International Tax

U.S. Citizens and Permanent Residents Living Abroad

If you are a U.S. citizen or resident alien working and residing abroad you are required to pay U.S. taxes on your annual world-wide income. Additionally, you are subject to the same filing requirements that apply to U.S. citizens or resident aliens who are living within the U.S.

To determine if you must file a U.S. federal income tax return your age, filing status, gross income, and dependency status will be considered. The gross income requirement for filing is determined by considering all income from foreign sources combined with your U.S. income. Foreign earned income is income you received for services you perform in a foreign country. These rules apply even though:

• The income is paid in foreign currency
• The foreign country imposes an income tax on the income
• The income is excludable under the foreign earned income exclusion

The due date for filing will still be April 15th of the following year; you are allowed an automatic 2-month extension to file your return until June 15. However, any tax due must be paid by the original return due date (April 15) to avoid interest charges. Automatic extensions are granted until June 15th if you are a U.S. citizen or resident and on the regular due date of your return if:

• You are living outside of the U.S. and Puerto Rico and your main place of business or post of duty is outside of the U.S. or Puerto Rico, or
• You are in military or naval service on duty outside of the U.S. or Puerto Rico

Fortunately, there are a number of income tax benefits that may apply if certain requirements are met while you are living abroad (see the Foreign Tax Credit section). Certain exclusions may be considered for housing, but travel restrictions apply.

Certain credits, deductions, exemptions, and reduced foreign tax rates may be enjoyed in some countries as a result of U.S. tax treaties or conventions with foreign countries.

Again, the deductions or exclusions allowed can be complicated and this means you should consult with an advisor such as Esquire Group to ensure you are in compliance with tax regulations as well as taking advantage of all the benefits available.