There are a few reasons why filing a US income tax return is a good idea, even when your income is under the annual thresholds.
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What is FBAR filing? You may have heard of FBAR filing, but you don’t know what it is. FBAR stands for “Foreign Bank Account Report”, and refers to FinCen Form 114, Report of Foreign Bank and Financial Accounts. Persons required to file a FBAR: US persons wh...Read more... about What is FBAR?
What is FATCA ? FATCA (Foreign Account Tax Compliance Act) is a legislation meant to help counter tax evasion in the US. It forces Financial Institutions worldwide to share information about the financial assets and interests of US citizens. It also indi...Read more... about What is FATCA?
The US is the only developed country in the world where your tax duty is based on citizenship rather than where you live or work. This implies that every US citizen (also those with dual nationality) wherever they are born, based or work, has to file US taxes yearly. Whether this implies a tax payment in the US is strongly dependent on your personal situation. Not filing taxes in the US is con…Read more... about US Tax treaties
What about taxes in USA? The US is the only developed country in the world where your tax duty is based on citizenship rather than where you live or work. This implies that every US citizen (also those with dual nationality) wherever they are born, based or wo...Read more... about How does the US tax its citizens?
You can be considered a US person for tax purposes in many different ways. In short: US Citizen: Born in the United States or if the individual has been naturalized as a US citizen. US Citizen: Born outside the United States if one or both of your parents are...Read more... about When are you considered a US Person (and taxable)
When are you considered a US Citizen? This isn’t always as straightforward as it seems. We have quoted the text from the American Citizenship organization. Please refer to their website to find out more information as it pertains to your own personal situation...Read more... about When are you a US citizen?
Does my non-American spouse need to file? I am a US citizen married to a nonresident alien. What is my filing status and can I claim an exemption for my Non-American spouse? In general, if you are a US citizen or resident alien married to a nonresident alien, ...Read more... about Non-American spouse filing tax returns?
A child born abroad to one U.S. citizen parent and one alien parent acquires U.S. citizenship at birth under Section 301(g) of the INA provided the U.S. citizen parent was physically present in the United States or one of its outlying possessions for the time ...Read more... about Is my child considered a US person ?
Once you get a green card, you automatically become a US tax resident and you must declare your entire income to the US government. You may have heard that the number of days you spend in the United States each year has some effect on whether or not you are a ...Read more... about When are you considered a taxable green card holder (even if you left)
Example: Two Dutch parents have a child that was born in the US. The child has a US passport. When does the child need to file taxes and/or an FBAR? In short: A child needs to start filing taxes when it makes money. Depending on the height and type of the inco...Read more... about Does my child need to file taxes?
I was born in the United States and given up for adoption. Am I an American? Yes, you are. When you were born in the United States or the child of American citizens you automatically got American citizenship. Even when you were given up for adoption and moved ...Read more... about I was born in de United States and given up for adoption. Am I an American?
Indeed, as a U.S. citizen, you must file a US tax return and sometimes even pay tax even if you do not live in the United States. We understand that it sounds unreasonable to file a US tax return when you don’t live in the U.S. However, the United States is th...Read more... about Why do I have to file US tax returns and possibly pay taxes when I don’t live in the US?
Were not born, lived or worked in the US? Does that mean I still have to file taxes Yes you do if you’re considered American. You have to file taxes, based purely on your American citizenship. Whether filing will result in you paying actual taxes in the US dep...Read more... about I wasn’t born in the US, nor have I ever lived, worked or visited the US. Does that mean I still have to file taxes?
Yes, you do if you’re considered a US person. You have to file taxes, based purely on your American citizenship. Whether filing will result in you paying actual taxes in the US depends on personal circumstances, and double taxation treaties made with the count...Read more... about (NOT) born in the US, never lived, worked or visited the US. Does that mean you still have to file taxes?
