By the last estimate in 2016, roughly nine million Americans are currently living permanently overseas. That’s an increase of more than five million from just six years earlier. Interestingly, there ALSO are an increasing number of Americans renouncing their citizenship entirely.
What are the tax requirements if you haven't filed returns as an Expat or are considering renunciation?
* Filing 5 1040 tax returns is a requirement if you are renouncing your citizenship.
* Filing 3 to 6 1040 tax returns generally will put you in good standing if you are an Expat that wishes to keep their US citizenship/Green card status in the clear.
To your advantage as an American expat, you can utilize the Foreign Earned Income Exclusion (FEIE) which excludes $107,600 in income from US taxation and the Foreign Tax Credit (FTC) which allows you to credit foreign taxes against your US obligation. Filing correctly, these factors can limit and many cases remove liability for any unfiled years.
Another key consideration for expats is declaring money held in foreign banks (FBARs) over $10,000 and filing (FATCAs) with your 1040's for financial assets exceeding $50,000.
Check out WATAX’s new video primer for a rundown of these and other common Expat tax topics;