If you’re a US citizen living abroad, you may be wondering how your taxes will be impacted. The answer is, unfortunately, quite complex. In this article, we’ll provide an overview of US taxation of US citizens living abroad, so you can be better prepared come tax time.

Firstly, it’s important to note that as a US citizen, you are required to file taxes with the US government regardless of where you live. However, the US has tax treaties with many countries around the world which can help you avoid double taxation.

The first thing to consider is whether you qualify for the Foreign Earned Income Exclusion (FEIE). This allows you to exclude up to $108,700 (in 2021) of your foreign earned income from US taxes. To qualify for the FEIE, you must meet certain requirements, including the Physical Presence Test or the Bona Fide Residence Test.

If you have investments, such as rental properties or stocks, you may still owe taxes on these to the US government. Additionally, if you have a foreign bank account with over $10,000, you must report it to the US government on the FBAR (Foreign Bank Account Report).

It’s important to keep in mind that even if you don’t owe any taxes to the US government, you are still required to file a tax return. Failure to file can result in penalties and interest charges.

Another important consideration is the Foreign Tax Credit (FTC). This allows you to offset US taxes owed on foreign income with taxes paid to a foreign government. This can help you avoid double taxation.

It’s also worth noting that US citizens living abroad are required to report any foreign assets over certain thresholds on the FATCA (Foreign Account Tax Compliance Act) form. This includes bank accounts, investments, and other financial assets.

In conclusion, US taxation of US citizens living abroad is complex and requires careful consideration. To ensure you’re in compliance with all the rules and regulations, it’s recommended to seek the assistance of a qualified tax professional.

At JTT Accounting, our team of experienced tax accountants can help you navigate the complexities of US taxation as a US citizen living abroad (in Canada). Contact us today to schedule a consultation and ensure you’re on the right track when it comes to your taxes.