US Citizens & Taxpayers Living Abroad
If you are a United States citizen living abroad or thinking about living outside the U.S., you probably find it easy to think about the fun and exciting aspects of such an adventure. The opportunity to explore other countries, learn about different cultures, and to possibly learn a new language, is very special. This type of experience is usually life changing and extremely rewarding. However, as you plan or have already embarked on your journey, here are some things of which you should be aware.
The U.S. government views a citizen nearly the same, whether they live in the U.S. or outside the U.S. That means that if you earn an income, they expect and require you to file a tax return each year. You will need to report your income, wherever it was earned, and pay any applicable taxes.
Avoiding Double Taxation
If you happen to be residing in a country that collects its own income tax from you, there may be some good news. Typically, you can avoid paying double taxes on the same income. The IRS provides something called a Foreign Tax Credit, which is designed to minimize double taxation. Some taxpayers opt to itemize and deduct foreign taxes from their amount owed to the U.S., but it is usually more advantageous for taxpayers to take the foreign tax credit instead.
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Smooth Navigation through International Tax Laws
CPA Accounting and Tax Services is experienced in these laws and the various issues involved with citizens living abroad. We would like to share all this and additional information with you, including possible exemptions and extensions for which you may qualify. Clients living abroad often come to us to help them file their taxes, saying that the process is more complex than it is for citizens living here. The forms are longer and sometimes more difficult to understand. Complicating matters is the need to file additional forms to report on retirement plans, stock holdings and other financial accounts. On top of all that, there are calculations from the currency of the country where they reside to U.S. dollars and vice-versa.
The IRS and Tax Evasion
The IRS has valid reasons for all of this additional effort, as tax evasion has become rampant. But for expatriates trying to comply and keep up with the rules, this can be quite a headache. That’s why we at CPA Accounting and Tax Services want you to call us right away at 407-382-6658. We can even file your forms for you, from the comfort of your home overseas.