As an American citizen living overseas, you should be aware that the US government requires you to pay taxes. You’ll find that it is a process that’s rather easy if you do not know how. Filing is definitely a much better choice to avoid IRS issues.
Most people think that by working overseas, they are spared from filing and paying their taxes. However, this is false. No matter where you are living, you are obliged to file your tax returns as an American citizen to steer clear of IRS problems.
When residing in a foreign country, citizens and residents of the United States of America can use 2 types of tax forms. These are the the IRS Form 2555-EZ and Form 2555 (Foreign Earned Income).
What applies are similar general rules. Your tax return needs to be filed at the 15th of April each year, and an automatic extension is given if you need more time. In fact, you will be granted an automatic 2-month extension, providing you more time to pay the correct tax debts due and file the right forms. You must attach an official statement to confirm that you qualify for this two-month extension to be able to use it.
Among the issues that many people who have recently relocated to another country is that they didn’t take all of their tax information with them, or they relocated before they could get all of their W-2 forms from their employers and they were actually sent to the old address in the United States. The honest and hard truth is that you will be liable for obtaining those documents. It has to be done, regardless if that requires getting your company to send a new copy or getting a good friend to find your mail. Another option is getting the official copies sent via the regular mail while electronic copies are sent to you through email. This will let you prevent an IRS issue and complete your tax returns on time.
In situations where you are an American citizen residing abroad but your spouse is not an American citizen, you do have a few choices with regards to how you must file your tax return. Filing as Married Filing Separately is one option. This means that only the income that you earned for that year is what you should declare. However, if you also have children and you are the provider of more than half of each child’s support, then you can qualify under the status of Head of Household. Lastly, you can elect to identify your spouse as a resident alient as a third option. This would be done for tax reasons, so you would actually be filing as Married Filing Jointly.
When filing taxes from overseas, it is recommended to consult a tax preparer. This is the surefire way to avoid IRS issues, taking into account the many aspects involved.