Yes and no, you can renounce your US citizenship but be aware that renunciation may have no effect whatsoever on your US tax obligations. Upon renunciation you need to fill in form 8854 that asks you clearly to state that you have filed all your taxes. If you...Read more... about Can I renounce my US passport/citizenship and never file?
Are you unsure whether you want to keep your American citizenship? We are an informative organization and try as much as possible to indicate the advantages and disadvantages of renouncing or not renouncing US citizenship, without giving you advice. It is a ve...Read more... about I am considering renouncing my US citizenship
Not having a Social Security Number doesn’t mean anything with regard to your tax obligation. The tax obligation is based purely on your US citizenship. To file your tax forms, you will require a Social Security Number . This is not the same as your passport n...Read more... about I don’t have Social Security Number. Does that matter?
Not having a US passport doesn’t mean anything with regard to your tax obligation. You can be an US citizen without having a passport. The tax obligation is purely based on your US citizenship. Check here what the rules are on citizenship through parents. Con...Read more... about I don’t have a US passport, but I do have an American parent. Does that matter?
Filing a U.S. tax return, even with income below IRS thresholds, has vital benefits. Eligibility for tax credits and refunds, safeguarding Social Security benefits, compliance with tax laws, establishing a tax history for future benefits, claiming foreign tax credits, and meeting deadlines for Form 2555 are reasons to file. Additionally, it serves as proof of compliance and aids in citizenship renunciation. Rules change, so consult IRS guidelines or a tax professional for accurate filing obligations based on individual circumstances.Read more... about Reasons to file a US Tax Return, even when your income is under the annual IRS threshold
If you are a US citizen and you decide to renounce your US citizenship this can still have substantial tax implications to you. The US imposes an ‘Exit Tax’ when you renounce your citizenship if you meet certain criteria. Generally, if you have a net worth in ...Read more... about Do I have to pay exit tax if I renounce my citizenship?
File taxes if you have dual citizenship? Yes, if one of your nationalities is American, you still have to file US taxes and report your financial interest here (bank accounts, investments etc.). The US, together with Eritrea, is the only developed country in t...Read more... about I have dual citizenship. Do I still have to file taxes?
Do you have to pay double taxes? In many cases, you do not have to pay American tax as an American living abroad. Everything paid to the country where you reside can often be stripped of the tax payable in America. But this is not always possible: then there i...Read more... about Double taxation
Yes. You still have a US tax obligation, simply based upon the fact that you have US citizenship status. Where you are born, and where you live or work is not relevant to your obligation. Whether you have to pay tax in the US is dependent on your own personal ...Read more... about I am a considered a US Citizen but I wasn’t born in the US; nor have I lived, worked or visited the US, does that still means I have a tax obligation?
Always tax liable in the US? If you are a US citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject t...Read more... about If your’e considered a US citizen, do you always have a tax obligation?
Yes. It will most likely will have an influence. through at least three ways: 1) The foreign tax credit: ‘If you paid taxes abroad and are subject to U.S. tax on the same income, you may be able to take a credit for those taxes. This way you don’t pay twice 2)...Read more... about I have already paid taxes in my country of residence. Does that have any influence on whether or not I have to pay in the US?
I’ve made investments in the stock market; is that a problem? The US has made investing in the stock market outside the US. extremely complex. Banks abroad are denying US Citizens investment services for fear of a penalty due to FATCA. Buying individual stocks...Read more... about I’ve made investments in the stock market; is that a problem?
Owning shares in a company outside of the US will have influence on your tax obligations. The US regulations on reporting investments in companies abroad are complex and require a specialist to advise you. Therefore, we advise you to have this screened by a ta...Read more... about I own a company. How does that affect my tax obligation?
Yes. Even if you have no earnings, it does not always dismiss you from filing taxes in the US; it will most likely result in you not paying any tax. Basically, you have to file an IRS Form 1040 for the previous year if your income was above a certain threshold...Read more... about I don’t make (a lot of) money; do I still need to report to the USA?
