Should you file taxes while living abroad?
These may be typical thoughts from an American who is not filing taxes while living abroad. Or, who may not know the importance of filing expat taxes. However, you can still get in some problems (ie: tax penalties) if you ignore your US tax obligation duty.
Do US citizens have to pay taxes on foreign income?
Yes, U.S. citizens have to pay taxes on foreign income if they meet the filing thresholds, which are generally equivalent to the standard deduction for your filing status. You may wonder why U.S. citizens pay taxes on income earned abroad. U.S. taxes are based on citizenship, not country of residence.
What are the penalties for not filing taxes abroad?
The penalties and tax fines for not filing taxes abroad depend on a lot of factors. It can range from 5% of unpaid taxes and escalate up to $25,000 and jail time (if the IRS determines that you’re involved in offshore money laundering and tax evasion.) This is why we want to encourage you to file your taxes on time.
Do I need to file a US tax return on Foreign Assets?
If you need to file a US tax return, you may also need to report on your foreign financial assets if the aggregate value of those assets exceeds the prescribed threshold. For a single person living abroad, the threshold is $200,000 in foreign assets held at the end of the year or $300,000 at any point during the year.
Tax Guide for U.S. Citizens and Resident Aliens Abroad