Reporting US taxes from abroad involves various tax filing obligations, deductions, and numerous forms. This resource provides clear guidance on understanding your US tax obligations.
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As a US tax filer, you must report all global earnings to the IRS annually, regardless of residency
Many international US tax filers overlook some income sources. To help, we've provided a checklist of income categories to include in your return
Having a US International Tax Accountant assess your filing requirements can help avoid unnecessary filings, penalties, or interest
Here are the key points to understand your filing status
All US citizens and resident aliens must file Form 1040 annually to report their earnings. Form 1040 is essential for all filers despite the many other tax forms. A full list of tax forms is provided in the section below
Your filing status can offer tax opportunities and considerations. Below are the different filing statuses to consider.
Individuals who are not married, divorced, or legally separated under state law.
Married couples who choose to file separate tax returns. Each spouse reports their own income and deductions
Married couples who choose to file separate tax returns. Each spouse reports their own income and deductions
Unmarried individuals pay more than half the cost of keeping a home for themselves and a qualifying person
Individuals whose spouse died in the previous two years and have a dependent child
Global Intangible Low-Taxed Income (GILTI) is a tax on income earned by Controlled Foreign Corporations (CFCs) with low foreign tax rates. Owners of 10%+ in foreign corporations may be subject to GILTI tax. A Form 5471 should be filed for reporting ownership and GILTI
The Gilti Tax is Calculated as the total CFC income minus a 10% return on tangible assets.
FTC can often be used to offset a portion of the US tax liability.
Filing thresholds determine your tax obligations based on income, filing status, age and income type. They influence your choice of filing status.
Each filing status has a different income threshold. For example, single filers usually have a lower threshold than those filing as a Head of Household or Married filing jointly.
In addition to varying by filing status, thresholds also vary by age. Therefore, when you reach the age of 65, your threshold increases.
Different types of income have different thresholds. Even if your total income is low, exceeding a threshold for specific income types requires filing.
Example: Self-employment income has a low threshold. If you earned $1,000 in 2023, you must file if $400 or more came from self-employment.
Since the thresholds change regularly, we recommend always using the IRS’s official website to check your tax year’s threshold.
If you’re unsure if you owe taxes, file by April 15th to avoid interest. Alternatively, a US accountant can provide a rough estimate, often at a lower cost than a full tax return and possibly tax-deductible. For dual citizens, you may need to file in your country of residence before the US. Tax planning can help avoid unnecessary taxes and penalties.
The tax filing deadline in the USA is April 15th. Any tax due must be paid by April 15th.
If you live outside the USA, including Puerto Rico, your filing deadline is June 15th. Taxes are still due by April 15th; unpaid amounts after this date incur interest.
You can request an extension to move your filing deadline to October 15th. This is useful if you have no tax due and need more time to gather documents
Get real-time official US deadline dates on any calendar system by integrating our official US Calendar below
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Residency status affects your filing obligations and entitlements. Treat this area with caution to avoid errors. Below are the tests for determining residency status, its impact on taxable income, and relevant tax forms.
Green Card Test or Substantial Presence Test: Pass
Taxed on worldwide income, including US Pensions.
1040, 8843, W-9
Green Card Test and Substantial Presence Test: Fail
Taxed only on US-sourced income, which includes US pensions.
1040-NR, 8843, W8-BEN
Form 1040 is just the start; other forms may apply. Use our filter below to find the additional forms you may need.
You can submit your federal tax return via e-filing or paper filing. We are approved for both methods. We recommend e-filing for most people as it is safer, faster, and easier. With e-filing, we can submit everything to the IRS within a few days without you leaving home.
The e-filing process consists of four simple steps:
Send us your documents via our secure, encrypted document exchange service.
Once we have your documents, we prepare and optimise your tax return, ensuring you pay no unnecessary taxes.
We will send you your completed tax return for review, approval, and e-signing.
After you approve and e-sign your tax return, we will electronically submit it to the IRS.
Sometimes, a wet signature or paper filing is required, such as when you are paying by check. Here are the steps to replace steps 3 and 4 above.
For a faster service, we can either mail the tax return to you or transfer it digitally for you to print at home.
Once you have approved the return, you can print, sign, and send it to us.
Once we receive your signed tax return we will verify it and send it to the IRS.
Postal delays are rare but possible. We recommend early preparation, using reliable postal services, and having backup copies so that the return can be resent immediately if a delay occurs.
The employment status of U.S. expatriates, whether employed, self-employed, unemployed, or a business owner, affects their tax filing obligations in several key ways:
FEIE: May exclude a significant portion of foreign earned income.
