Taxes for Expats: How to Survive, Thrive & Not Get Hunted by the IRS (2024)

I am very lucky (in a lot of ways) but here is a big one: When I was an expat in England, I didn’t have to do UK taxes because I was a student on a Tier 4 Visa.However,I did have to do my US taxes. Even though I wasn’t living in the US! Many people from the US don’t know that when you live abroad, you actually still have to file US taxes on your worldwide income. That’s a pretty important wakeup call because you do not want the IRS hunting you down, my friends! Think how complicated doing taxes for expats is: You have income in multiple countries, bank accounts in multiple countries, multiple jobs (hello blogger life), and more. Taxes for expats is no mean feat.

I literally cannot imagine doing this on my own! Up until last year, I was still able to be a dependent in my parents’ taxes because I was a student under 24 years old. My mom is also a former accountant/tax adviser/numbers pro so that helps 😉 This year, however, I am both no longer a student and no longer 24! I’m diving into this whole adulting thing, which includes taxes. When Taxes for Expats reached out to me to write this post, I honestly first felt such relief that a company like this evenexistsbecause if I am ever an expat again, I will need professional help! I also know that so many of my readers are expats/immigrants so I thought I would share a bit about doing your taxes as an expat, and the Taxes for Expats company!

Get $25 off your taxes!

*This post is sponsored by Taxes for Expats. All opinions remain my own.

What to look for in Taxes for Expats as a preparer

I think most people hate taxes, and this is largely because of what a confusing and frustrating process it can be. Going to a tax preparer can help, but when you are an expat you may find most tax preparers aren’t, well,preparedfor you! There are some great things Taxes for Expats has in place to help with that:

  • Real human tax preparers. Each one has at least 10 years experience.
  • Fair and transparent pricing shown here. A quick search shows me that the average price for a tax preparer is $273. Taxes for Expats runs at $350 which is marginally more expensive but tbh seems very reasonable considering the extra skills and complications that completing taxes for expats requires!
  • Great and secure system. They do not use third parties to store your personal information.
  • Top rated tax preparer for expats! There are nearly a thousand verified reviews from expats all over the world.
  • Women-owned. Gotta add this one in because girl power.

How to complete your taxes with Taxes for Expats

The Taxes for Expats system is pretty simple. There are only 5 steps! I made an account and started going through the process and I have to say their interface is really user friendly. I’ll share a few screenshots below!

1. Register

This is just entering your basic info and creating an account. After you register you will have to answer 8 simple questions, and then you’re set!

2. Telephone consult

After registering you can have a free telephone consultation here.

3. Tax questionnaire

In your user panel, click on the “tax questionnaire” tab on the left (in black below). Then click the orange “create new questionnaire” button.

After you’ve made a new tax questionnaire, just fill it out!This form is actually online and built into your browser – no faffing about with PDFs and word documents required (is it just me or is that always the *worst* and most time consuming?!?). Below you can see some of the basic questions you get.

4. Track your progress and upload documents

In your user panel you also have access to a “documents” section where you upload and download all your relevant tax documents. You can see it below.

5. That’s it… you’re done!

All in all I am really impressed by the interface of this. It is a lot simpler than you expect when you think “taxes”!

Get $25 off your taxes!

Final Thoughts: Should you use Taxes for Expats?

Okay, having an explore is quite different from actually shelling out $350 for a service so… is Taxes for Expats worth it?

First of all, taxes aren’t optional. They are a necessary responsibility that everyone has – so it’s not deciding whether to splurge for a special treat, but rather whether to just do something you needto do, in an easier way. Preparing taxes for expats is very complicated and Taxes for Expats is transforming a usually obscure, complex, frustrating thing (taxes) into something achievable!

I know first hand that living as an expat has its fill of bureaucracy woes. From visa applications, visa renewals, and ever-changing legislature that affects everything from where you can live to how many hours a week you can work… bureaucracy is the price we pay for the privilege of living abroad.Personally,I don’t want to add any more than I have to onto this bureaucracy mountain pile. Deferring to a service like Taxes for Expats is 100% worth it in my book, especially considering the fair and transparent pricing.

Like I mentioned, my mom is a tax preparer and my boyfriend (y’all know Dan) is currently getting his chartered accountant license. I have my fair share of people to help me with taxes and give advice, but eventually that reaches its limit. In the complicated case of taxes for expats, well, thank goodness for companies like Taxes for Expats!

