When you’re a US Citizen or Green Card Holder living abroad, you’re required to file US taxes to the IRS every year if you reach the income filing threshold. However, filing US taxes doesn’t always mean that you have to pay taxes. In most cases, you need to report your information.

How does that happen? When you pay taxes in your adopted country, you probably won’t owe any US taxes because of certain expat tax benefits.

For example, you could use the Foreign Tax credits against your US income. Another option is to use Foreign Earned Income Exclusion to exclude your foreign wages from US taxation. 

However, there are some instances why you would pay US taxes to the IRS:

  • Have US-sourced income, which is over the standard deduction, thus subject to US income tax
  • Have US-sourced income with no federal taxes withheld
  • Do not pay enough foreign income tax on unearned foreign income, which is still subject to US taxation (e.g., capital gains on foreign property sold)
  • You’re subject to self-employment tax, and there’s no Totalization Agreement in the country you’re in.

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