Humans have always been a nomadic species. Our adventurous spirit has long seen us travel the world in search of new lands and experiences. Even today we yearn to escape the confines of our regular lives in search of new cities and countries.
While travelling to a destination allows you a glimpse into a different culture and way of life, choosing to live abroad takes the experience to a whole other level. You’re able to fully immerse yourself into a destination, and gain a behind the scenes look at what a country is really like; the experience opens your mind to new ideas, helps you grow as a person, and gives you a greater sense of self confidence.
Whether you choose to backpack across Europe for 12 months or migrate to another country permanently, you become what is known as an expatriate (expat for short); a person temporarily or permanently residing in a country other than their own.
To live abroad is something everyone should experience at some point in their lives, but you do have certain responsibilities as an expat. And one of those is staying on top of tax.
How to File Taxes as a US Expat
Your Tax Responsibilities as a US Expat
While living abroad is adventurous and exciting, it is important not to forget about your obligation to file US taxes. Because if there are two things you can count on as an expat, its flight delays … and still having to pay tax!
As a U.S. citizen, you are legally obligated to pay tax on your worldwide income. Unfortunately the US is one of only two countries in the world that tax their non-resident citizens on overseas income. Lucky us!
As Mike is an American living in Australia, we know first-hand how confusing and frustrating it is trying to understand your tax liabilities while living abroad. There’s very little local help, and while tempting, sweeping the problem under the rug to avoid paying tax on overseas income could face harsh penalties and even prison time.
And it would be fine if it was straightforward enough to file yourself, but (a) the online portals we’re used to using in the States are blocked overseas, and not set up with the necessary boxes for expats (b) there are so many different rules that apply to expats as opposed to residents, and (c) you’re legally obliged to fill out all required forms accurately, based on the most recent laws (which are constantly changing!).
Expats looking to file their taxes will find that it is a much more involved and complicated process than you’re used to. And you’ll be hard pressed to find tax help or assistance abroad, so it is important to know who can actually help you. This is what trying to figure out taxes on your own looks like …
Choosing the Right Tax Filing Service
A U.S. Expat Tax Guide can definitely help in understanding your obligations, but the safest way to avoid potential penalties is to have an expert handle it for you. And when we say ‘expert’, we don’t mean any local tax agent.
Because the expat tax situation can be so complex it requires choosing a company that is knowledgeable with the process, and specifically experienced in expat tax.
From our experience, Taxes for Expats (TFX) are experts when it comes to dealing with Americans living abroad and their tax situations. Through their extensive knowledge of the IRS code and by keeping up to date with the latest tax laws, you can be assured your taxes will be filed accurately, thereby avoiding potential large headaches down the road.
Every individual expat tax situation is unique, something that Taxes for Expats realizes. They have worked with expats living in over 100 countries across all seven continents. They provide the most qualified tax advice money can buy with a 100% Accuracy Guarantee.
In addition to providing you with accurate tax returns, your returns are reviewed by multiple experts that aim to optimize your return to save you as much money as possible when it comes to your taxes.
Why We Choose Taxes for Expats (TFX)
Expert Knowledge
While most accountants may only deal with a few (if any) expat tax cases each year, TFX is solely dedicated to the process. Your taxes are prepared by multiple professionals who each have a minimum 10 years tax preparation experience, and are U.S. citizens familiar with the U.S. tax system.
For over 25 years, TFX has been assisting expats with their taxes and realizes the difficulties and frustration of paying your taxes while living abroad. Their creation of a simple tax return process has made filing your taxes one less headache to deal with while learning to live in another country.
Fair Flat Fee Pricing
Their flat fee pricing system means you won’t be surprised by large hidden fees. All packages include the most common forms you will need to file as an expat, and they have clear straightforward pricing for any forms you may need for less common situations such as self employment or amended returns.
They also offer multiyear filing discounts as well as tax preparation credits for new client referrals, and never charge Value Added Tax found in the EU.
Easy to Use TFX System
TFX has made preparing and filing your taxes as easy as possible. Their simple responsive tax questionnaire doesn’t require you to create any word or excel documents, you simply fill out the questionnaire, submit any relevant tax documents, sign the electronic working agreement, and then sit back and relax while TFX does all the hard work.
This way, our computer is no longer at risk of being thrown against the wall out of frustration from trying to lodge our taxes ourselves (it’s very nearly happened). Even if you have attempted to file yourself, and are now dangerously close to the deadline, TFX has a rush service available should you need it.
Obviously a really important consideration in filing taxes is that it involves sensitive personal data. TFX does not store your important files with any third party websites, so we’re more than happy in the knowledge that our data is secure.
The TFX Process
The whole process of completing our tax this year was 5 easy steps. It took less than a minute to register an account and set up a free introductory phone consultation to discuss our tax situation.
You then fill in an easy tax questionnaire, submit required tax documents, and sign the agreement to have TFX professionals begin work for you. Once your taxes have been finalized and inspected, they come back to you for review before TFX either e-files or provides you with instructions if e-filing isn’t available for your specific situation.
The one thing that stood out through the whole process was the exceptional customer support for any questions you have (and we had a lot!) before, during, and after your tax preparation, whether it be over the phone or by live chat.
Screenshots of How Easy it is to Use
Tax Questionnaire
Their easy step-by-step questionnaire doesn’t involve creating any special excel or word documents. Simply answer the simple questions regarding your basic personal details, income, deductions, physical presence abroad and in the U.S., submit required tax documents, and you are well on your way to having TFX professionals take over from there.
My Documents Section
Access all your documents whenever you wish. Know that your personal data is secured with 256-bit encryption and not stored with third parties. Easily upload required tax documents and view your tax documents prepared by TFX.
