Tax Samaritan's Guide for US Expats: Tax Filing 101

If you’re an American citizen – regardless if you’re currently residing in London or San Francisco, California – you have a tax obligation to the United States government. 

You may wonder why American citizens pay taxes on their income earned abroad. This is because U.S. taxes are based on citizenship and not on the country of residence. That means it doesn’t matter where you live and call home – if you’re a U.S. citizen, you have to pay taxes to the federal government.

Even if you’re being paid by a foreign employer overseas, your tax filing requirements are the same with Americans working inside of the country. Aside from submitting federal income tax documents, some U.S. citizens residing abroad are also required to file state tax returns. Taxable foreign-earned income includes wages, interest, dividends, and rental income. 

If you’re an American expat and have never filed a tax return, there’s no need to worry. The Internal Revenue Service (IRS) has put in place a streamlined compliance procedure to safeguard those who truly did not know they had to file. 

The following infographic presents the concepts of exclusions, deductions, and credits, which are measures you can use to lessen your taxes as an American expat. It also includes the processes prescribed by the IRS in resorting to these tax reduction methods.

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