US Tax Information for Expats

U.S. citizens and green card holders living abroad have the dubious honor of being the only expats of an industrialized nation to be subject to taxation of foreign earned income.

If you are a U.S. citizen or green card holder you must file a U.S. tax return if you earned over the minimum filing income for a U.S. resident. For a married taxpayer filing separately, the threshold for filing can be as little as $3,000. 

In most cases, foreign residents are granted an automatic filing extension to June 15th (return must be received in the U.S. by that date.) Interest, however, will accrue from April 15th. 

Note that if you haven’t been filing that there are ways to come forward and back file before the I.R.S. finds you and impose interest or penalties. 

Section 911 of the U.S. tax code allows bona fide foreign residents to exclude up to $87.600 (2008 income) of foreign earned income under certain conditions. Generally, this income will not fall under U.S. taxation laws even if you pay no local taxes. 

Passive income such as pension payments, rental income, capital gains, dividends, etc.,.) is subject to U.S. taxation and generally may not be excluded, no matter where it was earned. However, you may use income tax paid for income from the category (passive, salaray, etc.,.) in question.