# US taxes: Do I have to file?



## Bevdeforges

The US is somewhat unique in the world in that it expects its citizens to file tax returns based on their worldwide income, no matter where in the world they are living. The thresholds applicable for 2011 returns are based on your filing status and are included in the following chart: http://www.irs.gov/app/vita/content/globalmedia/who_must_file_charts_a_b_4012.pdf

Gross income is everything you earned, before applying any deductions and before taking the Foreign Earned Income Exclusion into account. (The FEIE is the exclusion of earned income available to US taxpayers resident abroad. You must file in order to claim it.) It is definitely NOT true that “if you make less than $91,500 a year you don’t have to file.” You probably won’t owe any US taxes (at least not on your salary income), but you do have to file.

If you are working while living overseas, you’re more than likely going to have to file, even if you’re paying taxes and social insurances to your local government. But there are tax treaties in place with most countries that should mitigate or eliminate any double taxation.


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## TundraGreen

Bevdeforges said:


> The US is somewhat unique in the world in that it expects its citizens to file tax returns based on their worldwide income, no matter where in the world they are living. ...


Is it really? I don't know the law in many countries, but I looked into it for Mexico. They have the same requirement; you are supposed to report worldwide income.


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## xabiaxica

TundraGreen said:


> Is it really? I don't know the law in many countries, but I looked into it for Mexico. They have the same requirement; you are supposed to report worldwide income.


even if you have no assets in Mexico & no longer live there?


UK citizens have to report global income & assets if we live there or have any assets there - but when we leave, if we no longer have any financial ties or assets there - then we no longer have to file a tax return there


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## Bevdeforges

TundraGreen said:


> Is it really? I don't know the law in many countries, but I looked into it for Mexico. They have the same requirement; you are supposed to report worldwide income.


France also requires you to report worldwide income - but only if you're resident in France. If you're a US citizen, you must report your worldwide income, no matter where you are resident.

Most countries require tax filings only from residents (citizens or not) or those with income derived from the country (on a non-resident basis).
Cheers,
Bev


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## TundraGreen

xabiachica said:


> even if you have no assets in Mexico & no longer live there?
> 
> UK citizens have to report global income & assets if we live there or have any assets there - but when we leave, if we no longer have any financial ties or assets there - then we no longer have to file a tax return there


I am not a tax expert, so take this with a grain of salt...
If you hold Mexican citizenship, but are a non-resident, you are only taxed on Mexican income.
http://www.solutionsabroad.com/en/b...ry/taxes-in-mexico-individual-income-tax.html

So, I guess what I was missing, is that the US is unique? in requiring a tax filing even if you don't live in the US.


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## xabiaxica

TundraGreen said:


> I am not a tax expert, so take this with a grain of salt...
> If you hold Mexican citizenship, but are a non-resident, you are only taxed on Mexican income.
> Mexico Taxes in Mexico: Individual Income Tax


neither am I ...........but I'm learning fast!

it sounds the same as the UK - if you don't live there but have assets/income there then you are taxed on those - if you have none, then you only have to pay tax where you _*live*_

from what I've learned about the US tax system you have to declare everything from everywhere..............even if you no longer live in the US & have no assets/income there....you still have to file a tax return there & potentially pay tax there


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## Ladyhawk

xabiachica said:


> neither am I ...........but I'm learning fast!
> 
> it sounds the same as the UK - if you don't live there but have assets/income there then you are taxed on those - if you have none, then you only have to pay tax where you _*live*_
> 
> from what I've learned about the US tax system you have to declare everything from everywhere..............even if you no longer live in the US & have no assets/income there....you still have to file a tax return there & potentially pay tax there


Yes, that is what is called double taxation. The Canada-US tax treaty prevents dual taxation up to a certain income, so most US expats in canada will not owe taxes, but they still have to file tax returns with the IRS every year, and send other paperwork to the Treasury department annually.


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## Bevdeforges

Ladyhawk said:


> Yes, that is what is called double taxation. The Canada-US tax treaty prevents dual taxation up to a certain income, so most US expats in canada will not owe taxes, but they still have to file tax returns with the IRS every year, and send other paperwork to the Treasury department annually.


It's not double taxation - but the US is pretty much unique in requiring tax filings from all citizens, regardless of their residence.
Cheers,
Bev


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## USinCanada

Thanks for the info, I have a lot of reading to do. I haven't filed a US return in at least 5 years (since I came to Canada). Currently a PR in Canada for almost 4, looks like I have a lot of work to do. 

