors.

Yes. When using Expat Tax Professionals to prepare your return, your file is assigned to one of our experienced tax managers who is a qualified and licensed CPA.  You will have the opportunity to communicate with them by email, phone or Skype.

Yes, absolutely. We understand that coordination between us and your local tax accountant or adviser may be required in order to optimize your tax position in both countries. Tax issues, such as income sourcing, or treaty interpretation, sometimes require a joint effort between tax preparers. We are happy to communicate with your local tax accountant or adviser in order to achieve optimal results and accurate tax returns in both countries.

Of course. From time to time, the IRS sends correspondence while processing the return. In such cases, we will respond to any IRS correspondence related to the return we prepared for you free of charge.

In some instances, if the IRS inquiries require extensive correspondence and/or additional work, we will request an additional budget to cover such out-of-scope time. However, any additional fees will be communicated to you in advance.

Yes. One of the unique qualities of our firm is that our staff consists not only of U.S. CPAs but also of U.S. tax attorneys who have valuable experience assisting clients with structuring, planning and other tax consulting projects. You can schedule a 30-minute consultation with one of our experts.

In a complex world, we believe filing your U.S. taxes should be easy. That’s why we’ve created Expat EZ, the most straightforward and simple self-directed online tax platform for Americans living abroad with straightforward and simple circumstances.

Our process is easy to use and understand because we built our solution on proven U.S. tax expertise. For one flat rate and about an hour of your time filling out our Expat EZ tax questionnaire, we deliver you a complete, accurate return and uncompromised peace of mind.

With Expat EZ, complete your tax requirements with confidence, receive validation each step of the way, and know your return will be complete, accurate, and in your hands within about 24 hours. One affordable flat fee, one hour of your time, one easy solution built around you.

You're welcome to check out the Expat EZ section of our website and answer a few simple questions to see if you qualify for this great new service.

Expat Tax Professionals is our flagship brand encompassing a platform of services that can accommodate any U.S. expat with circumstances ranging from the simple to the complex. Whether you are a US citizen or non-resident alien, a current filer or a late filer, and whether you have a simple financial profile or a complex investment portfolio, Expat Tax Professionals provides expert support from our U.S. CPAs, EAs and tax attorneys at every step to tax compliance to deliver the highest level of service and optimized outcomes.

Expat EZ is our new alternative offer for filers with simple and straightforward circumstances looking for a more affordable and self-directed tax preparation service. The Expat EZ questionnaire is specifically designed to simplify the information-gathering process to accommodate taxpayers with very basic U.S. expat items to report on their tax return. This makes the tax return process faster and simpler, while maintaining accuracy and reliability. Even with the convenience that Expat EZ offers qualifying clients, we stand behind the quality of our work and the level of service we provide.

As with all Expat Tax Professionals' services, one of our licensed U.S. CPAs or authorized EAs will prepare your Expat EZ tax return. All of our tax preparers are employees of our firm and work in one of our offices. We do NOT outsource your tax return (or personal financial information) to third-party contractors.

Expat EZ is a self-directed service designed for taxpayers with simple and straightforward circumstances who do not need the guidance of a CPA and would prefer to limit the CPA’s role purely to the preparation of the tax return. This streamlining of the service means a more affordable price for those who qualify.

This in no way affects the quality or accuracy of your return. As with all Expat Tax Professionals' services, one of our licensed U.S. CPAs or authorized EAs will prepare your U.S. tax return. In this way, Expat EZ represents the best of both worlds - affordability coupled with award-winning service.

If you need assistance when filling out the Expat EZ tax questionnaire, you can always chat with a customer service representative during working hours. Our representatives can walk you through the questionnaire and answer any questions or concerns. During non-working hours, you can leave us a message in the Chat box or send us a message via the Contact Us section of the client portal.

If you've answered our Expat EZ qualifying questions and received a message that you do not qualify, this is because your responses indicate that your return requires a more comprehensive service that fully captures the complexities of your situation to ensure you're getting the most out of your return.

Instead, our flagship offering - Expat Tax Professionals - is the best option for you. You'll find that your circumstances are captured more effectively within the Expat Tax Professionals online tax questionnaire, and that your needs are better accommodated with the added support of a tax professional. It's the smart way to optimize your filing position and minimize risk.

When you sign up with us, we'll give you access to a personalized online client portal, which houses our interactive tax questionnaires. Here you can provide us with all the information needed to prepare your tax return filing. After logging in to your client portal, you can click on the tax year you would like to file and begin filling out the tax questionnaire.

