General Overview....

Our clients find comfort knowing "Every Abacus Service" is available to all U.S. citizens regardless of their location. We have four core offerings; Money Management, Tax Services, Bookkeeping & Accounting, plus Financial Counseling & Education with individual pages for each on the main site.

However, when living abroad, personal tax filings represent the most nuanced. Pricing along with other considerations will differ from the service description mentioned on the main site. Also, tax filings for citizens of US territories are specific to each territory, but we can help,....

We at Abacus want citizens to be familiar with their tax filing obligations when residing outside the continental United States. Understanding what to expect and when to act will save you time and money. This overview aims to help you remain tax-compliant! Everyone dislikes filing a tax return, but through the convenience of technology plus 24 hour access, secured document storage and fixed pricing, we've created a process that's easy and workable while abroad.

Learn More Here....
Pricing for Expat Tax Services

Our initial guidance is below. Have questions? Reach out to us via our "General Inquiries" tab above when more details are necessary. Responding to your questions and/or video consultations are always free of charge. Our email support team is available 24 hours a day, all questions are responded to in the order they were received. Your patience is appreciated....

Who Must File...?

* US citizens (living in the US or abroad) including Accidental Americans
* Green Card Holders
* Permanent Residents (Resident Aliens within the USA with Earned Income)
* Non-Resident Aliens who have US income

Are you an Accidental American?

You may be an Accidental American and need to file US taxes if you were....

Born in the US to foreign parents or born abroad but having at least one American parent. Many ‘Accidental Americans’ have only lived in the US for a short time, sometimes just a few days, and have little to no ties to the country.... not raised, educated, or worked in the United States and often are unaware of their American citizenship.

If this sounds like you, then you're a US citizen abroad and once recognized as such would have the same privileges as any US Citizen, this further creates an obligation to file and pay US taxes.

It can get complicated though for US Citizens living abroad, "Accidental" or not. That said, continue reading for further guidance and/or coordination detailing those considerations and the exclusions you would be allowed....

What is Your Tax Status...?

Even though you're a citizen abroad, many rules are the same, you may or may not need to file taxes depending on your profile and gross income. Each profile has income thresholds which help determine whether you need to file a US tax return. Income thresholds are subject to change by the Internal Revenue Service. Select the profile that fits your particular situation best....

Single...
You are not married (to a US Citizen or non-US Citizen) and filing for yourself.

Married Filing Jointly...
You’re legally married (including common law), and your spouse files US taxes with you using either an SSN or ITIN.

Married Filing Separately...
You’re married. However, you’re not filing with your spouse. For example, they are a non-US Citizen and are not required to file a US tax return.

Helpful Hint: Most expats married to non-US citizens will use this filing status.

Head of Household...
You are considered unmarried* and responsible for paying more than half in maintaining your household during the tax year (and includes paying more than half for rent/mortgage, groceries, household bills, repairs, etc.). You must also have a qualifying child or dependent, such as a biological or adopted child, and the child has lived with you for more than six months during the tax year, etc.

Helpful Hint: Under this requirement, You would still qualify as unmarried if your spouse is a Non-Resident Alien (NRA).

Qualifying Widower...
You have a dependent child and retain the benefits from the Married Filing Jointly status for two years after your spouse, whom you normally filed jointly with, passed away.

Now....

Verify your gross income. Normally, this would be what you receive from employment (salary or wages) plus other sources, such as... foreign assets, other business interests, pensions, rental income, dividends or interest etc. etc. After determining your tax profile and gross income, reach out for further assistance....

Once confirmed, (Passport or Social Security Verification) you'll need to collect the following materials to get started:

All documents showing your sources of income and expenses, monthly or end-of-year statements from foreign bank or investment accounts to verify whether or not you had more than $10,000 combined from all foreign financial accounts at any time during the year.

All Abacus clients receive 24 hour access to their personal client portal, offering bank level security for the upload and storage of documents, which includes secure text messaging directly to your support team. When your return is completed, you'll receive, via email, a secure link for you to review and sign your return. Should you question the result, you will have the ability to reach out to us with questions or for additional clarification. Signed returns are eFiled once payment has been received. Paying your invoice is easy, just select the "Blue Pay Invoice" button when received. All documents and submitted returns are kept securely 365 days a year within your client portal. Phone and email support are always available....

