EXPAT TAX FILING FAQS
Are you a US citizen living abroad?
Are you a foreign expat Living in the US?
Here’s what you need to know about filing your US tax returns—and what to do about missing returns.
US CITIZENS LIVING IN A FOREIGN COUNTRY
I'm a US citizen living abroad. Do I need to file a US tax return?
Yes. All US citizens must file a tax return in the US, regardless of where in the world they live.
You must also report foreign income and financial assets on tax returns, submit international information returns, and pay tax on worldwide income.
Does a US citizen living abroad have to pay taxes in the US?
Yes, if you are a US citizen you are treated as a US tax resident regardless of the country you reside in. You must file a US tax return each year, disclosing your income streams and foreign assets. You potentially can reduce any US tax by claiming foreign tax credits for tax paid to the country you reside in if there is a tax treaty between the US and that country.
As a US citizen living outside the US, do I need to pay taxes in the foreign country I live in?
Potentially, yes.
As a US citizen living abroad, you must also comply with the local tax laws of your country of residence. This may include filing tax returns and paying local taxes. Consult the tax authority of your host country.
FOREIGNERS LIVING IN THE US
I'm a Green Card holder working in the US. Do I need to file a US tax return?
Yes. All Green Card holders must file a US tax return.
Once you have a Green Card, you’re considered a US resident for tax purposes. This means your tax obligations are the same as for US citizens. So you’re subject to disclosing foreign income and financial assets on tax returns, submitting international information returns, and paying tax on worldwide income.
Do I need to pay US taxes if I’m a Green Card holder living or working in the US?
So you’re subject to paying tax in the US on your worldwide income.
I'm a foreign visa holder working in the US. Do I need to file a US tax return?
If you’re a non-resident for tax purposes, you must still file a US tax return using Form 1040-NR to report and pay tax on your US income.
However, if you meet the substantial presence test rules, you’re considered a US resident for tax purposes. In this case, your tax obligations are the same as for US citizens. So you’re subject to disclosing foreign income and financial assets on tax returns, submitting international information returns, and paying tax on worldwide income.
Do I need to pay US taxes if I’m a visa holder working in the US?
If you’re a visa holder and a non-resident for tax purposes, you’re required to pay tax on your US income only.
However, if you’re a visa holder who is categorized a US resident for tax purposes, your tax obligations are the same as for US citizens. This means you’re subject to paying tax in the US on your worldwide income.
As a foreigner living in the US, do I need to pay taxes in my home country?
As a Green Card or visa holder working in the US, you must also comply with the tax laws of your home country. This may include filing tax returns and paying taxes. Consult the tax authority of your home country.
US EXPAT TAX FILING BASICS
What is a US tax resident?
A US resident for tax purposes means your tax obligations are the same as for US citizens.
All Green Card holders are considered US residents for tax purposes. Visa holders are US residents for tax purposes if they meet the substantial presence test rules.
How do I know if I’m a non-resident for tax purposes?
What is the substantial presence test?
The substantial presence test is used to determine if you’re a US resident for tax purposes for the current calendar year.
The test rules are based around the number of days you were physically present in the US for the year in question. You are treated as present in the US for any day, at any time you’re physically present in the country. But there are exceptions to this rule. There are also some categories of visas and occupations for which you’re exempt from the rules.
Learn more about the substantial presence test here.
As a Green Card holder, am I considered a US tax resident?
As a US visa holder, am I considered a US tax resident?
If you meet the rules of the substantial presence test, you’re considered a US resident for tax purposes. Therefore your tax obligations are the same as for US citizens.
If you don’t meet the rules of the substantial presence test, you’re NOT considered a US resident for tax purposes.
Finally, there are some categories of visas and occupations for which you’re exempt from the rules.
What are my tax obligations as a US tax resident?
Report all foreign financial assets,
Pay applicable taxes on your worldwide income, and
File tax returns on time, including international informational returns such as FBARs.
