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Expatriate Information
U.S. Income Tax Obligation:
As a U.S. Expatriate living abroad, you must file U.S. tax
returns each year to report your worldwide income.
Foreign Earned Income Exclusion (2009):
If you are currently a full time resident abroad for a full calendar
year, or live abroad for 330 days out of any consecutive 12 month
period, you can exclude up to $91,400 of your earned income from
U.S. Income Taxation for 2009. If you are married and you and your
significant other earn income and live abroad, you can exclude up to
another $91,400 of your spouse's income from taxation. These exclusions may only be claimed by filing a tax return and are not
automatic if you do not file your U.S. Tax Return and/or forms for
the year it applies. You are also eligible to claim an additional exclusion/deduction for your foreign housing expenses exceeding a
standard amount established by the Federal Government.
Statute of Limitations:
If you do file a tax return each year while living outside of the
U.S., the Statute of Limitations for IRS audits will expire three
years after those returns are filed. Thus forth, the IRS will not
be able to go back and attempt to audit or change your previously
filed returns, unless there is evidence of fraud. This is why it is
necessary to file your returns each year regardless if you have
received income or owe no taxes. This insures the Statute of
Limitations will expire and, therefore, will assist you in avoiding any future problems which may arise when you return to the U.S.
U.S. Social Security and Medicare:
If you are an offshore employee of a U.S. corporation, Social
Security and Medicare will most likely be withheld by your employer
on your W-2. If you are working for a U.S. based employer in one of
the 22 countries (Italy, Germany, Switzerland, Belgium, Norway,
Canada, United Kingdom, Sweden, Spain, France, Portugal,
Netherlands, Austria, Ireland, Finland, Luxembourg, Greece, South
Korea, Chile, Australia, Japan, Denmark) the U.S. has established a
Social Security Totalization Agreement with, you can eliminate dual
Social Security taxation. This agreement also fills gaps in benefit
protection for workers who have divided their careers between the
United States and another country. If you are a bonafide employee
of a foreign employer and are subject to laws which govern their
social security tax, you are not required to pay U.S. Social
Security tax.
Self-Employment Taxes:
If you are self-employed you must pay, in addition to your income
taxes, a U.S. Self-Employment tax that includes both Social Security
and Medicare taxes. You must file a Schedule C with your U.S. tax return and pay U.S. Self-Employment Tax on your net earnings by
filing a Schedule SE. The Self Employment Tax rate is 15.3% of net
Schedule C income before any foreign income exclusion, and the taxable net self-employment rate is not reduced by the previously
mentioned foreign tax credits. Net earnings are income after all
legal business expenses are deducted and include the income earned
both in a foreign country and in the U.S.
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information, or to see how we can help you save money on your U.S.
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