I am on a very modest income though, so, hopefully I won't owe anything.


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## byline

USinCanada said:


> Thanks for the info, I have a lot of reading to do. I haven't filed a US return in at least 5 years (since I came to Canada). Currently a PR in Canada for almost 4, looks like I have a lot of work to do.
> 
> I am on a very modest income though, so, hopefully I won't owe anything.


In all likelihood, you won't. I've been a permanent resident in Canada since 1997 and have very little earned income. I didn't even start working till 2004. Where my situation becomes more complicated is because of spousal RRSPs my husband set up for me. Those must also be reported, along with tax-free savings accounts (which, while tax-free in Canada, are not tax-free in the States). There's a separate Form 3520A and 3520 that I had to fill out this year for the TFSA.


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## USinCanada

byline said:


> In all likelihood, you won't. I've been a permanent resident in Canada since 1997 and have very little earned income. I didn't even start working till 2004. Where my situation becomes more complicated is because of spousal RRSPs my husband set up for me. Those must also be reported, along with tax-free savings accounts (which, while tax-free in Canada, are not tax-free in the States). There's a separate Form 3520A and 3520 that I had to fill out this year for the TFSA.


I don't think we have a TFSA. My fiance does not have any RRSP's so I'm good there too. 

I'm not sure that I technically have to file for some years. I honestly do not know when the last time a US tax return was filed in my name. It's just something that was always taken care of by family. My last couple of years in the US I lived with my parents and did not work. My first year and a half in Canada, I did not work due to the immigration process we chose to take. So, I'm not sure I'm even required to file for those years since technically I had no income. 

I have been working for the past 3 1/2 years though so I know that I unequivocally have to file for those years.


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## Bevdeforges

Download Publication 17 from the IRS website. In the front of that publication there is a section on "Do I have to file a return" or something similar and that lists the income thresholds for filing a return based on your filing status (i.e. married, single, head of household, etc.). http://www.irs.gov/pub/irs-pdf/p17.pdf
Cheers,
Bev


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## Peg

On modest self-employment earnings in Canada I had to pay 14% self-employment tax plus penalties which resulted in 36% of the earnings owed to the IRS.

If I had made more then I would have contributed to Canada Pension Plan and then would not have to pay the US Self-Employment Tax. Unfortunately it was simply a hobby that made a bit of money.

I also paid Canadian tax on those earnings so in my case it was double taxation.

TundraGreen - I have never worked in the US and all of my income is from Canada as I moved to Canada as a child yet the US still require that I file annual tax returns with the IRS. That is definitely not typical of other countries.


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## USinCanada

Peg said:


> On modest self-employment earnings in Canada I had to pay 14% self-employment tax plus penalties which resulted in 36% of the earnings owed to the IRS.
> 
> If I had made more then I would have contributed to Canada Pension Plan and then would not have to pay the US Self-Employment Tax. Unfortunately it was simply a hobby that made a bit of money.
> 
> I also paid Canadian tax on those earnings so in my case it was double taxation.
> 
> TundraGreen - I have never worked in the US and all of my income is from Canada as I moved to Canada as a child yet the US still require that I file annual tax returns with the IRS. That is definitely not typical of other countries.


I am not self employed and I'm paying into the CPP through my employer, so, hopefully that keeps me in the clear. You mentioned having to pay penalties...did they find you had not paid or did you voluntarily file and then get charged penalties? Just curious, you don't have to share that info if you don't want too. 

Cheers. 




Bevdeforges said:


> Download Publication 17 from the IRS website. In the front of that publication there is a section on "Do I have to file a return" or something similar and that lists the income thresholds for filing a return based on your filing status (i.e. married, single, head of household, etc.).
> Cheers,
> Bev


Thanks for the reply Bev, in this, and the other thread. 

It's been a busy week, I'm hoping to download pub 17 over the weekend and give it a look. If I do not exceed those thresholds is it safe to not file for those years? 

I'm curious since it's been around 6 years since I've filed...let's say I do not exceed the threshold in Pub 17 for the first 3 years and I only file for these last 3....what is to stop the IRS from inquiring about the 3 missing years? :confused2:

Thanks and cheers.


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## Peg

USinCanada said:


> I am not self employed and I'm paying into the CPP through my employer, so, hopefully that keeps me in the clear. You mentioned having to pay penalties...did they find you had not paid or did you voluntarily file and then get charged penalties? Just curious, you don't have to share that info if you don't want too.


