Things to Be Aware of On Taxes as an Expat
The government requires resources to run the state and for many governments, the main source of revenue is the taxes they levy from people and businesses. 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. If you are found to be on the wrong side of the law, when it comes to paying taxes, such as tax evasion, resistant to pay, filing the returns late and so on, you are punishable by the law. To be on the wrong side of the law is very dangerous and that is why it is important that you understand what is required of you. If you determine and to learn more about the law, many governments have an online site that is primarily meant to help you in filing your taxes and also help you learn different things about the tax law.
Living in another country doesn’t mean that you have escaped the liability of paying the taxes because you are still responsible to your government when it comes to paying 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.
There are myths and misconceptions about taxes for 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. The America tax laws don’t recognize that and that is why is a citizen living in another country you still of tax obligations to fulfill. 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. Additionally, it is important to note that you can also be taxed on your savings and also the 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.
As an expat, therefore, it is important that you understand fully what is required of you when it comes to taxes. For example, if you want to use the foreign and income exclusion, it is important that you satisfy the requirements that are there for example, you can prove that by a physical presence test or Bona Fida residence test. You can fill an online tax return from abroad and you are allowed to make payment using different forms using electronic money such as credit and debit card.