This post is sponsored by Taxes for Expats but I hope it was useful for all of you expats! When the next tax season rolls around, at least you will know you have options. Have any of you used Taxes for Expats or another tax preparer before… or do you dare to do them yourself?! Also just checking… all you Americans *did* know you have to be filing US taxes while you live abroad, right?!

Get $25 off your taxes!

Sarah xx

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*This post is sponsored by Taxes for Expats. All opinions remain my own.


Taxes for Expats: How to Survive, Thrive & Not Get Hunted by the IRS (2024)

FAQs

Taxes for Expats: How to Survive, Thrive & Not Get Hunted by the IRS? ›

Use the Foreign Earned Income Exclusion and Foreign Housing Exclusions to shield income completely from US tax. Claim foreign tax credits on your US return for taxes paid abroad. Make use of special elections and adjustments in your first and last year's abroad.

How can an expat avoid US taxes? ›

Avoiding U.S. Taxes While Living Overseas

Under the U.S. tax laws currently in place, there is no way for an American citizen to avoid filing a tax return and paying the related taxes except by renouncing their U.S. citizenship.

What is the IRS expatriate tax exclusion? ›

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). In addition, you can exclude or deduct certain foreign housing amounts.

Does the IRS go after expats? ›

More In File

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.

How to retire overseas and avoid IRS penalties? ›

If you're retiring abroad, there's a good chance you'll be subject to taxation by the United States and your new home country. Double taxation can be avoided by taking advantage of tax treaties, Foreign Earned Income Exclusion and Foreign Tax Credits.

Do US expats get taxed twice? ›

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.

What is the US exit tax for expats? ›

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.

What are the tax exemptions for expats? ›

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.

Can IRS find out about foreign income? ›

One of the main catalysts for the IRS to learn about foreign income which was not reported is through FATCA, which is the Foreign Account Tax Compliance Act.

What is the foreign income exclusion for 2024? ›

For tax year 2024, the maximum exclusion is $126,500 per person. If two individuals are married, and both work abroad and meet either the bona fide residence test or the physical presence test, each one can choose the foreign earned income exclusion. Together, they can exclude as much as $253,000 for the 2024 tax year.

Are expats more likely to be audited? ›

In fact, far less than 1% of US taxpayers are audited each year. Unfortunately, the chances do increase for Americans living abroad. This is probably for a few reasons. For example, the complexity of expat taxes means it's easier to make a mistake when filing.

How to avoid double taxation on foreign income? ›

United States citizens who live abroad can exempt themselves from paying taxes on the income they earn in other countries if they qualify for the Foreign-Earned Income Exemption, allowing them to avoid double taxation.

Can the IRS stop you from leaving the country? ›

By law, the IRS will certify taxpayers with seriously delinquent tax debts to the State Department for specific actions regarding their passports. Generally, the State Department will not issue passports to taxpayers after receiving their delinquent debt certification from the IRS.

How can I leave the US and not pay taxes? ›

Renounce Your Citizenship

If you renounce, you don't have to pay taxes or report on any of your overseas activities. Some people are required to pay an exit tax on all unrealised capital gains, like those from a business (which can be hard to value) to real estate, investments and other assets.

What US taxes do retired expats pay? ›

“A U.S. citizen planning to retire abroad is still subject to U.S. federal income tax, and sometimes state tax, on their worldwide income and should consult with an expert who knows the specific foreign country's tax law and how it applies to U.S. citizens living in that country,” said Ed Borgstrom, a Certified Public ...

How to avoid US tax on foreign income? ›

With the Foreign Tax Credit, you can show the U.S. how much money you paid in taxes to that foreign country and receive a credit for every dollar you owe, so you don't have to pay taxes for that same income again on your U.S. tax filing. If you qualify, you claim the Foreign Tax Credit by filing Form 1116.

Do expats still have to pay US taxes? ›

U.S. taxes are based on citizenship, not country of residence. That means it doesn't matter where you call home, if you're considered a U.S. citizen, you have a tax obligation this tax year. Your expat tax filing requirement doesn't change even if you're paid by a foreign employer overseas.

Do I have to pay US taxes if I have dual citizenship? ›

In both cases, the same tax rules apply to you as any other citizen of the US, including all other dual citizens. You will have to file a US tax return every year, and you may have to pay taxes on any income you receive. The only way to escape this obligation is to renounce your citizenship.

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