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Why Americans Abroad Should File U.S. Tax Return

Why Americans Abroad Should File U.S. Tax Return

1. First and foremost, it's the law - If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. It's that simple.

2. If you fail to file, you cannot claim foreign income exclusion and you may be liable for penalties.

3. There is a three year statute of limitations on filed tax returns.

4. Most of our clients never actually have to pay anything to the IRS...

6. If you do owe money to the IRS and do not report it, you are liable to pay penalties and interest...

7. U.S. government is actively exploring the option of refusing

8. As you have probably heard, the US government has started ...

9. Lastly - the government is actively working with foreign countries...

These are the reasons why American Expats should file their US tax returns. We have also prepared a list of reasons why you should enlist the services of Taxes for Expats to help you file.

But what if you have left the U.S. shores years ago and don't plan on coming back?

But what if you have left the U.S. shores years ago and don't plan on coming back?

Let's examine the following scenarios which may apply to you or your loved ones. We have established that you are not abroad for a year or two on a business secondment, but have moved permanently and have no intention of returning to the U.S. Should you still file your U.S tax return? Are you at risk of any repercussions for failure to file? If you don't file, how will the IRS find you? Below we lay out a few situations that we have observed in many years of practice.

1. You are an expat and get married to a non U.S citizen in the country you currently reside.

2. After living abroad (and not filing a tax return) for years, you switch jobs and decide to come back to the U.S.

3. Your hard work paid off and you have done well for yourself while abroad.

5. The three year statute of limitations only starts counting when a tax return is filed.

6. Hopefully, you've done extremely well and have amassed a great deal of wealth and would want to leave it to your relatives or various foundations.

8. If your child is of college age, or if you have younger children whom you would like to see enter college in the future...

9. Let's say you're turning 62 and after years of paying Social Security taxes...

10. Finally, expats can exclude roughly $100,000 of foreign earned income from tax calculation

These are just a few of the common pitfalls we have encountered in over 20 years of preparing tax returns for U.S citizens living abroad. The risk/reward is clear -- for expats, all the upside lies in filing your tax return and only downside can come from failing to file.