I had 5 types of income over 5 years on my US returns: earned income, RRSP withdrawal, employment insurance income, self-employment income and phantom RESP capital gains. The only time I owed anything to the IRS was on the self-employment income because it could only be offset by CPP paid on those earnings which I did not have because the amount was too low. 

Yes, I voluntarily filed and declared income amounts exactly as I had on my Canadian return. I declared every penny that I made from my hobby which included cash payments. If I had been dishonest and not claimed the cash payments I would not have had to pay anything but that's not how I work.

A lawyer friend had told me that the approximately $100 owing each year in Self-employment tax might be considered 'de minimus' and ignored by the IRS. Ha! I also explained to the IRS that I was renouncing and would never claim the social security but they still charged me the 14% SE-Tax plus another approx 22% of my self-employment income as penalties - _failure-to-file _and _failure-to-pay _- plus interest. Perhaps now I will see if I can claim the social security when I am eligible 

Since they also gave me a refund for a different year the amount I owed was not much so it is easier and less stressful for me to pay it than to fight it. If it had been more it would have been worth fighting. I despise having to pay "failure-to-file" and "failure-to-pay" penalties for something I did not know about and voluntarily came forward and declared and susequently paid.

My friends and family in the US are embarassed at how we are being treated and have promised to help me fight should I be assessed FBAR penalties :boxing:


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## miramar2011

TundraGreen said:


> Is it really? I don't know the law in many countries, but I looked into it for Mexico. They have the same requirement; you are supposed to report worldwide income.


As a US citizen you must always file a tax return (until you die) wherever you live. Even retirees, who have only pension, and savings income must file and pay taxes.

My son is an IRS agent and he tells me of some new laws aimed at cracking down on expats, like requiring a certain IRS form every time you transfer more than $10,000 US at a time anywhere in the world.

We've lived in Portugal and they tax worldwide income too.

Good luck and check with an accountant that know US tax laws.

miramar


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## Bevdeforges

miramar2011 said:


> As a US citizen you must always file a tax return (until you die) wherever you live. Even retirees, who have only pension, and savings income must file and pay taxes.


File, yes - forever. Pay - not always. Depends on your sources of income and how they are taxed (or not) in your country of residence).



> My son is an IRS agent and he tells me of some new laws aimed at cracking down on expats, like requiring a certain IRS form every time you transfer more than $10,000 US at a time anywhere in the world.


Reporting all transfers of "financial instruments" of $10,000 or more has been going on for a LONG time now. Generally the bank will file the forms for you if you're transferring funds from the US overseas. Most foreign banks also have the same requirement, due to anti-money laundering regulations.

There is the obligation for US taxpayers to report each year all foreign (i.e. non-US) bank accounts they have (or have signature authority over).
Cheers,
Bev


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## Ladyhawk

*m*



Bevdeforges said:


> Reporting all transfers of "financial instruments" of $10,000 or more has been going on for a LONG time now. Generally the bank will file the forms for you if you're transferring funds from the US overseas. Most foreign banks also have the same requirement, due to anti-money laundering regulations.
> 
> There is the obligation for US taxpayers to report each year all foreign (i.e. non-US) bank accounts they have (or have signature authority over).
> Cheers,
> Bev


Do you mean that if I transfer, say, an investment account from a Canadian financial advisor to a bank investment account, and that account has more than $10,000 in it (in Canadian securities), or even just transfer cash of more than $10,000 from an investment account to a bank account, the financial advisor has to tell the IRS? Even though I also am obligated to report it? What if I have no US securities in that investment account?
Thanks,\

Bonnie


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## BBCWatcher

Individuals (U.S. citizens and green card holders) do not have per-transaction reporting requirements (with the possible exception of oddball cases like Cuba). U.S. citizens and green card holders have foreign financial account reporting requirements (if applicable): FBAR (Form TD F 90-22.1) and FATCA (Form 8938).

One slight modification: whether you are a U.S. expatriate or not, you do not have to file a U.S. tax return if you don't meet the income threshold. For example, if you are single and under age 65, you do not have to file if your total gross income was under $9,750 (tax year 2012). IRS Publication 501 lists all the thresholds. Please note that it is possible you might have to file a FBAR but not a tax return.


