First Year Abroad

Sep 20, 2014

If you just moved abroad, you probably have a lot of questions about how to deal with the tax implication it may have. The Foreign Earned Income Exclusion and Foreign Tax Paid Credit pages will give you a more complete explanation of some of the issues you need to know, but you will find below a quick summary of the main issues for first-time overseas filers.

  1. You do need to file a tax return. As a US Citizen or permanent resident you are required to file a US return every year. The only exception being if your income was less than about $9,500 ($19,000 if filing jointly). You may have heard that your salary is all or partly “tax free.” If you meet certain requirements, it is true that you may not owe any US income tax on your foreign earned income. While you may not owe any taxes, you are still required to file a 1040 every year, even if you owe no taxes.
  2. For 2013, up to $97,600 of foreign earned income may be excluded from US income tax. If you only lived overseas for part of the year, this amount is prorated to the proportion of the year in which you lived overseas.
  3. When you live overseas, you are allowed an automatic two-month extension to file your tax return, until June 15th. You do not need to make a special request for this.
  4. If you expect to qualify for the exclusion, your first year abroad you will often need to request a lengthier extension until you have passed either the Bona Fide Residence Test (living overseas a full calendar year and meeting some other requirements) or the Physical Presence Test (being overseas 330 days in a 12-month period). The extension request should be filed as early as possible, and definitely before June 15.


U.S. Taxes For American Expats E-book

FREE U.S. Tax Guide for Americans Abroad

The only e-book about U.S. Expat Taxes you need to read! Covers

1. Foreign Tax Credit vs. Foreign Earned Income Exclusion

2. The Additional Child Tax Credit. Get a $1,400 refund!

3.  What happens if I don't file?

and more...

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