Events & News For American Expats in the UK

Top 5 things US Expats need to know about their taxes.

If you’re living life abroad, not understanding your US tax obligation can lead to some serious consequences. To help you out, we distilled the basics of taxes for expats down to the top five things you should know right now:

US citizens have to file taxes on foreign income earned abroad, and your 2019 expat tax deadline is July 15, 2020. If you earn over a certain amount and are a US citizen, you must file taxes on foreign income earned abroad. You may also still have to pay state taxes, depending on the state you lived in before the move. If you fail to file, you face fines and penalties ranging from a couple thousand dollars to jail time and losing your passport.

Americans abroad can get caught up on multiple years of taxes with Streamlined Filing Compliance Procedures if you didn’t know you had to file taxes while overseas.

You need to be careful when deciding between the Foreign Earned Income Exclusion vs. the Foreign Tax Credit. Choosing whether to claim The Foreign Earned Income Exclusion, Foreign Tax Credit, or both will have a substantial impact on the outcome of your tax return, and you should consider all of your options carefully before filing.

If you want to pass the Bona Fide Residency or Physical Presence Test you need to track your time carefully. For example, you could fail the Physical Presence Test if you’re off by even a few hours in your time tracking. If, say, you’re on a 12-hour international flight, those 12 hours may not count toward your full 330 days because you were in international air space.

If you retire abroad, you may still have to pay taxes on your retirement income and Social Security payments. That’s right, just because you’ve retired abroad doesn’t mean you’re off the hook for taxes. Depending on the type on income you have, you may need to still have to file and pay taxes. Get Started

As an American living abroad, you’re likely trying to keep up with important updates in the U.S. and at home during the coronavirus pandemic—specifically updates having to do with your 2019 tax return and the coronavirus stimulus check. Right now, there are two important things you absolutely should know:

First, the Treasury Department announced a 90-day tax payment extension. This change gives all taxpayers, including expats, additional time to file and pay their income tax bill—until July 15, 2020. The best part? You don’t have to do anything—it’s an automatic extension.

The following types of filers are eligible to use the special coronavirus tax extension.

· Individual Form 1040 filers

· Corporations filing Form 1120

· Trusts and states filing Form 1041

· Fiscal year partnerships, associations and companies with due dates on April 15, 2020 (uncommon)

Second, the government approved sending each qualifying American (including expats) up to $1,200 in the form of a stimulus check. The amount you receive will depend on your 2019 income, your filing status, and whether you have children. If you haven't filed your 2019 taxes yet, it will be based on the income from your 2018 tax returns.

Unless you’re a non-filer, you will not get a check if you do not have a 2018 or 2019 tax return on file, or haven’t updated your information via the IRS’ portal.

Most expats will not have to do anything to get their check—the IRS will be using either direct deposit or mailing your check to the address you have on file. If you used direct deposit for your refund in 2018 or 2019, you don’t have to do anything. Since getting mail as an expat can be unreliable, we recommend you opt for direct deposit. If you need to catch up on prior year returns, you can quickly get started with Virtual Expat Tax Services today.