FAQ
This is NOT tax or financial advice. Any information found on this website is purely based on our own experience and research, therefore we are NOT liable for any mistakes or steps you take in connection to your tax obligations.
Q: I am a US citizen living abroad. Do I need to file a US tax return?
A: Most likely, YES. US is the only country in the world that effectively enforces Citizenship Based Taxation. All US citizens are subject to US income tax on their worldwide income, regardless of where they reside. US citizens residing abroad are subject to the same income tax filing requirements that apply to US citizens living in the United States. There are exceptions(read below).
Source: IRS
Q: I have been living abroad for the past 20 years and have no US income/property/bank account. Do I still have to file?
A: Most likely, YES. It does not matter if you have any relations to the United States. As long as you hold US citizenship, you are required to file and report your worldwide income (not only US sourced income).
Q: I have low/no income. Do I have to file?
A: It depends on how low your income is and if you have any special circumstances. Find MINIMUM FILING REQUIREMENTS here or consult with Interactive Tax Assistant here. If you are employed by a Croatian employer, your paycheck reflects NET(after tax) income, which is lower than your GROSS (before tax) income. When filing a US tax return, you have to report your worldwide GROSS (before tax) income. You might have to request an itemized anual GROSS income report from your employer since it is not a common practice in Croatia.
Source: IRS Publication 501 & HRBLOCK
Q: I am paid in local currency. How do I file US tax return?
A: You must express the amounts you report on your U.S. tax return in U.S. dollars. Therefore, you must translate foreign currency into U.S. dollars if you receive income or pay expenses in a foreign currency. In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item.
Source: IRS & Currency Exchange Rates
Q: Do I need to report my foreign bank account to the IRS?
A: Most likely, YES. A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report: a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported. Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a foreign financial account for FBAR purposes. Read about penalties for failing to do so here.
Source: IRS