Taxes are the main source of revenue for many governments in the world including the US government. It is required of you, therefore, as a business or citizen of the US government to ensure that you pay your taxes and file your returns in time and also in the accurate amount. There are penalties for people who fail to follow the tax laws by evading the law, filing the returns late and so on. If you don’t know what is required of you, you fall on the wrong side of the law which is not good and this can be avoided by equipping yourself with the appropriate knowledge about the tax law. Many governments have taken the step of ensuring that there is essential info for you and such information can be gotten from an online homepage belonging to your government and therefore you will discover more about the tax laws.
Living in another country doesn’t mean that you are not responsible to your government when it comes to taxes. Being an expat can be a very challenging issue especially when it comes to the taxes because the process is complicated. As an expat, there are important things to be aware of as discussed below.
Overtime people have come up with different myths and conceptions when it comes to taxes as expats. When you move abroad, you will have to pay taxes in the country living in and also your native country and that is why many people believe that the obligation should not be on them when they move abroad. This however is not the case because according to the American tax laws, you’re still obligated to pay the taxes to your mother nation. Many people also believe that because they live abroad they don’t have to file their returns. Failure to file the returns is dangerous on your side because it can lead to double taxation. As an expat, it is also crucial to know that you are taxed both on your savings and also your income. Also, if you have more than $10,000 in your foreign financial account, you are expected to file the report with the FBAR which is the sum of the savings, investments, pension plan to name but a few.
With many issues surrounding taxes for people living abroad, it is important to understand all about taxes for expats. One of the important facts to know when you live in a foreign country is that for you to use the foreign earned income exclusions, you have to satisfy the requirements which can be obtained by either the physical presence test or Bona Fida Residence Test. Filing the return is not hard nowadays with online sites because you can file an online tax return from abroad and use the different electronic money for payment.