In this blog, we’re going to show the five top American expat tax facts that individuals working overseas want to know. Please note that although that each expat’s personal instances will decide the befitting strategies to ensure that they do not just remain compliant, but file to their maximum advantage too, so it’s really worth consulting an American expat tax professional.

american expat tax

1.All American Citizens need to file returns

All American citizens and green card holders are required to file US federal tax return, reporting their worldwide earnings, whether or not they stay within the states or overseas. That is the case irrespective of the duration of the venture overseas (until it’s very brief, together with just a few months). People living abroad may additionally need to keep filing state taxes, relying on the rules in the state where they last lived earlier than relocating abroad, what ties if any they’ve retained there, and how long they’ll be abroad for.

2.Automatic extension

Usually, expats acquire an automatic two-month submitting extension, so the filing closing date for expats is June 15th. The purpose expats get extra time is because they usually must file an overseas tax back in the country where they reside.   Again generally, the American expat tax that expats owe has to be paid by April 15th to keep away from interests and overdue fee payment, even though it’s only an estimated amount that’s paid on time. In 2020 though, the filing and tax payment closing date has been prolonged further for all individuals due to the covid-19 outbreak, to July 15th.

3.Mistakes can be amended

Many expats are unaware that you can amend a payment if you have made any mistake while filing tax. In case you haven’t reported all your profits in your return, or in case you didn’t take all the deductions allowed, you may need to report an amended return for that tax year on form 1040x. Filing an amendment earlier than the IRS finds the mistake is the better alternative, as penalties are often much less. Once the accurate return has been filed, the clock starts ticking, and amended returns will typically need to be filed earlier than a certain date to get a credit or refund.

4.Tax Treaties

America has signed tax treaties with nearly  60 other counties which don’t prevent expats from having to file returns. That said, some expats take advantage of provisions inside a tax treaty, most customarily students, teachers, and researchers, and on occasion retired expats, and athletes. Tax treaties in majorly define which country gets to tax various forms of profits first, and also often permit the two countries to access personal and economic data to help police tax evasion.

5.Do not pay double tax

The USA has put numerous important deductions, exclusions, and credits in place to ensure you aren’t taxed two times on the same profits. Many expats are able to offset all of their foreign earned profits with the following:

Don’t pay American expat tax for your earnings two times! US taxpayers may be eligible to assert the foreign tax credit score towards profits that have already been taxed by using their host country. For the exclusions, you have to qualify as an official expat and have overseas earned income, and also you ought to file your returns to prove that you are eligible for those blessings.

6.Residency Test

To get the foreign earned income exclusion you should be a resident of a foreign country and physically present in the country for 330 days in a year. You should have lived for a calendar year and should not have an intention to return to US immediately. Consider this exclusions before paying your American expat tax.

7.Totalization Agreement

The united states has treaties referred to as totalization agreements currently with 26 different countries that let Americans living in those countries pay either US or overseas social security contributions (however not both) that depend on both the countries pensions schemes. Commonly, if an American might be working overseas for less than 3-5 years after which returning to the United States, they will continue paying US social safety taxes and won’t have to pay host country contributions. If they are planning to live overseas longer although, they will normally have to pay social security taxes in their host country.

precisely, American citizens working overseas nevertheless should file American expat taxes, but when they do if you want to claim one or more exemptions that in most cases reduce their US tax due to zero. They’ll additionally have extra  US reporting requirements relating to any foreign bills, investments, commercial enterprise interests or assets they will have.


If you are an American citizen working overseas wants assistance in paying your American expat tax, consult with the expert team at Avant Tax to know your obligations and deductions. We have helped large number of clients to save on their American expat tax.





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