Conclusion
No matter what your situation may be for living abroad, TFX provides the best service when it comes to preparing and filing your taxes. Whether you are a dual citizen, military personnel serving overseas, retired overseas, or backpacking for 12 months, TFX has the knowledge to prepare your taxes quick and accurately.
They will be able to help you take advantage of the many tax deductions available such as the Foreign Earned Income Exclusion, Foreign Tax Credit, Foreign Housing Exclusion, Treaty exclusions, and more (just learnt about those!). Their exclusive dedication to expats and their tax liability will make sure your taxes are done right so the IRS won’t be knocking at your door (they’re everywhere!!!).
We’re happy to confirm that TFX lives up to their industry leading status, and their knowledge of the tax system, transparent pricing, and easy to use system take the stress out of expat taxes.
They have turned the complex tax situation many expats face into a simple process that relieves a lot of anxiety. Because ultimately, you shouldn’t be spending days worrying about your taxes – you’re living abroad, and should be maximizing every moment!
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Megan is an Australian Journalist and award-winning travel writer who has been blogging since 2007. Her husband Mike is the American naturalist and wildlife photographer behind Waking Up Wild; an online magazine dedicated to opening your eyes to the wonders of the wild & natural world.
Having visited 50+ countries across all seven continents, Megan’s travels focus on cultural immersion, authentic discovery and incredible journeys. She has a strong passion for ecotourism, and aims to promote responsible travel experiences.
32 Comments
Many American dirt bag farangs in Thailand are laughing at this post title Meg. That’s a joke LOL. Good to have it broken down because Uncle Sam wants tax dough no matter where you are on earth as a US citizen. Sometimes certain breaks exist based on how much time you spend out of the country.
Lol too true Ryan! Haha. Yes absolutely, there are some pretty big breaks that exist for most expats, but still need to file all the same :) Sadly!!
Great info. Meg, thanks!
Glad the post was helpful Katie :)
So, Megan, while the US does require ex-pats to file taxes, there are some pretty extensive breaks for those who live most of the year outside the US borders. And, yes, Form 2555 is extensive, but that’s where the benefit (credit for money made overseas- to a point) is derived.And, since you are married, you also know that ex-pats married to non-citizens either must file as Jointly Married or Married Filing Separately; the latter leads to higher taxation levels, too.
(Yes, we’ve been doing taxes around the world for more than three decades. And, we, too, charge by the form- if the client has records that we can use. And, we make the process as easy as possible. (We charge for “shoebox” computations, besides the forms.)
Thanks for sharing your knowledge and experience Roy. Yes, we’ve been able to take advantage of a number of different breaks, and file as jointly married.
When we were living in the States it was easy enough to file taxes ourselves, though we got a bit of a shock when we found it was a lot more complicated trying to file them overseas!
Can never escape Uncle Sam.
Pretty much!
You know too that as an expat you have an automatic 2-month extension to file your return. So June 15. That said, it’s a bit of a catch 22 as I learned last year because they still make you pay interest on any tax not paid by April 15 even if you’re allowed an extension.
We aim to get ours over and done with as soon as possible to jut get it out of the way, but that deadline is definitely handy. I wasn’t aware though that you had to pay two months interest from April 15 – lol not that it surprises me though!!
If you’re blocked from doing it online use a VPN.
We tried that but it was pretty touchy. Easier to just send everything to TFX and have them cover it for us :)
One of my friends tried telling me the other day that she doesn’t live in the US so doesn’t have to file U.S. taxes. Sending her this post.
Yes, while that would be lovely, unfortunately she’s mistaken. Have to file taxes otherwise they will catch up with you. Have her contact TFX and they can sort it out for her :)
I haven’t been filing my taxes for years.
:S yikes – I would highly recommend touching base with someone at TFX to sort it out and catch you up. You might be able to go for a couple of years, but it does catch up with you, and when it doe you don’t want to be hit with crazy interest from taxes they decide should have been paid years ago.
Something to be aware of is how you define yourself as an expat – you do need to pass a residency test to use the foreign income exclusion. Ie being present inside a foreign country for 330 of any 365-day period.
Many people like temporary overseas contractors and those on assignment don’t qualify.
Great point Elizabeth, yes the government definition is pretty intensive.
Great post – thanks for the info.
You’re welcome Scotty, glad it was helpful. TFX are great :)
My taxes always feel like such a cluster f*&&%. Will check out TFX. Thanks
You’re welcome – they’re so helpful. And yes, I feel the same way about our taxes lol
Most expats are never really double taxed. It’s a bit alarmist when they bang on about the US doing so. You can exclude your first 100,000 odd and for most people that will cover their whole entire foreign income.
Yes, but for those people who do earn over 100,000 it’s far from an ideal situation having to pay double tax.
Thankyouuuuuuuuuuuuuuuuuuuuuuuu!!
You’re welcome Sara – touch base with TFX, they’re super helpful :)
Yep, I’ve found that local accuontant have no idea what they’re talking about. Cheers for the review.
I have better knowledge than local accountants in my area lol and that’s saying something. You really do need experts who are experienced in the expat situation. TFX are awesome :)
Great article, thankyou.
Glad it was helpful. Happy Monday!
Mmm, expat taxes… it’s like a toothache: unavoidable and impossible to deal by yourself. Thank you, Meg, for another great resource. Quite timely too. I was unhappily thinking about doing some research for a new tax service, so it comes super handy. Question though – is it possible to set up a phone call for the initial interview to see if its a good match? Thanks!
Pretty good description of expat taxes … sigh!!! Glad that the post was helpful though and that we could introduce you to TFX. They’re a tooth-ache saver :D
Yep you can absolutely give them a call, or you can use the chat box on their website to talk to someone live. Phone number is +16463972887 or you can also shoot them an email to questions@taxesforexpats.com
Happy filing (gotta love this time of year!!!)