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## Bevdeforges

Ladyhawk said:


> Do you mean that if I transfer, say, an investment account from a Canadian financial advisor to a bank investment account, and that account has more than $10,000 in it (in Canadian securities), or even just transfer cash of more than $10,000 from an investment account to a bank account, the financial advisor has to tell the IRS? Even though I also am obligated to report it? What if I have no US securities in that investment account?
> Thanks,\
> 
> Bonnie


The reporting requirement only applies to transfers into or out of the US (or, for that matter, across any other international borders). The bank or financial institution has to report the transfer to the Treasury Department (presumably of both countries involved). It's not really a tax issue, it's a money laundering issue. But since the IRS is part of the Treasury Department, I suppose they might have access to the information at some point.

Where I am, in France, I believe the banks are obligated to report any transfer to or from a foreign source to the Banque de France.

But transfers within your country of residence shouldn't normally be reported anywhere outside the country itself.
Cheers,
Bev


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## Phil Hogan

BBCWatcher said:


> One slight modification: whether you are a U.S. expatriate or not, you do not have to file a U.S. tax return if you don't meet the income threshold. For example, if you are single and under age 65, you do not have to file if your total gross income was under $9,750 (tax year 2012). IRS Publication 501 lists all the thresholds. Please note that it is possible you might have to file a FBAR but not a tax return.


Really good point by BBCWatcher, this is something that is often missed by new US tax filers. 

Phil


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## BBCWatcher

It may still be a very good idea to file a U.S. tax return, notably if you qualify for refundable tax credits, but it's not a requirement if you fall below those gross worldwide income thresholds.


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## Touchline Dad

*Tax Question*



Bevdeforges said:


> The US is somewhat unique in the world in that it expects its citizens to file tax returns based on their worldwide income, no matter where in the world they are living. The thresholds applicable for 2011 returns are based on your filing status and are included in the following chart: http://www.irs.gov/app/vita/content/globalmedia/who_must_file_charts_a_b_4012.pdf
> 
> Gross income is everything you earned, before applying any deductions and before taking the Foreign Earned Income Exclusion into account. (The FEIE is the exclusion of earned income available to US taxpayers resident abroad. You must file in order to claim it.) It is definitely NOT true that “if you make less than $91,500 a year you don’t have to file.” You probably won’t owe any US taxes (at least not on your salary income), but you do have to file.
> 
> If you are working while living overseas, you’re more than likely going to have to file, even if you’re paying taxes and social insurances to your local government. But there are tax treaties in place with most countries that should mitigate or eliminate any double taxation.


Hi all. I am wondering if this chart is still accurate? The link says end of 2014 just looking 
for confirmation. Thanks-


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## Bevdeforges

Touchline Dad said:


> Hi all. I am wondering if this chart is still accurate? The link says end of 2014 just looking
> for confirmation. Thanks-


It looks like they are updating the link as they go. This comes from the IRS website, so it's about as authoritative as you can get. 
Cheers,
Bev


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## maz57

Just a clarification on determining if you exceed the income threshold for your filing status and must therefore file. What the IRS rules actually say is: (I paraphrase for brevity) "gross income is all income that is not (US) tax exempt". I take that to mean any income that is exempt from US taxation is not counted towards figuring your gross income for filing purposes.

One consequence of this is that for countries that have a totalisation agreement with the US (like Canada) all government pension income may only be taxable in the country of actual physical residence. Tax-free municipal bonds may be another example of income that gets a pass. (Others can chime in here, I don't know for sure.)

So conceivably a retiree might have considerable income and still not hit the filing threshold because a lot of it is exempt from US tax. A side bar to this sort of situation is that our mythical retiree would not have to file a Form 8938 if they didn't have to file a 1040 even though their specified foreign assets exceed the threshold for 8938. (Says so right in the instructions for 8938.) 

Doesn't eliminate the requirement to file an FBAR, however.


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## Bevdeforges

I agree with your take on this, maz57. One other "interesting" note is that it appears that foreign unemployment compensation is not considered reportable income, either. (Though for US residents, both state and federal unemployment compensation is both reportable and taxable.)

Works for me!
Cheers,
Bev


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## BBCWatcher

Do also note the self employment tax threshold which is quite low ($400 or even sometimes less).


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## Lacroze

I have asked this on another thread but after Bevdeforges kindly pointed this one out to me I thought I would ask here as well. Has anyone heard of or have used Taxes for Expats - taxesforexpats.com for filing US taxes? 

I stupidly have just found out about the requirement to file US taxes and FBAR, I am resident in France so if anyone could recommend the above or an accountant I could contact regarding this I would be most grateful.


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