IRS views crypto coins as property, not assets or foreign currency! This is an important nuance because many countries view crypto coins as a currency form. You can pay with them, invest in them and trade the coins. The IRS sees this differently: “Virtual curr...Read more... about I own Bitcoins or other crypto coins, how does the IRS deal with them?
Not fulfilling your US tax obligation when you knew about the obligation but chose (for whatever reason) not to file is considered to be a willful violation. Not fulfilling your US tax obligation when you did not know about the obligation is considered to be n...Read more... about What is the difference between willful and non-willful violations?
You are not the only one! Many fellow Americans (living and working outside of the US) are not aware of their obligation. That is one of the reasons why the IRS has implemented several programs such as the Voluntary Disclosure Program for Overseas Americans, w...Read more... about I have never heard about this tax obligation; will I be fined?
This is very normal, as the IRS can communicate in a very aggressive way. We understand and recognize that you may be anxious with your situation. However, we strongly advise you to file and become tax compliant in the US. At the very minimum, have your situat...Read more... about I’m very anxious about my tax situation. What are the risks of not filing?
What is the risk of IRS prosecution? Unfortunately, we can’t answer that question properly. We want to inform and advise you as thoroughly and as neutrally as we can. The fact is that you have a tax obligation even if you are an American citizen living oversea...Read more... about What is the risk of having the IRS on my back?
This depends on your situation. To start with, it’s important for some IRS programs to asses whether you’ve willfully or non-willfully failed to file tax (see next FAQ). Or whether your failure to comply is due to reasonable cause. However, there are different...Read more... about Will I actually have to pay any fines?
This questionnaire is a result of the FATCA agreement your bank (as all banks) has signed. This obligates the banks to report any account (bank account or investments) that is held or that has signing authority by an American citizen. This information is being...Read more... about I recently got a form from my bank about FATCA, asking if I’m American. What do I do?
What are the consequences if I don’t file taxes? The IRS issues very severe penalties for (willfully) not filing taxes. Source 1 Source 2 Contact us for more informationRead more... about What are the consequences if I don’t file FBAR?
Received an American check? You can cash your check in the following ways: Cashing the check at your own bank You may be able to cash your American check at your own local bank. A charge will be made for processing the check. In some countries, such as the Net...Read more... about Received an American Check? You can cash your check in the following ways
This is difficult to answer. More and more computer systems are being connected and there is always the possibility while entering the US that questions on your tax status could be asked. Traveling into the US on your other nationality passport (if you have on...Read more... about Can I travel to the US, or is that a risk?
The standard rule is that you have to back file for 6 years. However, if your file is accepted under the Streamline program, you can back file for 3 years. Source 1 Source 2 Contact us for more informationRead more... about How many years do I have to go back when filing?
Where do I file tax returns? Filling in the US is complex, especially when doing it from abroad. We therefore strongly advise you to file through one of our Tax Advisor Partners, who can file for you, through the correct avenues by following all the IRS protoc...Read more... about Where do I file?
The US is the only developed country in the world where your tax duty is based on citizenship rather than where you live or work. This implies that every US citizen (also those with dual nationality) wherever they are born, based or work, has to file US taxes yearly. Whether this implies a tax payment in the US is strongly dependent on your personal situation. Not filing taxes in the US is con…Read more... about When are you a US person for tax purposes?
What is W8? Form W8, W 8BEN, or W8 form is used by non-resident aliens who do work and/or make income in the U.S. or by foreign business entities who make income in the U.S. If you’re a legal citizen of the United States, at no point will you have to worry abo...Read more... about What is W8?
What is the “Streamlined Procedure” and what does it mean if you use this option? The IRS announced a new updated Streamlined Procedure in June 2014. This procedure is a friendlier and less costly approach to bringing non-compliant Americans back into the tax ...Read more... about What is “Streamlined Procedure”?
