8 Reasons why US expats should file their US taxes

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5 min. read

There are around 9 million US expats. Many of those expats overlook the fact that they still must file taxes in the US. Even though filing US taxes can be a daunting experience here are 8 reasons why you should.

Reason #1 You have to

The first and foremost reason US expats should file tax returns, is simple: it is required by law. All US citizens are required to file and report their worldwide income, no matter where they live or work. As US expats are subject to the same tax rules as US residents, the same filing thresholds apply.

Reason #2 You probably don’t have to pay anyway

Filing you US federal tax returns doesn’t actually mean you have to pay taxes in the US! As mentioned, you need to report your worldwide income to the IRS, which means that your worldwide income might be liable to tax in two countries, as you are probably paying taxes in the country you work and live in. However, most expats can offset their US tax liability with their foreign taxes paid (using the Foreign Tax Credit), or they can use the Foreign Earned Income Exclusion to lower or eliminate their US taxes. For a more in-depth explanation of the FTC and FEIE and when to use which tax break, you can read this article.

Reason #3 Avoid interest and penalties

If you owe tax to the IRS and you don’t file and pay your tax returns, you are liable to pay interest and penalties. These can quickly add up and in fact penalties and interest can sometimes end up costing you more than the taxes you would have originally owed.

Reason #4 You will be unable to claim benefits such as exclusions and credits

There are several perks to being compliant and filing your tax returns. If you meet certain requirement you could claim the Child Tax Credit (CTC), the Additional Child Tax Credit (ACTC), the Other Dependent Credit (ODC) and the Earned Income Tax Credit (EITC). These credits are refundable, which means the government will pay you, but you have to file first to claim these!

The CTC can offset any taxes owed with a maximum of $2,000 per child who is under the age of 17. The ACTC can be claimed if the CTC cannot be fully utilized or if you don’t owe any taxes. You can receive up to $1,400 per child. If you have children that don’t qualify for the CTC, you could claim the ODC and receive a maximum amount of $500 for each child.

The EITC can be claimed if your income is below a certain threshold. This refundable credit ranges from $538 and $6,660 depending on your income, filing status and number of children.

Reason #5 You don’t want to miss your Stimulus Check

You probably don’t want to miss out on the Economic Stimulus Payment. However, if you want to receive the Stimulus Check you will need to file your tax returns for 2018 or 2019!

Reason #6 You will be unable to renew your US passport

If you owe more than $53,000 to the IRS and did not file, you could put your US passport at risk. The IRS can revoke your passport or even refuse to renew your US passport till you pay the outstanding taxes. It seems that the IRS notified a lot of expats with the request to settle their tax debt immediately or they risk having their passports revoked.

Reason #7 Streamlined procedures

If you’ve recently found out that you have been tax delinquent, you can become compliant without facing penalties using the Streamlined Foreign Offshore Procedures. US expats who meet the non-residency requirement can use the Streamlined Foreign Offshore Procedure. You meet the non-residency requirement if in any one or more of the most recent three years, you did not have a US abode and you were physically outside the United States for at least 330 full days.

To apply to the Streamlined Foreign Offshore Procedures, you need to file Form 14653. This form certifies that your tax delinquency has been non-willful, that any late tax returns are filed and paid and that all required FBARs are filed.

Reason #8 It’s now so easy with Expatfile

Every expat should now file their US taxes as it is just so simple now with Expatfile, the world’s first intuitive tax software, designed specifically for US expats like you!

Just answer our easy-to-understand questionnaire and based on your specific situation our algorithm will maximize the expat tax breaks most favorable to you and instantly create your tax forms for your review. Once satisfied, you just e-file your return through our IRS certified e-filing connection and you’re done! We had client who were finished in as quick as 10 minutes. Smart. Simple. Be stress-free in no time!

Expatfile offers their software and e-filing feature for a flat fee of $79. You can try it for free as you are paying at the end of our questionnaire and only when satisfied.

Check out our pricing page to see whether Expatfile currently supports your tax forms. If you just want to start with your US taxes, please click the button below.