What is worldwide income?
EXPAT TAX FILING REQUIREMENTS AND FORMS
Which US tax forms do I need to file?
As an expat, as a minimum you must file IRS Form 1040 (or 1040-NR depending on your tax residency). This include expats who are:
US citizens living abroad,
Green card holders working in the US,
Foreign visa holders working in the US.
If you have foreign financial assets, there are additional forms you may need to file, such as Form 8938. You may also need to submit a report of Foreign Bank and Financial Accounts (FBAR) and other applicable international informational returns.
How do I file my US tax return?
You can file your US tax return yourself directly with the IRS.
Otherwise, you can enlist the help of a tax specialist to prepare and file US returns on your behalf.
Streamlined Advisory strongly advises US citizens living abroad and foreigners in the US on a Green Card or visa to seek specialist tax help. That’s because US tax for expats is complex and there are additional forms and information returns you may need to file. A thorough knowledge of US tax laws is essential to ensure you are fully tax compliant. There can be severe penalties for getting it wrong.
Need help getting started with your US tax returns? Schedule a free consult with us today.
FBAR AND FORM 8938 FILING
What is an FBAR?
An FBAR, report of Foreign Bank and Financial Accounts, is used to summarize and report all your foreign bank and financial accounts. Your FBAR is submitted to FinCEN (Financial Crimes and Enforcement Network), whose primary purpose is to prevent and detect money laundering and other crimes.
Do I need to include zero balance or low value accounts on my FBAR?
Are you a US citizen, resident, partnership, corporation, LLC, trust, or estate? If so, you must file an FBAR if the aggregated value of all your foreign accounts at any time during the tax year was over US$10,000. You must list all foreign accounts on your FBAR, including zero balance accounts.
You must also file Form 8938 if the aggregated value of foreign assets was at or more than $50,000 (filing single)/$100,000 (filing jointly).
Do I need to disclose my foreign accounts anywhere else besides the FBAR?
Yes. If you hold foreign bank and financial accounts, you must report them on Form 8938 which is submitted as part of your tax return to the IRS.
What is Form 8938?
Form 8938 is used to summarize and report all your foreign accounts. It’s submitted as part of your tax return to the IRS.
There are no exemptions. So you must declare income derived from the accounts listed, including interest, dividends, and royalties.
What is the difference between the FBAR and Form 8938?
The FBAR and Form 8938 collect similar information, but they’re submitted to different agencies that use them for different purposes.
Form 8938 is part of your tax return, so it’s submitted to the IRS. By contrast, your FBAR is a separate and stand-alone form submitted to FinCEN and serves as a tool to aid in anti-money laundering efforts.
If I filed Form 8938, do I still need to submit an FBAR?
Yes. Form 8938 and the FBAR are each submitted to a different agency that uses them for different purposes. Form 8938 is filed as part of your tax return while your FBAR is submitted to FinCEN.
If you have a Form 8938 filing requirement, you will also have an FBAR filing requirement. So you must submit both for tax compliance.
EXPAT TAX PENALTIES
Are there any penalties if I haven't submitted a US tax return or filed it incorrectly?
Yes. You’re at risk of penalties for filing tax returns late or not at all and for incorrect or incomplete returns.
Are there any penalties for failing to file FBARs?
Yes. You’re at risk of severe penalties if you have delinquent FBARs.
Penalties start at $10,000 per missing form per tax year. Some clauses can go up to 25% of an undeclared asset. If the IRS deems you willfully did not declare assets, fines can go up to $100,000.
EXPAT TAX FILING HELP
How worried should I be if I'm behind on my tax returns or owe taxes?
US taxpayers should always be diligent about meeting their tax obligations. But in 2022, tax compliance is even more important.
The Inflation Reduction Act was passed in 2022, providing 80 billion dollars in funding for the IRS. This means the IRS will significantly increase its number of audits, increasing the risk of penalties for non-compliant taxpayers.
