3 Things to Should Know About Expat Taxes for 2022

Being an expat is thrilling, but different countries have different rules and there are U.S. taxes to consider. The latter may vary depending on multiple factors, e.g. US taxes for expats in Canada may conform to different rules than the taxes for some other country.

However, no matter where in the wide world you are, you should be able to make calculations. Here are the 3 most important things to consider.

1. State Taxes: Do You Have to Pay Them?

U.S. state taxes are applied to all U.S. citizens no matter where they are unless: You’re not a resident of the state for tax purposes

You’re a resident if:

• You lived in the state for any duration during the tax year

• You have a permanent place of residence in the state

• Your immediate family lives in the state

• Your keep your voting rights, ID card, or driver’s license in the state

Income, pension and retirement income, and various government benefits earned in the state are taxable in that state.

The states that don’t levy state income taxes are:

• Alaska

• Florida

• Nevada

• South Dakota

• Texas

• Washington State

• Wyoming

New Hampshire and Tennessee only apply income tax on dividend and interest income.

California, South Carolina, New Mexico and Virginia have different rules. People from these states have to pay the taxes while living abroad even if they didn’t live in the state during the year if:

• They own a property

• They own a bank or investments account

• They hold an ID card, a driving license and/or a voter registration

• They have a mailing address in the state (including relatives)

• They have dependents in the state

2. Do You Qualify for the Streamlined Tax Filing Procedures?

The Streamlined Filing Procedures (SFP) are intended for American expats and comprise a number of tax returns.

To qualify for the program you must:

• Demonstrate that the reason for not filing taxes in the past was because you didn’t know you were required to.

• Prove that you have lived outside of the U.S. for at least 330 full days during one or more of the three most recent tax years.

• Prove that you haven’t had an abode in the U.S. for one or more of the three most recent tax years.

• Produce and mail off a signed statement (Form 14653) certifying the above-mentioned.

3. Preventing Double Taxation

Lastly, you can prevent being taxed on foreign-earned income. There are 3 ways to go about that:

The Foreign Tax Credit (FTC)

The FTC allows expats to claim a dollar-for-dollar credit on foreign income taxes.

The Foreign Earned Income Exclusion (FEIE)

The FEIE allows expats to exclude up to $112,000 of the foreign earned income.

Tax Treaties

The U.S. has tax treaties with more than 70 countries. Familiarize yourself with the specific agreement before setting off.

Angela Ash is an expert content writer, editor and marketer, who focuses on topics related to remote work, freelancing, entrepreneurship and more.