Taxes for expats

There are certain topics that strike fear in the heart of every amateur expat. “Amateur” being anyone who hasn’t been in their new country for long or one who just simply chooses to lead a life of blissful ignorance. I am most definitely the latter.  Which is why, when someone asks a question like, “What happens when you retire?” “Which country will you get social security from?” or “Don’t you have to pay US taxes, too?” My face usually looks like this:

But inside I’m like:

The reason for this is fairly simple: I just genuinely do not know.  I also figure that I don’t make enough money for the US government to care much. Spoiler alert: This is not true. The US government cares about everything.

Enter my friend and fellow expat blogger, Kate, who one day posted about a company who specializes in taxes for expats, (conveniently called, Taxes for Expats). As a little background, Kate and I have never met but have followed extremely parallel lives and have gone through a lot of the same processes being expats in Spain. To my extreme benefit, she has done most of them before me and gives me the inside scoop every time. Knowing this, I knew that if she was doing it, I should probably have a look at what all the hype was about. So I spoke with Taxes for Expats and they got me set up with a great CPA, Susan, who was there for me 24/7 to answer all of my ridiculous questions that my liberal arts education didn’t cover in college. And here, dear reader, is what I learned.

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After being paid a shitty salary, (normal in Spain, but still shitty according to most standards), I feared that the US government was going to expect more of my hard earned teacher’s salary. This is not the case. Most people who are making under 100K a year will not need to pay anything extra to the US. Its a good idea to have someone who knows what they’re doing take a good look at your taxes to take into consideration your specific case especially if you have real estate, a mortgage, a family, investments, etc, but the fact of the matter is that most likely, you’re not going to have to pay anything more.

*wipes sweat from brow*

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If at any point during the calendar year you have had more than 10,000 dollars in your foreign bank accounts, you need to file this document. It is not a part of your taxes, it is simply a document that you need to fill out to report any foreign accounts to the US treasury. (I’ve just been watching a lot of Ozarks and Narcos and I’m wondering if any of them have ever even heard of an FBAR)

PS–It stands for Foreign Bank Account Report.

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Here it comes–what I was afraid of. Now, lots of expats may be sitting in their apartments in Barcelona, Paris, Tel Aviv and saying, “Well, I don’t really care because I’m never going back to the States.” K sure. But for those of us who can’t predict even the future of what we’re having tonight for dinner, much less where we could be three years from now, here are some things you may want to consider.

  • If you marry someone from the country you live in and want to obtain them a US visa later on, you’ll need 3 years of taxes filed to do so.
  • If you change jobs and move back to the US and start filing taxes again, you’ll have to explain where you’ve been for the last however many years. Whoops. *Laughs nervously*
  • Maybe you want to invest in the American stock market. The IRS will want to know where that money is coming from and why you forgot to tell them about it.
  • Maybe one day you’ll want your child to attend an American university and you want to apply for government aid. I think you see where this is going.
  • At the moment, you don’t need to present tax returns to renew your passport. But it’s in the works.
  • Imagine you reach the ripe age of 62 and want to start finally cashing in those social security checks. But the government says, “Not so fast, old man, you’re 40 years delinquent on filing your taxes.” All of the sudden the cottage in Key Largo is looking a little farther away.
  • And a couple more reasons detailed here by Ines from Taxes for Expats

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And potentially lots of it. Now, before we start talking about fines and penalties, lets get one thing straight–if you do not owe taxes, you will NOT be fined, regardless of when you file. (As a side note, the deadline for US residents is April 15th, the deadline for expats to file is June 15th. You can have it extended to October 15th, but if you owe money the interest starts accruing from April 15th. But again, if you don’t owe, it doesn’t matter when you file.) This, understandably is a big concern for me and others like me who, either out of laziness or ignorance, have not filed taxes in the US while abroad. You may worry that not filing for years means that you will undoubtedly have to pay a fine for delinquent taxes. But this is only if you owe taxes, which we established would probably only be people making over 100-120K per year abroad. And if this is you, let’s be friends before Christmas.

If, however, you do owe taxes and haven’t paid them, the IRS is going to make you pay dearly.

There are five ways the IRS can penalize you on owed back taxes:

  • Failure to pay penalty
  • Failure to pay estimated payments
  • Failure to file penalty
  • Negligence and fraud
  • Fraudulent failure to file civil penalty

And even though interest rates are historically low, you could be adding on lots of extra unnecessary digits to what you owe simply by putting it off for months or years.

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As you guys know, I was a Language Assistant  with Spanish government for three years, receiving a stipend of 700 euros per month for 9 months. (Total of $6,300) During the summers I would come home and work as a waitress and therefore always filed, only on the taxes I paid in the US. Turns out, I actually did that correctly. Totally by chance, but still.

However, if you are abroad and receiving a stipend that amounts to over $10,300, you need to file.  Here are more details on who needs to file, even when you think you won’t have to. (**Students who are studying abroad receiving scholarships for books, tuition, etc, still need to file but will not be taxed. However if it is a stipend for general living expenses, you still need to file and it is considered taxable income–if you get more than $10,300)

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No, I’m not your dentist lying about pulling a tooth. If you are anything like me, (a millenial on the wrong side of 25), your mom or dad has probably been taking care of your taxes for awhile. (I know its not just me.)  In any case, anything tax related confuses and completely intimidates me. I always feel like I’m getting screwed over or not reporting something that could get me a bigger return, or not reporting something I need to.

With these guys, you don’t have to give it a second thought.

  • Expat taxes are literally ALL they do, and they’ve done it for a long time. This isn’t a job for CPAs straight out of college. These guys are seasoned vets.
  • At least two CPA/EAs check over the tax review before sending it to the client to be approved.
  • They are extremely helpful, knowledgeable, and patient. Shout out to my girl Susan who had to explain a lot of things down to me in layman’s terms over numerous emails.
  • The entire platform is online, super user friendly, and you fill it out at your leisure. Standard things to have on hand are scanned copies of your last US taxes filed, and your latest taxes filed (from the country you’ve currently residing), with your salary information. Even if you are missing some information, your CPA will simply ask you to clarify, or it could be that you don’t even need it.

Isn’t that picture so satisfying? So is filing your taxes and not having to worry about them for another year. Added bonus: more time for adorable animal videos. To find out more and decide whether Taxes for Expats is for you, check out their website with tons of practical information and contact information for any questions you may have! Happy expatting!

Disclaimer: This post is sponsored by Taxes for Expats, who prepared my 2016 US tax returns in return for an honest review of their service. Now you can enjoy their services too!

4 thoughts on “Taxes for expats

  1. Hi, love your blog!

    I own an expat tax firm, I won’t post the name because I see you are recommending another firm and I don’t want to be tacky.

    I just wanted to say “great post” and that I can’t tell you how often I see expats making costly mistakes and paying huge penalties because they try to do their own taxes. We literally see this all year long.

    The US tax rules are a little far-reaching for expats, but a good firm can make it effortless, and for simple taxes, it shouldn’t cost more than $250 or so for returning clients to file.

    Thanks for the great article.


    1. Hi Tod! Thanks for commenting. I appreciate the feedback because it is so important for me to give my readers the best information possible, and this post took me a long time to do because I asked my tax assistant SO many questions to make sure I was getting it all right. Its a tricky business, that’s for sure, and I think sometimes we think we are “outsmarting” the system, but Uncle Sam always has the last laugh! 🙂


  2. There is a bonus of child tax credit, if you have kids, even if they were born in Spain. I believe it is up to 1800$ per child that the US government pays you each year.


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