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Are you a US citizen living in UAE? You might think you have escaped the hassles and headaches of US tax filing. Then, in that case, your thinking is wrong as you are still obligated to file US tax returns meant for Non-residents living in UAE.

Here we will discuss what you need to know about your expat taxes as a US citizen living abroad.

Do US Citizens Living Abroad in United Arab Emirates Have to Pay Expat Taxes?

Yes, American taxpayers living abroad must file a US federal tax return and pay their US expat taxes on their income earned globally, irrespective of where they reside. In other words, they are subject to the same norms regarding income taxation as people living in America.

Why Do Americans Living Abroad in UAE Have to Pay Their US Taxes?

The United States of America has a unique and rare approach to tax individual income. Most countries use one of the two tax systems- territorial-based and residential-based taxation.

The United States of America is one of only two countries (Another country is Eritrea) that impose citizenship-based taxation. According to this system, US expats staying in UAE are taxed on their global income even when they reside there.

What is A Federal Tax for Non-Residents Who Work Overseas?

In the US tax system, American taxpayers living abroad in UAE must file a US federal tax return if their total income for the year, regardless of where it was earned, exceeds certain prescribed minimum thresholds by the IRS.

Even if you have not lived in America for the whole year and have earned your entire income in UAE, you must file a tax return. If you are skeptical about how to file the US expat taxes, consult the best US expat services in UAE.

How Can Expats Avoid Paying Their American Tax for US Residents Living Abroad? Consult an Excellent American Expat Tax Service in UAE!

Based on the current tax laws, the only way to avoid a US expat tax return is to renounce your American citizenship. This is not an easy decision that should not be taken lightly. Before considering this option, ensure you have all the inputs about all the requirements and implications of citizenship renunciation.

But as long as you are a United States’ citizen or a green card holder, IRS requires you to file your US expat tax return and pay your associated expat taxes while living in UAE. However, it is possible to avoid double taxation and minimize the expat taxes using special tax credits, deductions, and exclusions available to US citizens living abroad.

How to Avoid Double Taxation of Income Earned By Americans in UAE?

One main concern faced by US expats to the American expat tax services is that there can be chances of double taxation on their income earned both by UAE and the US. This scenario is relevant for a US citizen living in UAE; who may qualify as a resident in other UAE’s local tax systems

To help avoid this negative consequence, the American tax system has a system called Foreign Earned Income Exclusion. Under this, US citizens living abroad are permitted to exclude $112,000 of their income earned in UAE from their US tax obligations for American expats.

Another provision to do away with the double taxation is the Foreign Tax Credit. This gives US expats a dollar-for-dollar tax credit for the taxes they have paid or owe to the foreign government.

What Happens If US Expats Living in UAE Do Not File Their Taxes While Living Abroad?

The American Citizens who do not file the American expat taxes while living in UAE have to pay penalties, interest costs, or even criminal charges. The IRS also levies penalties for both late filing and payments.

How to File A US Income Tax Return Online?

The professional Tax help for expats in UAE works hard to ensure your US tax filing process is straightforward and hassle-free as possible. US citizens living in UAE can file their own expat tax returns online. That means the expat tax helps process all your tax documents online and e-filing your US expat tax return.

When it comes to filing your American expat taxes, there are more items you will need to report in addition to your earned income. The IRS requires that you disclose your foreign accounts and assets that cross a specific value. Even the retirement contributions in the foreign retirement accounts of the US expats residing in UAE might be taxable though they might seem tax-deferred.

Wrap up

When it comes to filing US taxes while living abroad, you must be aware of everything about the expat taxes and the things you are required to report in your filing. Take the help of professional US expat taxes services in UAE to have a hassle-free filing of your US expat tax returns.

USA Expat Taxes has a team of experts specializing in Expat Taxes. In addition to our professional credentials, we provide our clients personal communication, and strive to keep the expat tax return filing as easy as possible.