If I Live Overseas Am I Still Required to File a Tax Return With the IRS?

The mere fact that you reside overseas does not mean that you are not responsible for filing a tax return and paying United States tax.

Whether or not you reside in the United States is not the determining factor as to whether you are required to file a United States tax return with the IRS. There are various factors, including threshold requirements for your earnings that will determine whether you are required to file a tax return.

It is very important to make sure that if you reside overseas and your status is a United States Citizen, Legal Permanent Resident, Overseas Contractor or United States Expat, you familiarize yourself with a basic understanding of the United States tax return filing requirements.

Who is Required to File a United States Tax Return?

The United States taxes individuals on their worldwide income. In a nutshell, this means that there is nowhere on the planet to hide from the IRS. If you meet one of the requirements for filing a United States tax return, then the IRS will require that you file it whether you live in the United States or in a hut off the coast of Brazil. There is nothing like receiving an IRS audit or levy letter at your foreign residence to remind you why you left the United States in the first place.

Does Every United States Taxpayer Who Resides Overseas Have to File a U.S. Tax Return?

No. Generally, there are three classes of individuals who are required to file a United States tax return (subject to threshold filing requirements such as employment and self-employment income earnings).

  1. A United States citizen is required to file a U.S. tax return even if he or she resides overseas in a foreign country.
  2. A United States legal permanent resident is also required to file a tax return even if he or she resides overseas in a foreign country.
  3. A foreign national who is otherwise subject to United States tax. This can stem from one of any number of different scenarios and commonly includes:
  • A non-United States person who works for a United States employer and earns significant money
  • A foreign person who is in the United States as either a student or other visitor and earns significant amount of income, or
  • A foreign person who has United States sourced income.

What if I Live Overseas and Did Not Earn Any Money?

If you are a United States citizen or Legal Permanent Resident and reside overseas but did not earn any income, then you may not have to file a United States tax return. In other words, simply because you are a United States taxpayer who resides in another country does not automatically mean you have to file a United States tax return. But, if you are otherwise subject to United States tax, then merely living in a foreign country will not absolve you from having to file a United States tax return.

What Are the Threshold Requirements for Having to File a Tax Return?

Whether or not a person who earns income meets the threshold requirements of having to file a tax return depends on their tax filing status, including marital status and age. Information on the threshold requirements can be found at IRS Publication 17. Even if you do not meet the threshold filing requirements based on income earned, there may be additional circumstances (like earnings from self-employment) that result in a person living overseas having to file a United States tax return.

What Happens if I Do Not File a United States Tax Return?

If you live overseas and do not file a United States tax return there can be serious repercussions. For example, the IRS can place a lien on you and your property for the amount that it assesses against you.

In addition, the IRS can place a levy on your bank account and even garnish your wages. That's right - if you reside overseas but work for a United States employer, the IRS can garnish those wages. And, even if you do not work for a United States employer, if the IRS knows your foreign employer's contact information or bank/foreign financial institution information, the IRS will do its best to attempt to garnish those wages as well.

If you just recently learned of this requirement to file tax returns, there are procedures you can follow in order to get compliant. In addition, despite the fact that there are heavy penalties for failing to disclose overseas income and offshore bank and financial accounts, if you resided overseas for at least 330 days in any of the last three years and your actions were not willful, you may be able to avoid many of the steep penalties that would otherwise be assessed against you.

It may be in your best interests to consult a tax attorney to assist you in understanding what your tax filing requirements are and what you could do to get in compliance.

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