FTC: Can offset U.S. taxes with foreign taxes paid
Social Security: Pay U.S. Social Security/Medicare taxes if working for a U.S. company; may be exempt under Totalization Agreements for foreign employers.
SE Tax: Must pay SE tax on net earnings.
Deductions: Can deduct business expenses.
Reporting: Report income on appropriate forms and calculate SE tax.
UE Income: Report any U.S. unemployment compensation
Min Filing Requirements: File a tax return if income exceeds the threshold.
FBAR: Comply with FBAR and FACTA if account businesses exceed thresholds.
Corporate Tax: Must report and pay U.S. taxes on global income.
Foreign Corporation: May need to file additional forms if owning a significant share in a foreign corporation.
Deductions & Credits: Eligible for business deductions and FTC.
As noted, IRS payments are due by April 15th. This section covers common obstacles US expatriates face when paying taxes and how to avoid them.
Payment methods include wire transfer, EFTPS, IRS2Go, credit/debit card, direct debit, or check.
Find Out What You Owe: Access your IRS online account to view your current balance and payments due for different tax years.
Bank transfer is convenient for many. Ensure you’re familiar with making international payments through your online banking for efficient transactions.
Investigate your bank’s options to find the most cost-effective method for transferring money to the IRS, reducing the overall cost of your tax payments.
Exchange rates affect the amount payable. Consult an advisor and monitor rates to choose the best payment time for the best value.
Consider timezone differences to ensure your payment reaches the IRS well before the due date.
Avoid last-minute tax payments. Schedule your payment according to U.S. dates and times, considering time differences to prevent late payments.
Check Your IRS Account: After making a payment, verify that it has been recorded by checking your online account. It should reflect the recent payment under the correct tax year.
Installment Agreements: The IRS offers structured payment plans if full payment is a burden. You can apply through the IRS website, with most agreements confirmed immediately online.
When moving money between US and UK bank accounts there are various tax considerations:
If the combined balances of your foreign bank accounts exceed $10,000 at any point during the tax year, you must file an FBAR.
Any interest earned on transferred amounts must be reported and may qualify for the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC).
Large transfers may need to be declared to HMRC.
Any interest earned on the transferred amount must be reported and may be subject to UK taxes.
If income earned in the U.S. is paid into a U.S. bank account, transferring it to a UK bank account typically does not impact U.S. tax liability but may have UK tax implications, such as reporting requirements and potential additional taxes. If the income remains in the U.S. account and is not transferred, it generally will not be subject to UK taxation.
You may need to file a state tax return if you have ties to a US state.
Select a state to see if you need to file a state tax return
Filing your first US tax return, especially from overseas, can be nerve-inducing. Common questions include:
US citizens, permenant residents, and certain temporary residents need an SSN. Apply by filing an SS-5 at a Social Security office or US embassy/consulate.
Apply for your SSNIf you’re not eligible for an SSN but must file a U.S. tax return, you’ll need an ITIN. Apply by submitting a W-7 via mail, in person at a Taxpayer Assistance Center, or through an authorised Certifying Acceptance Agent (CAA).
Apply for your ITINWhen you leave the USA, notify the IRS of your move by submitting Form 8822.
File Form 882Nonresident aliens can reduce or eliminate withholding by submitting Form W-8BEN to claim tax treaty benefits. However, this doesn’t apply to employment income from a U.S. company, which can be offset by the Foreign Tax Credit (FTC) and Foreign Earned Income Exclusion (FEIE).
Speak to a US AccountantEveryone’s journey to renouncing US citizenship or ending long-term US residency is unique. This comprehensive resource covers the details, including considerations like the exit tax.
Find out more about renouncing your citizenship
Ideally, no one needs to read this section, but it’s important to know the consequences of non-compliance If you are non-compliant, penalties and interest may be applied, including:
Late tax returns can accumulate daily, resulting in significant amounts even with short delays.
For underpayment of taxes, the US charges penalties up to 0.5% of the unpaid tax per month, increasing to 1% if unpaid after ten days of notice.
Interest accrues on unpaid taxes from the return’s due date until payment. The rate is set quarterly, based on the federal short-term rate plus 3%.
You can appeal if you’ve accidentally or non-willfully fallen behind on your taxes. The streamlined filing procedure can help you catch up and avoid excessive penalties or interest. For detailed information, refer to our streamlined filing procedure resources. For support, get in touch with us.
Bambridge Accountants: 20+ years of expertise in international US tax laws, foreign income, reporting, and tax treaties.
For help with U.S. taxes abroad, contact Bambridge Accountants. We simplify your tax responsibilities.