What are the Relief Procedures for Certain Former Citizens and what does it mean if you use this option? Relief Procedures for Former Citizens IRS In 2019 the United States (US) Internal Revenue Service (IRS) released a new Procedure for certain persons who ha...Read more... about What is Relief Procedures for Certain Former Citizens?
Form 8938 What is Form 8938? As part of the introduction of the FACTA legislation, the IRS has created a new form, Form 8938 – Statement of Specified Foreign Financial Assets. When is Form 8938 required? Form 8938 is required when: 1) the highest balance of yo...Read more... about What is Form 8938?
Form 5471 What is Form 5471? Form 5471 “Information Return of U.S. Persons With Respect to Certain Foreign Corporations” is an informative form that must be completed and submitted when a U.S. person is engaged with certain foreign companies as official, direc...Read more... about What is Form 5471?
We strongly advise that you have a specialized US tax advisor to do your tax reporting. It is complex and very different from the system in your home country. Making a mistake in reporting happens easily because you are unfamiliar with the system, the forms re...Read more... about Do I need US tax specialist?
What happens with my tax filing obligations when I decide to settle outside of the United States during my retirement? Do I have to file tax returns during my retirement abroad? Yes, you certainly do. Among the various things you will have to remember when pla...Read more... about Do I have to file tax returns during my retirement abroad?
Yes. There are several IRS programs (e.g., The Streamline Program for Americans overseas who have refrained from filing taxes in the US. Please be aware that when filling out, you are NOT automatically filing under this program. Your US tax advisor knows how t...Read more... about Are there programs that the IRS employs for people who never knew about their tax duties until now?
This depends strongly on your personal or business situation Most of our selected partners do provide law services when needed. Discussion with legal counsel would be protected by the attorney-client privilege. This is particularly important if the taxpayer ul...Read more... about Do I need a US tax lawyer?
How often should I declare my taxes? The US has a yearly filing requirement on or before April 15th, following the tax year of your reporting. When living abroad there are exceptions on the filing deadlines. Contact us for more informationRead more... about How many times do I need to file?
It’s difficult to say how long the total process will take. Your US tax advisor will give you an estimate on the length of the process. However one of the stipulations of the Streamlined Procedures is that the IRS does not notify the taxpayer that their ‘non-...Read more... about How long does this process take?
The SSN (Social Security Number)/TIN (Tax Identification Number) is needed to be able to file taxes in the US but recently also its needed for the Banks in your country. They will ask you to provide a TIN (which is your SSN) Many people don’t have a social sec...Read more... about How do I obtain a SSN (Social Security Number)?
Unfortunately, we have not found a lot of helpful information via the consulate. Americans Overseas is continuously striving to improve relations with the consulate and to motivate them to better inform and service their citizens overseas where possible. Curre...Read more... about Can the US consulate help me?
What is Form 1040? In the US, the income tax return is also called a form 1040, irs form 1040, 1040nr or irs 1040. This is based on the number of the form that must be completed and submitted annually. It is one of the three forms, namely the 1040 (extended ve...Read more... about Form 1040
We believe that you should not file your US tax form without assistance. The filing is complex and very different from what you or your local tax advisor is used to. There are currently so many programs with the IRS that you will also stand a chance of missing...Read more... about Should I just download the tax forms and submit them?
Declaration deadline US? You have to file on a yearly basis, on or before April 15th. Americans who live overseas will be granted a two-month extension for filing. In that case, the latest filing date would be June 15th of each calendar year. Contact us for m...Read more... about When do I file?
Americans Overseas has negotiated with their US Tax Advisor Partners to provide you (the Client) with an assessment of your tax situation free of charge and to provide you with a competitive cost estimation (offer) should you decide to proceed. Contact us fo...Read more... about What will this cost me?
He or she might be able to help you, but our own experience has taught us that chances are, at the end of a long period of trying, you do end up getting help from a specialist on US tax systems. Americans Overseas opens the route to the right specialist. C...Read more... about Can my local bookkeeper or accountant file for me?
