10 Things to Know About Filing Your US Taxes as an Expat in 2025
10 Things to Know About Filing Your US Taxes as an Expat in 2025
Life abroad, working abroad is quite exciting; however, it presents a layer of complexity to life abroad for American expats, the obligation to file U.S. taxes. No matter where they are located, the U.S. tax system requires citizens to remain compliant, which can be very daunting without the proper knowledge. Fortunately, managing your tax responsibilities doesn’t have to be stressful. With proper planning and guidance, you can confidently handle your taxes in 2025. Here are 10 essential things every American expat needs to know to simplify the tax-filing process and avoid potential pitfalls.
1. Yes, You Do Need to File a Tax Return Every Year
As an American citizen, you are considered liable to file a U.S. tax return annually-even when living abroad. You need to file a U.S. tax return regardless of the country where you live, be you single, married or have filed for separation from spouse. Your income may reach the threshold for filing based on whether you are single or are married and separated.
Failure to file taxes leads to severe penalties, such as the accumulation of penalties and delay in getting your refunds. Staying compliant will save you from these problems and maintain peace of mind.
2. You Haven’t Filed for a Few Years; There’s a Way to Catch Up
If you’ve missed a few years of filing, don’t worry-you are not alone. Many expats neglect to file taxes due to a lack of information or simply other priorities in their life. The more time you take, however, the higher the likelihood that the IRS will start paying attention.
Thanks be to streamlined filing compliance procedures, which provide this lifeline. In exchange for meeting certain criteria, the program allows you to file tax returns for up to three years without penalties. But with six years of FBAR, or Foreign Bank Account Reports, and an agreement to file your taxes on time, you’re in the clear.
Professional tax services like Greenback Expat Tax Services can help you through this process to ensure you catch up easily and avoid penalties.
3. Extended Deadlines for Expats
Whereas Americans in the U.S. have a deadline of April 15, expats automatically have a two-month extension, bringing the deadline to June 16, 2025, to file their taxes.
If you need more time, you can file Form 4868 before the June deadline to get an extension until October 15, 2025. This extra time can be invaluable if you need to gather documents from a foreign employer or organize your finances. Partnering with a tax service simplifies the process and ensures deadlines are met.
4. Avoid Double Taxation with Deductions and Credits
However, expats face one more primary dilemma : tax is subjected to double taxation. As such, the IRS applies credit and exclusions in light of foreign earned income for many that includes:
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- Foreign Earned Income Exclusion (FEIE): This is exemption on the amount of earned income, excluding it from federal incomes tax.
- Foreign Tax Credit (FTC): Applies dollar-for-dollar credit from taxes paid to foreign countries or governments.
- Foreign Housing Exclusion (FHE): This one deals with housing costs when living overseas.
Working with a professional expat tax service helps you maximize these deductions and may save you thousands of dollars.
5. FBAR Filing is Required
If you have accounts overseas with an aggregate balance over $10,000 in any calendar year, you are required to file an FBAR. The report helps prevent tax evasion and calls for detailed record keeping.
Filing failure attracts very stiff penalties. The penalty may begin at $10,000, though the process appears rather complex. However, an expat tax professional is adequately knowledgeable on how to complete an FBAR form in an accurate manner and compliant with IRS rules.
6. FATCA Applies to You
Another reporting requirement for expats is the Foreign Account Tax Compliance Act, or FATCA. Unlike the FBAR, which focuses on bank accounts, FATCA is a reporting requirement that targets foreign assets, such as pensions, shares, and other sources of income.
If you have foreign assets exceeding $300,000 for single filers or $600,000 for married filers at any time during the year, you are required to file a FATCA report. Non-compliance could lead to severe penalties; therefore, it is necessary to seek professional help in order to stay on top of these requirements.
7. Planning to Renounce Your Citizenship? File Your Taxes First
Renouncing your U.S. citizenship is a serious decision, often made for personal or financial reasons. However, before you take this step, you must ensure your tax filings for the past five years are up to date.
Depending on your income and assets, you may also be subject to an exit tax. Filing regularly with the assistance of an expat tax service will keep you abreast of your responsibilities and help you plan accordingly.
8. Retiring Abroad? Know Your Social Security Implications
Expats can still claim Social Security benefits while abroad, but those payments are subject to taxation. The amount you owe will depend on your citizenship status, tax treaties between the U.S. and your host country, and other conditions.
Knowing how you qualify for deductions or credits can help you minimize taxes on your retirement income. A tax professional can make this process easy and save you money.
9. Filing Taxes May Be More Affordable Than You Think
The cost of filing taxes as an expat will vary based on your situation. However, many good tax services, such as Greenback, offer flat rates and transparent pricing. Their Tax Pricing Calculator gives you an estimate up front so that there are no surprises and you can budget accordingly.
10. You Can Still Claim the Third Stimulus Check
If you haven’t filed your 2021 tax return, there’s still time to claim the third stimulus check issued during the coronavirus pandemic. The final deadline is April 15, 2025.
Eligible individuals can receive up to $1,400, with additional amounts for dependents. Filing your taxes on time ensures you don’t miss out on this benefit.
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