So if you owe taxes or haven’t filed tax returns, understanding how to get back into tax compliance—and how tax amnesty programs can help you—is essential.
I didn't know I needed to file a US tax return. What should I do?
If you’ve been delinquent in filing tax returns, the first step is determining which forms are missing and for how many years. Depending on your circumstances, you may be eligible for a tax amnesty program.
I've never filed an FBAR, but I was supposed to. What should I do?
The steps to get caught up on missing FBARs depend on how many years you’ve been non-compliant. You may be eligible for a tax amnesty program, depending on your situation.
I submitted US tax returns but didn't include foreign income and assets. What should I do?
There are options to amend previously filed tax returns, such as tax amnesty programs. The right choice depends on your circumstances.
I filed tax returns in the US before, but I think I still owe taxes. What should I do?
If you owe taxes, there are options for settling your tax liability and, if needed, amending previously submitted tax returns. You may be eligible for a tax amnesty program.
If I haven't submitted US tax returns in the past, should I simply go ahead and start filing them from now on?
No. US taxpayers are required to file tax returns on time and pay applicable taxes. If you have missing tax returns, you’re out of tax compliance, and you’re at risk of penalties. There are IRS-authorized options to get back into tax compliance, including tax amnesty programs.
How can Streamlined Advisory help me get caught up with my US tax returns?
Your specific circumstances dictate the right option for meeting your tax obligations. Streamlined Advisory uses our knowledge and expertise in expat tax filing to assess your situation. We’ll develop an effective strategy to get you back into US tax compliance, including the use of tax amnesty programs. Schedule a FREE consult with us today
EXPAT TAX AMNESTY PROGRAMS
What are tax amnesty programs, and how can they help me?
Tax amnesty programs are relevant for expats, including:
US citizens living abroad,
Green card holders working in the US,
Foreign visa holders working in the US.
Specifically, the programs help expats who didn’t file one or more years of tax returns or didn’t report all foreign earned income or assets.
Amnesty tax programs were established by the Internal Revenue Service (IRS) to encourage expats who are out of tax compliance to come forward voluntarily.
They’re an opportunity to make the IRS aware of missing and incomplete tax returns, and pay a reduced penalty. To be eligible for an IRS tax amnesty program, you must meet all the program criteria. Learn more about expat tax amnesty programs.
How can Streamlined Advisory help me apply for a tax amnesty program?
We take the guesswork and stress out of becoming tax compliant. Our licensed CPAs specialize in expat taxes and tax amnesty programs. So we apply our knowledge and expertise in expat tax filing to review your case and determine which tax amnesty program is the right fit. We’ll prepare and file the amended or missing returns, leaving you up-to-date with all your tax obligations.
Schedule a free consult with Streamlined Advisory today to learn more about tax amnesty programs.
REPORTING FOREIGN FINANCIAL ASSETS
What are foreign financial assets?
Foreign financial assets refer to assets held outside the US, including bank and investment accounts maintained by a foreign financial institution, stocks, and securities issued outside the US, an interest in a foreign retirement or deferred compensation plan. Certain assets are not considered foreign financial assets by the IRS, including real estate outside the US.
Do I need to report an overseas rental property?
Yes, using Schedule E.
Do I need to report foreign wages?
Yes. These can be reported either on Schedule 1 or Form 1040.
Do I need to report foreign dividends and interest?
Yes, using Schedule B.
Do I need to report superannuation or a pension fund?
Yes, using Schedule B.
Do I need to report a foreign company or other foreign business?
Depending on how it has been structured, it could be reportable through forms such as Form 5471.
Do I need to report a foreign domiciled mutual fund, index fund, or ETF?
Yes. If you have any of these, you may have a passive foreign investment company, which means you have a Form 8621 filing requirement.
Do I need to report a non-US trust?
Yes. If you have a non-US trust and are the trustee or received a distribution from a trust, you must file Form 3520/3520-a.