No, Americans Overseas and our tax advisor partners will not share any information with the authorities unless requested by subpoena. Additionally, since you don’t share your details with AOS, but with the partner, we don’t have access to any information. We d...Read more... about Will you submit my information to the authorities?
Americans Overseas and our Tax Advisor Partners will not share any information with the authorities unless requested by subpoena. Should you acquire the services of a partner via a lawyer, then you will be protected by lawyer-client privilege. Contact us for ...Read more... about Can the US force you to publish your records?
Your inquiry with Americans Overseas or with one of our Tax Advisor Partners is handled with the utmost discretion. Americans Overseas will not have access to any financial or personal data information that you share with our Tax Advisor Partner. Our partners ...Read more... about Is my information confidential?
We share as much information about the US tax system as possible on our blog. We welcome suggestions on news sources, articles, and questions to further extend this section. Contact us for more informationRead more... about Can I find any articles on these topics?
Outside of the United States, Americans Overseas provides services worldwide. Our main office is located in Amsterdam, The Netherlands. Our operating hours follow local time and we try to respond to all inquiries within 48 hours. Contact us for more informati...Read more... about Which countries does Americans Overseas serve?
Reporting point Banks and Government for US persons Share your story. Do you have problems with your bank, financial institution or government institution concerning your status as a US Person? For example if you have received incorrect or incomplete informat...Read more... about Reporting point Banks and Government for US persons
The Americans Overseas network consists of US tax partners based in your country of residence as well as in the U.S. We make the match based on your preference, complexity of your case, and waiting times. Local advisors have more waiting time due to limited ca...Read more... about Does Americans Overseas have partners in every country?
See our terms and conditions. Contact us for more informationRead more... about Is Americans Overseas liable for the information?
Americans Overseas was specifically founded for individuals and companies who reside outside the US but continue to have a tax filing obligation with the United States. Contact us for more informationRead more... about For who is Americans Overseas available?
Am I, as a client, paying for the Americans Overseas commission? We make agreements with all of our partner companies to reduce initial rates. These reductions are divided between the client (you) and Americans Overseas. This means you are not paying for our c...Read more... about Do I pay Americans Overseas?
We are a referral agency that helps you find the right tax advisor. We do not prepare or file returns. Contact us for more informationRead more... about Does Americans Overseas file and prepare returns?
Feedback from our clients is essential. We ask our clients to provide feedback about the quality of service when entering into agreement with a partner of Americans Overseas. This feedback is used to ensure the highest standards of service are maintained. We a...Read more... about How does Americans Overseas keep its network up to date?
The partnerships are responsible for first preparing their annual tax declaration, and in that document are also the K-1 forms. Those K-1 forms are distributed to each owner, and the owner uses those K-1 forms to properly report their own taxable income or lo...Read more... about Who has to file a K-1 form ?
What is PFICS? PFIC is a Passive Foreign Investment Company. They are complex investments for US citizens. If an investment is a PFIC there are several complex rules, but generally that investment earns most of its income through passive activities such as ow...Read more... about What is PFIC?
The answer is yes. In the United States, the tax regime requires you to file a tax return no matter where you earn your salary or earnings or where your income is derived from. It does not matter if you are living abroad or working abroad: an annual tax filin...Read more... about Do I need to file if I am a US citizen or green card holder when I’m working abroad?
So what is the problem with a PFIC for a US person? There are two main problems with PFICS for US citizens. The first is: that it is quite possible that a US Person invests in a PFIC without knowing about PFICs and the financial risks. A simple example: let’s ...Read more... about What is the problem with a PFIC for a US person?
A partnership is a business or investment vehicle that has at least two owners. It can have more than two owners of which at least one is a US person, but it must have at least two owners and if it does it then files an annual tax return in the United States,...Read more... about What is a partnership for US tax purposes?
The K-1 tax form is an IRS tax document that has many boxes and lines on it because each individual item of taxable income is separately reported on this document. For example, there is a line for ordinary income which would be taxable to a partner that has a...Read more... about What does a K-1 tax form look like?
