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5 Tax Tips for Americans Living Abroad

Did you know that Americans living anywhere in the world must pay US taxes? 

Unlike many other countries, the USA does not exempt expats from state taxes. If you earn above a specific limit, you must file tax returns as a US citizen regardless of whether you live in the US.

Whether you get rental income, interest, dividends, salary, or work on wages – you have to pay taxes!

Here are a few tax tips for Americans living abroad to ease filing.


#1 Remember the Minimum Filing Requirements

The taxes and the minimum threshold for every individual in the US vary according to their filing status. 

  • If you are single and below 60, the minimum income requirement is $12,550.
  • Alternatively, single American citizens must have an income of at least $14,250 to file taxes.
  • The head of household files for income above $18,800 when under 60 and $20,500 at 60 or more.
  • A married couple filing separately has to file for taxes when their income exceeds $5.
  • Moreover, a married couple filing jointly has to file taxes over an income between $25,100 and $25,800. 
  • Lastly, self-employed people have a tax minimum threshold for Americans of $400.

If you cannot get your head around the tax-paying system, do not hesitate to connect to a US tax CPA in the United Kingdom.

#2 Always File For Your NRA Spouse

You might be thinking, “Why do I need to file for my NRA spouse when they are not American?” 

However, the US tax implies that foreign/ alien spouses of American citizens must file taxes as Married Filing Single or Married Filing Jointly.

#3 Do not Forget State Taxes

The American tax system is quite complicated and varies from state to state. Some States may not require you to file for the tax, while others deem it necessary. It depends on how long you live in the USA during the year, your wishes to return soon, or financial accounts or dependents in the country.

#4 Save Money

While Americans living abroad have to pay taxes as US citizens, you may save some money through some leverage programs like

  • The Foreign Tax Credit (FTC) – Tax paid to the foreign country
  • The Foreign Earned Income Exclusion (FEIE) – Through the Bona Fide residency test or physical presence test
  • The Foreign Housing Exclusion – Considering your number of days in a foreign country

#5 Amending Previous Tax Returns

While filing taxes can be a hassle, you may amend a previous US Tax Return if you have made a mistake. Fill out an amended return form 1040-X for that year to avoid further issues. It is better to fix your filing mistake before the IRS reaches you and charges a higher penalty. 

You may take help from a competent Orlando criminal defense attorney to save you from the hassle.

The Bottom Line

US citizens are not exempted from paying taxes when living in another country. This is because every individual has to pay taxes on a particular minimum income, depending on their filing status. However, you may take exemption from the taxes using FTC, FHE, or FEIE when living as a US expat. 

Bonus tip: Always file your taxes on time before IRS catches your negligence.

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