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American expats pay annual U.S. income taxes on worldwide earnings, such as salaries, interest, rental income, business profits and more.
U.S. citizens and resident aliens must file taxes and cover what they owe, regardless of where they live. These rules mean expats may have to file and pay taxes in two places.
“It can get very complicated very quickly,” said David McKeegan, co-founder of Greenback Expat Tax Services.
In fact, 69% don’t feel they should have to file U.S. taxes while living abroad, Greenback’s survey found.
Some expats may also have to disclose foreign financial accounts, such as savings and investments.
Once balances across foreign accounts pass $10,000, expats must file the Report of Foreign Bank and Financial Accounts, known as FBAR, with the Treasury Department.
For example, let’s say someone has $5,000 in savings and $4,975 in investments. If their investments grow to $5,025 at any point during the year, they will have to report their accounts.
The so-called FBAR deadline was April 15, but there’s an automatic extension to Oct. 15 for those who missed it.
In addition to the FBAR, some expats with accounts above a certain limit may need to file Form 8938, which seeks to curb tax dodging with overseas accounts.
The Form 8938 thresholds are over $200,000 for single filers at year-end (more than $400,000 for married couples filing together) or reaching a $300,000 balance during the year (over $600,000 for spouses).
In addition to the burdens of more reporting, many expats were dismayed by the U.S. government.
The pandemic may have motivated some to stay abroad long-term, with 60% disapproving of how the U.S. government handled the pandemic, the poll uncovered.
Moreover, 85% of expats don’t feel they are represented fairly by the government, Greenback found.
Ultimately, many expats are just looking to carry on normal financial lives, McKeegan said.
“I think it’s safe to say that the vast majority of Americans living overseas are what we consider middle-class,” he said. “We’re not talking about multi-billionaires who are living on yachts.”
2021 U.S. Expat Opinion Survey
Greenback Expat Tax Services
Source : CNBC