It could vary. It would really depend on the partnership and the underlying activity of the partnership. If the partnership is an operating company that provides goods and services and has wages and expenses, then the K-1 is very complicated with lots of diffe...Read more... about How complicated or simple is a K-1 form?
Is a K-1 simple or complicated? It varies. Some K-1s could be very simple if there is not much activity in the partnership. Other partnership K-1s could be very complicated and could have many items of taxation to be shown and declared on the K-1 form such as...Read more... about Is a K-1 partnership complicated?
Yes, there are. If the investment is held by a bank, there are FATCA requirements for that bank to report to the US treasury the ownership and the balances in those investments on an annual basis. Americans Overseas can help you with your K1 forms Americans Ov...Read more... about Are there FATCA requirements for an investment fund that issues K1 forms?
When is the K-1 form deadline? K1 forms for a calendar year are due on March 15th following the close of that particular year. The partnership can automatically get an extension for six additional months to file those K-1 forms. Americans Overseas can help yo...Read more... about When do you need to file a K-1?
The difference between a K1 and a 1099 is: A K1 is used for a partnership, reporting tax items that need to be declared by the owners. A 1099 is generally a tax information document for only one owner, one person. An example would be: if a person had a bank ac...Read more... about What is the difference between a K1 and 1099?
The answer is yes. US citizens or green card holders are taxed on their worldwide income. A tax return is due each year regardless of where you’re located and regardless of your source of income. A return is due each year on June 15th, and the deadline to pay ...Read more... about Do I have to file a tax return when I leave the US to work abroad as an expat?
A Flow-Thru Entity is a legal entity that does not pay taxes, that is the first attribute. It is an entity where any income, expenses, interest income, dividends, or any income of a taxable item is passed through to its owners on a pro-rata basis. An example: ...Read more... about What is a Flow-Thru Entity?
In general, expat tax returns are due June 15th of the year following the close of the prior calendar year. Two months later because you live outside of America. Also, an automatic extension is available by requesting it for an additional six months from the n...Read more... about When do I need to file as an expat?
Certainly, a US taxpayer can file their tax return on their own as an expat, but they should be very aware that there are various tax credits and a tax treaties that they should avail themselves with so that they don’t wind up paying double tax or not getting ...Read more... about Is it advisable for a US expat to file US tax returns on their own?
The main difference is that most countries have different capital gains. A short explanation of what a capital gain is: a simple example, a purchase of traded shares that are then sold for more than you paid is gain, it is known as a capital gain in the United...Read more... about What are the main differences between taxation between the United States and the EU?
If you are a European investment fund and would like to obtain US investors into that fund, the fund will need to prepare a partnership return along with K1s for those US investors each year, which will show the various items of taxation that the partnership h...Read more... about If I’m a European investment fund and would like to get US investors on board, what do I need to know and do?
It is a special tax regime for expats that come to the Netherlands to work. It is a reduced tax rate for a period of time, for these newly arrived expats. The 30% ruling Simply put the 30% ruling allows an employer to grant an employee a tax-free allowance of ...Read more... about What is the Dutch 30 percent ruling?
Do expat pay taxes? In most cases, you will not owe tax to the US. Many EU countries have a tax treaty with the United States, which allows you to take advantage of tax credits and avoid double taxation. There are certain instances (e.g. real estate ownership)...Read more... about Do I owe taxes in general as an expat to the US?
In the first year you arrived in the Netherlands and start working for your employer, there is a typical tax situation. Here are some Dutch tax advantages you should be aware of. Tax refund first year This first year, most employers calculate too much wage tax...Read more... about Be aware of your (historical) Dutch tax advantages
How can I balance my tax filings between the EU and the US? It is very important to be sure that as you plan your taxes, you take advantage of foreign tax credits between the United States and the particular country that you’re living and working in. Most coun...Read more... about How can I balance my tax filings between the EU country I work in and the US?