If you're reading this, something about your tax situation has you worried. That's fair \u2014 the IRS is intimidating until you know how the rules actually work. I'm Darrin Mish, a Tampa tax attorney. I've handled cases like yours for 32 years. Let me walk you through it.<\/p>\n
The US tax system<\/a> is unlike other countries \u2013 the government taxes you based on your citizenship, not your country of residence. So as long as you are a US citizen, it does not matter where you are living and working, you need to declare your taxable income to the IRS every year. Tax season has just ended last April but for those who have foreign income sources, you need to comply with some additional requirements.<\/p>\n When working or drawing some income from another country, you will have to fill up the relevant tax forms<\/a> according to your host country\u2019s tax laws. After doing so, you also need to submit your tax returns to the IRS. Most of the time, all you need to do is transfer all the figures you entered into the tax form of your host country into the IRS<\/a> forms and you\u2019re good to go. You will be entitled to relevant tax credits for taxes paid to your host country that normally offsets your tax liability to the US government, either in whole or in part. So you only have to pay a small amount of income tax or none at all and be entitled to a refund. However, the requirement to submit your tax returns is mandatory, even if you do not have to pay any taxes to Uncle Sam.<\/p>\n But do not forget to file the Foreign Bank and Financial Account Report (FBAR) with the US Department of the Treasury in which you disclose all investment and bank accounts and their maximum balance in the calendar year. You have until June 30 to submit your FBAR this year and since the deadline is on a Saturday, you actually have till June 29.<\/p>\n In addition now US citizens living abroad need to file Form 8938 Statement of Specified Foreign Financial Assets to declare their “specified foreign assets”. Starting January 1, 2014, all foreign financial institutions will be asking you if you are a US citizen or green card holder if you open an account with them. Under the Foreign Account Tax Compliance Act (FATCA) these financial institutions will be required to inform the IRS if they do business with any US citizen. If you do not declare your US citizenship, you will be reported to the IRS and 30% tax can be withheld on any of your income from US sources.<\/p>\n