Most of the Americans abroad agree that US expatriate taxes can be intimidating. The U.S. and Eritrea are the only two countries in the world which impose taxes on their citizens regardless of their residence. Taxes are an already complicated matter but it is even more difficult for U.S. expatriates who need to comply with two different tax systems and also keep an eye on ever-changing U.S. tax laws. Tax situations become more complicated when Americans abroad haven’t been filing for years or have foreign corporations and offshore bank accounts.
1. U.S. Taxes On Foreign Income: Who Needs To File A U.S. Tax Return?
Let’s gain an understanding of what the U.S. taxes on foreign income mean to Americans living overseas. First things first, who needs to file a U.S. tax return?
Firstly, you are a U.S. citizen or a Green Card holder living abroad. Secondly, your worldwide income is above the filing threshold. By income, we mean wages and salaries for any US and non-U.S. sources, dividends and interests, rental income etc. You can check here the tax table for U.S. expatriates. Self-employed Americans have to file the U.S. tax return if their annual income equals $400 or more.
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