Where Can I go for Additional Support....? 

If you have attempted to work with the IRS on your own but have become frustrated in the process, then our "Tax Resolution Service" may be your solution. Abacus "Personal" tax resolution is available internally using "IRS Enrolled Agents" while "Business" tax resolution, also internal, is available through "Certified Public Accountants" for every client nationwide or internationally. Pricing is hourly. A retainer is determined upfront with the remaining balance due upon completion.

When are the Tax Filing Deadlines for Expatriates...?

If You Owe taxes?
You’ll need to pay the estimated balance due by April 15th...

Helpful Hint: We can help you determine IF there's an estimated balance due. There is no extension for PAYING taxes.
Missed the deadline, no worries, we can get you back on track by reaching out to the Internal Revenue Service to negotiate an agreement...

Need to file taxes?
US expats can file later due to an automatic extension granted to anyone living outside the United States. Expats have until June 15th to file their return. This automatic extension is for filing only, not for payment of taxes owed...

Need an Extension?
If you can’t file by the June 15th expat tax deadline, requesting an additional extension is easy. Abacus offers FREE tax extension filing.
Once your extension is approved, you’ll have until October 15th to file your US tax return...

Helpful Hint:: You'll need to request your extension BEFORE your regular deadline, which is June 15th...

Final tax deadline for American expats?
That would be December 15th, when you need additional filing time, apply for this extension before the October 15th deadline.

How are Past Due Returns Handled...?

Did you miss filing previous tax returns? You could have a backlog of unfiled tax returns which need addressing. Past due returns may trigger IRS notification to the State Department, leading to possible passport revocation when left unaddressed.

As an American citizen or Green Card holder living abroad, there’s a tax amnesty solution for you called the  "Streamline Procedure", which prevents tax penalties and fees and puts you back on the IRS favorable list. It’s a specific process where you will need to collect information from the last three years (salary, investments, etc.) to qualify for the procedure. Your actions must be considered innocent by the IRS for not filing tax returns in the past. This could mean you didn’t know how to file, were unaware of this tax obligation, even forgetfulness. When you apply for this program, you'll sign a statement stating your reason via IRS Form 14653....

Eligibility for Using this Procedure:

* You did not live in a home in the US for the last three years
* Were living outside of the US for at least 330 days in the year
* You have not filed a federal tax return in the last three years
* Haven’t filed amended or delinquent tax returns in the past
* Haven’t filed the FBAR within the last six years

What Your Filing Must Include...?

* Three years of back tax returns (not including the current year’s return)
* Current year plus six previous years of FBAR reporting is required if you maintained over $10,000 in all foreign accounts at any time during the year
* Signed statement on the Certification by U.S. Person Residing Outside of the United States

How Much Does the "Streamline Procedure" Cost...?

The cost of filing the "Streamline Procedure" can vary. It is possible to do it yourself, but it is complicated. Most EAs or CPAs charge over a thousand dollars. The Abacus "Streamline Procedure" is among the most affordable to become tax compliant. Even if you have a more extensive or complex tax situation, our $879 fixed price is very competitive. Pricing for citizens requiring a business "Streamline Package" is based on the complexity of the situation.

Additional Insights for Expats...!

Unfortunately, living abroad as a US citizen does not exclude you from your US tax responsibilities. Filing an annual tax return when exceeding at least the basic income threshold is required. Any foreign-sourced income earned is TECHNICALLY taxable at the same marginal rate as any other regular income earned.

However...

To avoid possible double taxation, which is when the US and the foreign country you reside in both place tax on your income,  the IRS allows for exclusions. The two primary exclusions are... the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC). For example, on a 2023 tax return, the FEIE would allow you to exclude up to $120,000 of foreign-earned income. This means you’ll pay no US income taxes on the excluded income. The Foreign Tax Credit can be used as a credit for specific types of income, unique to each country, allowing you to offset US income taxes with the income tax you paid to a foreign country. In other words, the US allows you to say, “I already paid ABC income taxes,” and get a credit for that amount on your US tax return.

