Olivier Wagner
Founder 1040 Abroad
In this article, we'll explore key considerations for American expats regarding taxes, including insights with Olivier Wagner, founder of 1040 Abroad, a leading tax advisor firm specialized in international taxation of Americans.
Getting started:
Q: What does a “new” American expat, who just moved abroad and never did a US tax return from abroad, have to do?
A: As a U.S. citizen living abroad, filing a tax return using the “Form 1040” is a must, reporting worldwide income. Key strategies to minimize U.S. tax liability include leveraging the Foreign Tax Credit and the Foreign Earned Income Exclusion. For those who are self-employed, exploring Social Security Totalization Agreements can help avoid hefty self-employment taxes.
Studying Abroad and Working Part-Time:
Q: What are the thresholds for having to file taxes back home in the USA?
A: Any U.S. citizen earning more than the standard deduction ($13,850 in 2023) is required to file a U.S. tax return. Self-employed individuals may face even lower filing thresholds.
Implications of Not Filing Taxes:
Q: Are there any possible implications for a U.S. expat living abroad for not filing taxes back home?
A: Non-compliance can have significant consequences. Beyond potential penalties, the implementation of FATCA means that foreign banks are now sharing information with the IRS. Additionally, for those who missed out on the Covid-19 stimulus checks, filing taxes is crucial to claim them, with a deadline of June 15, 2024.
Late Filings:
Q: What happens to someone who, for several years, did not file taxes and decides to do so now?
A: The IRS offers the Streamlined Foreign Offshore procedure for those in this situation. It requires filing three years of delinquent tax returns and six years of delinquent FBARs. While penalties are waived under this program, continued compliance is expected. But generally there is a significant penalty for not filing the expatriation form.
Covid-19 Stimulus Deadline:
Q: Who is eligible, and what are the main requirements and deadlines for the Covid-19 stimulus?
A: All U.S. citizens are eligible, subject to income-based phase-outs. To claim the full amount, earnings should be below $75,000. The deadline to request the 2020 stimulus check is June 15, 2024, with the deadline for the 2021 stimulus check on June 15, 2025. More on this here .
Other Important Deadlines for 2024:
Q: Are there other crucial deadlines for U.S. expats in 2024?
A: Key deadlines include:
- April 15, 2024 (tax payment)
- June 17, 2024 (filing deadline for expats living abroad)
- October 15, 2024 (extension filing and FBAR deadline)
- December 15, 2024 (extension with a second deadline)
Conclusion:
Living as an American expat comes with its unique set of challenges, and managing taxes is a critical aspect of this experience. By staying informed about deadlines, utilizing reliable information and seeking professional advice from a service like 1040 Abroad , expatriates can navigate the complexities of U.S. taxation, while enjoying their international adventure.