Do I have to file?

Do I have to file a tax return? Even if I live overseas?

November 2015

 

The most common question we get from Americans living overseas is, “Do I have to file a tax return?” Generally speaking the answer is, “Yes.”

 

Look at the last page of your passport. It should say something like this: “U.S. Taxes  – All U.S. citizens working and residing abroad are required to file and report on their worldwide income.”

 

While it’s not exactly 100% true that *All* U.S. citizens abroad are required to file and report on their income, almost everyone working overseas is required to file.

 

What happens if you don’t file your tax return? As quoted from page 3 of IRS Publication 501:

“You may have to pay a penalty if you are required to file a return but fail to do so. If you willfully fail to file a return, you may be subject to criminal prosecution.”

 

So exactly what are the filing requirements? Let’s start with the fast and easy answer first, and then get a little more specific. Finally, I will explain a few situations in which you won’t have to file, but you’ll want to.

 

The short answer.

If you are single, or are married to a foreign spouse that doesn’t have a US passport or a green card, and earned MORE than $10,150 in 2014, you must file.

 

If you are single, or are married to a foreign spouse that doesn’t have a US passport or a green card, and earned LESS than $10,150 in 2014, you probably don’t have to file.

 

And if you earned more than $22,700 in 2014, then you must file regardless of your marital status.

 

Here is a more detailed explanation.

Whether or not you have to file depends mostly on your filing status, your age, and your income.

In general, you must file a tax return if your income is greater than your standard deduction plus one exemption. Age matters because if you are 65 years or older, you get a higher standard deduction.

 

If you are an expat, be careful. It is a common mistake for people to think that they don’t have to include money they have earned in a foreign country when calculating their total income for US federal tax purposes. You must include all income earned worldwide, including earnings from international waters such as from a cruise ship or offshore oil rig. In fact, even if you work on the International Space Station, you have to report that income, because even money earned while working in outer-space must be reported!

 

You can use table 1 below, which was copied directly from page 2 of the IRS’s 2014 Publication 501, to determine if you have to file a return or not.

 

Also, if you bought health insurance through the federal or state Health Insurance Marketplace during 2014, you must file a return. There are a number of other situations that might require you to file a return. Please contact us with your questions.

 

Situations in which you don’t have to file, but should.

Even though you aren’t required to file doesn’t mean that you shouldn’t. If you worked at least part of the year in the US and had federal taxes withheld from your pay, you can file for a refund. Also, there are a number of tax credits that you may be eligible for, such as educational credits, first time home buyer’s credits if you have just moved back to the US, and credits if you have children. In additional, if your spouse is going to apply for a green card, you need to have all your tax returns filed. If you plan on returning to the US, not having all your tax returns filed may make it virtually impossible to get a mortgage or to get a number of different types of jobs.

 

Please note that this is intended as a general overview. As with all the tax laws, there are many different rules, exceptions to those rules, and exceptions to those exceptions. Please contact either Allen or Katie through this website to discuss your filing requirements in more detail based on your specific situation. We’re always glad to help!

 

2014 Filing Requirement Chart for Most Taxpayers

 

Filing Status Age Gross Income
Single Under 65

65 or older

$10,150

$11,700

Head of Household Under 65

65 or older

13,050

14,600

Married Filing Jointly Under 65 (both spouses)

65 or older (one spouse)

65 or older (both spouses)

$20,300

$21,500

$22,700

 

Married Filing Separately  

Any age

$3,950
Widow(er) with Dependent Child Under 65

65 or older

$16,350

$17,550

 

(Updates for 2015 gross income limits will be available soon.)

 

References:  

 

A transcript of the IRS video posted on Youtube may be found on the IRS’s website:

https://www.irs.gov/uac/Newsroom/Do-I-Have-to-File-a-Tax-Return-(ASL)-YouTube-video-text-script

 

Publication 501, exemptions, standard deductions, and filing information

https://www.irs.gov/pub/irs-pdf/p501.pdf

 

IRS’s Interactive Tax Assistant

https://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F

 

IRS’s website article “Do I have to file a tax return?”

https://www.irs.gov/uac/Do-I-have-to-File-a-Tax-Return%3F