In addition to those two commonly used expat tax benefits, US tax treaties also prevent double taxation on certain types of income. You’ll want to see if your country has a tax treaty with the US and how it applies to you. For most expats, the FEIE and FTC are enough to offset any possible taxes owed.

Also, "Tax Treaties" are especially helpful when determining how to declare unearned income such as pensions, social security benefits, alimony, etc. Since these are all considered unearned income, they cannot be excluded via the FEIE, and may be subject to local income tax in your resident country.

Helpful Hint: Your resident country could have a "Totalization Agreement" which is different from a "Tax Treaty"  preventing dual "SOCIAL SECURITY" taxation for Americans abroad. Americans who reside in certain countries could avoid dual social security taxes since they can choose which country they wish to pay into the "Social Insurance" system.. This is usually handled by your employer. Here is the current list of countries with active agreements: Italy, Germany, Switzerland, Belgium, Norway, Canada, United Kingdom, Sweden, Spain, France, Portugal, Netherlands, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, Czech Republic, Poland, Slovak Republic, Hungary, Brazil,, Uruguay, Slovenia and Iceland.... with more to come.

Totalization agreements help American expats avoid foreign social insurance costs if they do not plan to stay overseas for more than five years and/or they are sent overseas on a short-term contract. If you do not plan to return to the US after five years, you can normally pay into the "Social Insurance" system for the country where you are residing, in those cases, you may want to be covered by retirement and health programs offered locally.

Have children? The Child Tax Credit and the Additional Child Tax Credit are still available to you. Also, a Foreign Housing Exclusion allows US citizens abroad to deduct any excess housing expenses, paid by the employer, over 16% of that year’s Foreign Earned Income Exclusion (FEIE) amount.

Additionally, some secondary housing expenses MIGHT be eligible for tax exemption or deduction regarding.... home utilities, personal property insurance, accessory rentals, and household repairs. Each situation is unique though and would require further review.

Don't Forget that FBAR....

The  acronym FBAR stands for the Foreign Bank Account Report. It’s a form that Americans abroad must fill out. Every foreign financial account you open as an American abroad connects you to the FATCA law, which means this form is strictly for information tracking purposes, and you will not be taxed on your foreign bank accounts. The FBAR does not go to the IRS but to the Financial Crimes Enforcement Network (FinCEN), part of the US Department of Treasury.

This law allows the US Department of Treasury to access your financial accounts to ensure no illegal activity. If your combined foreign financial accounts exceeded $10,000, at any time during the year, you’ll need to fill out a "Foreign Bank Account Report" and, yes, even if you don’t meet the requirements to file a tax return, you are still obligated to file this report.

FATCA stands for the Foreign Account Tax Compliance Act. This federal law requires foreign financial institutions, like banks, to report back the data of US account holders while also requiring US citizens to disclose this information themselves. It’s a means to prevent illegal money laundering abroad. Every foreign bank that allows Americans to open an account must be able and willing to comply with FATCA law. This means it is possible to get rejected by a foreign bank because you are a US citizen, and the bank does not want to comply with the regulations. If the bank allows you, as an expat, access to a foreign financial account, you will fill out and sign lots of paperwork.

In addition to the FBAR, under FATCA, form 8938 must be filled out if the total value of all your specified foreign financial assets for which you have an interest is more than the $10,000 threshold. Generally, taxpayers living abroad will file Form 8938 regardless, when they file their income tax return.

In Closing....

Whew.... yes, tax reporting when living overseas can be a challenge and these were just the basics! Right about now you may be wondering what have you done to yourself? But you don't need to go it alone! Abacus offers a comprehensive service to all US citizens, regardless of their location.

Abacus is a family-owned business located in Newark, Delaware providing personalized service for over 30 years.

Combined with other core services (referring you back to the main site), it may be comforting to know you have a single source to assist you while pursuing a career or other interests abroad. Unlock tax freedom and get back to your expat life! We hope to hear from you....