The questionnaire indicates with a symbol when you are in the middle of filling out a section (a half moon symbol will show) and when you are finished (a check mark symbol will show), and indicates the percentage of progress you've made throughout the entire questionnaire. When you're finished filling in your information, you can submit your questionnaire to us, and we'll get started preparing your return.

If you can't finish your questionnaire all in one go, you can save your progress and return later. You can click on the Client Login button at the top of this website to return to the client portal whenever it is convenient for you.

Yes. Our questionnaire has been carefully designed to allow you to provide us with all of the necessary information in a quick and easy manner, whether you are current in your filings or you are filing late under the Streamlined Procedures. For those filing late under the Streamlined Procedures, you will find specific instructions for providing us the necessary information in order for us to prepare your Streamlined submission.

Of course. We take data security very seriously. Our secure portal and online questionnaire allows clients to upload sensitive personal information without any worries or hassles. You can rest assured that your information is always protected using 256-bit SSL for file transfers and 256-bit AES encryption for files at rest. This is the same security used by banks and many e-commerce sites such as Amazon.com.

One of the many great features of our online questionnaire is its "smart logic", which allows you to answer only those questions that are relevant to you. If a question is not relevant to you based on your answer on a previous line, you will not see or have to answer that question. The "smart logic" of our online questionnaire significantly decreases the amount of time you'll need to provide us with your information.

Yes. You can easily upload your relevant document when prompted by the online questionnaire. The client portal, which houses the online questionnaire, also has a section for uploading any necessary documents that aren't explicitly asked for in the questionnaire.

Yes. Each section of the online questionnaire allows users to enter multiple items, whether they are multiple employers, pensions, businesses, foreign entities, bank accounts, etc. For joint filers, the questionnaire will ask you to specify whether the item belongs to you or your spouse.

For two items that are very similar (e.g., two bank accounts that are the same other than the account number and balance), you can use the "duplicate" function to copy your responses from one item to a second item and make any necessary adjustments to the second item.

Our online questionnaire has been designed not only to allow you to provide us with your information, but also to provide you with knowledge and resources that you can access to your liking. To this end, we have strategically placed "More Info" buttons next to questions, which serve two purposes. First, they provide instructions for answering a question when needed, and second, they give background information on tax concepts and rules that are referred to in the particular question.

If the More Info button does not provide you with adequate information to answer a question, you are always welcome to use the questionnaire's Chat feature to communicate directly with a service representative during working hours, or you can leave us a message on the Contact Us page of our client portal, and we'll respond promptly to any questions or concerns.

Absolutely! While working on your questionnaire, you will see a chat icon at the bottom right of your screen. Click on the button to begin chatting with a customer service representative during working hours. Our representatives can walk you through the questionnaire and answer any questions or concerns.

During non-working hours, you can leave us a message in the Chat box or send us a message via the Contact Us section of the client portal. We'll respond as promptly as feasible.

Yes! When you open a new tax questionnaire, you will be asked if you want to roll over information from another tax year. Rolling over information will save you loads of time and effort each time you begin a new questionnaire.

Please note that for purposes of ensuring accuracy, when you roll over your information, the program does not copy all of the information from another tax year. Rather, only basic information which tends to stay constant from year to year will roll over. You should review your new tax questionnaire to ensure that it contains all the relevant new information for that year.

Yes. You will see a Save button on the lower left of your screen when filling out a tax questionnaire. You can save your information at any point and return to work on your questionnaire whenever it is convenient for you.

Your secure client portal not only houses your tax questionnaires, but it also acts as the delivery station for your completed tax return and other deliverables. When your tax return is complete, we will contact you to let you know and provide you with our invoice. Once you have paid your invoice, you can access your completed tax return and transmittal letter with instructions in the Deliverables section of your client portal.

We accept all major credit cards, PayPal and wire transfers. There is an additional $25 processing fee for wire transfers.

Given time zone differences, the best way to reach us is by email. You can either email your tax manager directly or send an email to [email protected].

Otherwise, you can contact us by phone or through our website contact form:

1. Phone:

U.S. +1 (718) 887-9933

UK +44 (0) 20-3642-0423

Please note that our office maintains London hours. Our office hours are Mon-Thurs 8am-4pm GMT (London time).

2. Contact Us form – click here and complete our online form.

Thankfully, the pandemic has not affected us or our ability to service our dedicated clients. We are well-equipped to work securely and remotely, harnessing technology to allow us to collaborate with each other and with clients to ensure a productive tax season. Our clients should experience little to no change in the efficiency or timeliness of our responses or deliverables. We believe, in fact, that our new process and online questionnaire will make this year’s filing season better than ever. We are always available for questions or concerns.