Expats Have to Consider Income Earned Offshore and Are Required to File IRS Tax Returns Regardless of Whether US Income Tax is Owed

December 10, 2015

There has been some confusion over the years as to whether or not US expats are required to file IRS tax returns. The answer is simply: yes, they do. Even if there is no taxable income. There are several issues here, but the simplest reason is the Statute of Limitations. If you don’t file a return there is no statute of limitations. This allows the IRS to literally go back as far as they wish, and if you didn’t file a return they can assess whatever numbers they wish to create, and now you are on the defensive trying to document the fact that you owe no taxes, while the IRS is proceeding with tax collections, liens and levies. Don’t open a door, and if you have missed a year or two it is time to close that door.

There is an exemption called the “Foreign Earned Income Exclusion” but this doesn’t mean you don’t have to file if you are below the present exemption rate (for 2014 it’s just above $99,000). It means you file a return, and then the process allows deductions that affect your bottom line adjusted gross income (and resulting tax burden). If you owe zero, great. You still are required to file the return, and you should do so for your own protection. If you pay income tax to the locality or foreign sovereignty where you are employed there are ways to offset that against US tax liability. You still need to file a US tax return. If you are a US expat with tax questions we invite you to call us at 866-631-3470 for a free consultation.


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