Tax Refunds for Expats (2024)

FAQs

Tax Refunds for Expats? ›

Do U.S. expats get tax refunds? If you paid more than you owe, whether you're an expat or not, you're generally entitled to a tax refund, but you will need to file a return to get it. Because you live abroad, you might want to e-file your return and receive your tax refund via direct deposit instead of as a check.

If you are a U.S. citizen or resident living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.

The maximum foreign earned income exclusion amount is adjusted annually for inflation. For tax year 2023, the maximum foreign earned income exclusion is the lesser of the foreign income earned or $120,000 per qualifying person. For tax year 2024, the maximum exclusion is $126,500 per person.

However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023).

Mark-to-Market Exit Tax

Covered expatriates must pay a capital gains tax on all other assets above an inflation-adjusted exclusion limit ($767,000 in 2022, up from $744,000 in 2021) as if they sold those assets on the day prior to the date of expatriation.

One of the main ways an expat can receive a refund from the IRS is by claiming refundable tax credits. Two of the more common refundable tax credits claimed by expats are the child tax credit and earned income credit.

Double taxation occurs when someone is taxed twice on the same assets or stream of income. US expats are often subject to double taxation, first by the US, and again by their country of residence.

The Foreign Earned Income Exclusion, or FEIE, is also known as Form 2555 by the IRS. This expat benefit allows you to avoid double taxation by excluding up to a certain amount of foreign earned income from your US taxes. In 2024, for the 2023 tax year, you can exclude up to $120,000 of foreign earned income.

For example, self-employed US expats and those who work for a US-based employer must file an expat tax return. For the 2023 tax year, the rate for expat employees is 7.65%. Self-employed expats, however, are responsible for both the employer and employee contribution, meaning that the total is double, (15.3%).

Americans who retire overseas still have tax obligations. Typically, you will have to file a tax return with both the US government and your new host country. You may even have to file a tax return with the US state you used to live in.

What tax return does an expat file? ›

An expat is someone who moves from their native country and settles abroad. American expats must file a federal tax return and possibly pay U.S. taxes if they earn above a minimum income threshold are typically eligible for an automatic 2-month extension to file, but not to pay any owed taxes.

In general, U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if one of the following applies: You are working for an American employer which includes: The U.S. Government or any of its instrumentalities.

Unless and until the Department of State approves the expatriation, the expat will remain a U.S. citizen, and will be subject to U.S. tax on worldwide assets.

Key Takeaways. Expats can use the FEIE to exclude foreign income from US taxation. For the entire tax year 2024, the maximum exclusion amount under the FEIE is $126,500. To qualify for the FEIE, you must meet the standards of the physical presence test or the bona fide residence test.

The only way to avoid submitting a US tax return is to renounce your US citizenship. Even doing so doesn't always ensure you are out of the US tax system forever. Failing to file your taxes when required could lead to fines, interest charges, and even jail time.

What Does It Mean to Become an Expatriate? An expatriate or "expat" is someone who leaves their country of origin and settles abroad for an extended period, often permanently.

Whether or not you need to file state taxes while living abroad depends on the state you last lived (or were considered a resident of), if you're still considered a resident of that state, and if you make income in that state.

Key Takeaways. All US citizens are required to file a US tax return regardless of where they live. Dual citizens living abroad risk being taxed twice on their income. The IRS has various tax benefits in place to help dual citizens avoid double taxation.

Recipients of foreign inheritances typically don't have a tax liability in the United States. And, if you're sending your own money from a foreign bank account to a domestic one, you won't have to pay taxes on the transfer.