As a US person living in Cyprus, what exactly do you need to know regarding filing US and Cypriot taxes?
American citizens living in Cyprus face additional demands from the United States. That’s because, unlike almost every other country on the planet, the US Government taxes its citizens no matter where in the world they live.
All US citizens and green card holders who earn a minimum of $10,000 (or just $400 for self-employed individuals) anywhere in the world are required to file a US federal tax return and pay taxes to the IRS, regardless of where in the world they live, or their income is generated.
The good news is if you are paying income tax in Cyprus, there are various exclusions and exemptions available to prevent you from paying tax on the same income to the IRS too.
If you earn over US$10,000 (or just $400 of self-employment income), wherever the income originates in the world, you have to file IRS form 1040. While any US taxes are still due by April 15th, expats get an automatic filing extension until June 15th, which can be extended further on request until October 15th.
If you had a total of at least US$10,000 in one or more foreign bank and/or investment accounts at any time during the tax year, you also have to file FinCEN form 114, otherwise known as a Foreign Bank Account Report or FBAR.
The US and Cypriot governments share taxpayer info because of the FATCA law (FATCA Cyprus)
With the adoption of FATCA and CRS by the Republic of Cyprus, all local financial institutions, for example, the Bank of Cyprus (BOC), need to comply with the regulatory requirements. Therefore, Cypriot banks pass on US account holders’ account info to the IRS, so it’s not worth not filing or omitting anything on your return. The penalties for incorrect or incomplete filing for expats are steep.
If you’re a US citizen, green card holder, or have an American Cypriot dual citizenship, and you have been living in Cyprus, but you didn’t know you had to file a US tax return, it is time to inform yourself about the US tax system and your obligations.
If you are a resident in Cyprus, you’ll have to pay Cyprus income tax. You will also be liable for US taxes on this income, though unless you claim one of the exemptions with these programs:
Don’t delay though, in case the IRS comes to you first.
We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.
When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?).
It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.
That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.
Americans Overseas can advise you which renunciation program is best for you and inform you about the American Cyprus dual citizenship tax. If you have any doubts or questions about your tax situation as a US citizen living in Cyprus, you can contact Americans Overseas
Source: IRS US Cyprus tax treaty
Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.
U.S. citizens and resident aliens who live abroad are generally required to file a federal income tax return and pay taxes on their worldwide income.Read more... about Who is required to file taxes in the US?
Yes, US citizens are required to file taxes on their worldwide income, regardless of where they are living.Read more... about Do US citizens living abroad still have to file taxes in the US?
Received an American check? You can cash your check in the following ways: cash the check at your own bank, transfer to another person (endorsement), cash checks using an online service or cash the check by another bank.Read more... about How can I cash my US check?
US citizens living abroad may be required to file Form 2555 and/or Form 1116 to claim the foreign-earned income exclusion.Read more... about Are there any special tax forms required for US citizens living abroad?
FBAR (Foreign Bank Account Report) filing is the requirement for certain U.S. individuals and entities to report their foreign financial accounts to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. The FBAR filing requirement applies to U.S. persons who have a financial interest in, or signature authority over, one or more foreign financial accounts if the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.Read more... about What is FBAR filing?