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Are you a US citizen or green card holder living abroad?

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Moodys Gartner Tax Law
16 November 2018 — 2 minute read

Promoted by Moodys Gartner Tax Law.

Five things you need to know:

The US is the only major country in the world that taxes based on citizenship and residency.

If you’re a US citizen or green card holder living abroad, you are subject to US tax on worldwide income during life and (for citizens) worldwide assets at death. Double-taxation can be a costly burden for many US expats, occurring when there are mismatches between US taxes and taxes paid in the country of residence.

Even if you owe no tax, you are required to file US taxes every year.

Unless you have almost no income, as a US citizen or green card holder living outside the US you are required to file annually with the IRS along with your regular tax filings in your country of residence. The filing deadline for US expats is automatically extended by two months from April 15 to June 15, but the requirement to file applies even if you have never been to the US. If you are a US expat who hasn’t recently filed US taxes, you must back-file to become compliant and should do so as soon as possible. There are special IRS procedures for back-filing that need to be followed.

US citizenship is passed down to your children.

Even if your children were born in another country, they may still be considered US citizens and should be aware that US tax filing obligations will eventually apply to them. The requirement to file US taxes doesn’t tend to impact most children since they have little income and few assets, but once they reach working age remaining compliant with the IRS is an absolute must. They also need US passports to legally travel to or from the US.

Social security benefits are taxable by the IRS

Social security, superannuation, and retirement benefits (whether paid from your country of residence or by the US government) are treated as income by the IRS. Depending on your non-US citizenship and your country of residence and its tax treaty with the US, it may be possible to reduce or eliminate US tax on these payments. However, such treatment is not automatic.

There are solutions to these problems, but it’s essential they’re implemented carefully and correctly.

Fortunately, there are avenues that US citizens and green card holders abroad can take to reduce the tax they owe or eliminate their tax filing requirements entirely. The IRS offers several programs that allow delinquent filers to get caught up with reduced or eliminated penalties. Another option, which is often the most effective for US expats not wishing to move back to the US, is renouncing  citizenship or terminating a green card. Renunciation requires that US tax filings be up-to-date and can present some hurdles and dangers, including an “exit tax,” but a qualified expert on US tax and citizenship renunciation can guide you through the process.

For more information for US citizens and green card holders living abroad, visit


Are you a US citizen or green card holder living abroad?
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