Taxes For US Citizens Living UAE

Tax-free salaries are one of the main attractions for many expats to move to UAE. UAE has expatriate population is more than 7 million and is rising. Apart from internationally renowned as a center for finance and commerce in the Middle East the country is promoting itself as a tax haven is another feather in the cap for US expats.

As an expatriate American, you are subject to file US taxes, immaterial of where you live and this to some extent dilutes the low tax appeal of the UAE. Below is the guidance that helps you understand the tax responsibilities as an American expatriate in UAE.

If you are a citizen or green card holder of the United States, then you are obligated to file US federal returns and report your worldwide income every year. In addition to the regular income tax return, you are required to report all foreign financial accounts if the aggregate balance during the year at any given time was $10,000 or more. The financial accounts are reported on Form 114.

 The US is one of few governments, that tax the international income of its citizens and permanent residents, it does have certain provisions to help its citizens from double taxation including:

• The foreign earned income exclusionallows you to decrease your taxable income on US expat taxes by the first $105,900 in 2019).
• A foreign tax creditthat could allow lowering your tax bill on your remaining income by certain amounts paid to a foreign government, and
• A foreign housing exclusionthat allows an additional exclusion from income for certain amounts paid for household expenses that occur as a consequence of living abroad.

 The UAE has tax treaties with a number of countries but not with the United States. So if you are self- employed and if you have earned $400 or more from self-employment you will be subject to self -employment tax which will be paid to the US but the earned income can be excluded by using the foreign income exclusion. 

With proper planning and quality tax preparation, you should be able to take advantage of these and other strategies to minimize or even eliminate your liability on US expat taxes. Please do note that even if you do not believe that you owe any US expat taxes, you will still be required to file a return.