Because of tax treaties, many US citizens moving abroad often think that they don’t need to file US taxes. However, this is not the case. On the contrary, tax treaties do not prevent US citizens abroad from filing US taxes. They just contain measures to help protect you from double taxation.
In other words, all US citizens, whether they live on American soil or abroad, are required to file US taxes. Tax treaties will not prevent you from filling out your US taxes, no matter where you live. So, it’s important to file your US taxes, even when you are living abroad.
Do I Have to File US Taxes While Living Abroad?
Whenever you are living abroad but are still a US citizen, you must file US taxes. In this case, you will file your taxes as a US expat, which is a US citizen who is temporarily living in another country, most often for professional reasons.
If you are a US citizen and are paying income taxes in another country too, you should be able to claim certain US credits or exclusions to avoid double taxation. In other words, you aren’t going to be doubly taxed by two separate countries for the same income, as long as you file your US taxes and claim the relevant credits or exclusions.
How Do Tax Treaties Help?
Since you still have to file US taxes as a US citizen living abroad, you might be confused as to how tax treaties actually help. Although tax treaties do not prevent citizens from paying taxes to their own country, it does ensure that citizens living abroad are not doubly taxed on the same income.
What this means is that tax treaties set out that you can claim credits against income taxes paid in the other country. Let’s take an example.
If you are a US citizen who lives in Italy temporarily for work, tax treaties ensure that if you pay Italian income taxes, you can claim US tax credits to reduce your US tax bill by the amount of Italian income tax you’ve paid while you are living in Italy as an expat.
How Can I Pay My Taxes as an Expat?
One of the best ways to pay your taxes as an expat is to hire an expat tax professional. They will help you to file your US taxes, even when you are living abroad in another country. The best expat tax services allow you to speak with an expat tax CPA before you file.
In conclusion, tax treaties do not prevent US citizens abroad from filing US taxes. On the contrary, all US citizens, including those who live abroad, need to file US taxes.
Luckily though, as long as you file, tax treaties stipulate that you are not going to be doubly taxed on the same income.