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You’re reading the roundup at the perfect time – today is the final day to file your 2017 expat taxes or request the automatic extension to October 15th. This week’s roundup features findings from our 2018 US Expat Opinion Survey, our newest tax guide on buying and selling real estate, a guide with expat tax help for Americans living in – or considering a move to – China, some news on Greenback Expat Taxes, and more great feedback from our customers.
Political Attitudes from the 2018 US Expat Opinion Survey
Last week, we shared some of the results of our expat survey about expat taxes. However, this year’s survey explored topics that went far beyond the realm of tax. We asked respondents to weigh in on topics such as gun control, immigration reform, and healthcare. While expats collectively had fairly one-sided opinions in some areas, in others they were sharply divided. See our recent article for more details on the survey’s political results.
Save Money While Investing in Real Estate Abroad
What does it take to successfully buy, sell, and invest in real estate while living abroad? We’ve put together a comprehensive guide that’s helpful for those looking to get started or those who are looking for some advanced tax tips. The guide will help you navigate the complicated process of overseas real estate and foreign property investment. The buying and selling real estate guide also includes best practices and recommendation on the tax implications and how to save money.
Expat Tax Help for Those Living in China
China is rich with history and industrial opportunities and can be a very attractive destination for US expats. If you’re living in China or considering a move there, you’ll be faced with a complicated set of rules outlining how and to whom you pay taxes. Determining your residence status alone can be quite a chore! Once you become sufficiently familiar with the Chinese regulations, don’t forget that you’ll still owe taxes in the US, too. Our guide will give you the expat tax help you need in order to be compliant with US and Chinese taxes.
The Secret to the Team’s Success
At Greenback, we pride ourselves on providing our customers with top-notch services. We operate really efficiently and a lot of that is due to our planning process. Greenback’s Co-Founder, Carrie McKeegan, shares some of the planning secrets that serve as a foundation to achieve success in this Inc. article “This Simple Trick Can Boost Your Team’s Effectiveness by 400%”.
Greenback Through the Eyes of Our Customers
Wow, Debra! Thanks for sharing your feedback. We’re glad we could partner with you.
Refer a Friend Today
If you refer a friend who is a new customer that completes their Federal Tax Return with us, Greenback will reward you with a $25 credit off your next expat tax prep. That means your friend gets hassle-free tax services and you get to save money! Everybody wins.
See You Next Week!
You’re all caught up on the expat tax news you need. If you didn’t get your filing ready in time or need expat tax help for any other reason, we have a team of Greenback accountants ready to answer your questions.
US expats who are interested in buying, selling, or otherwise investing in foreign property and overseas real estate: we’ve got good news. We’ve created a guide to help you navigate the complicated process, including the implications of the foreign real estate on your US taxes. Don’t fall prey to the beginner’s mistakes many expats make when investing in foreign property. Download our guide instead!
Yes, Foreign Property Investing Can Feel Straightforward
If you’ve considered buying a rental property for the extra income or wondered how the purchase of real estate could affect your expat taxes, this guide will be a lifesaver. For those who have already purchased foreign property, this guide can help you mitigate the effects of the sale on your expat taxes.
Plus, we have covered the most important topics that can save you money, such as what credits and exclusions can help you save money. The Primary Home Sales Exclusion, for example, allows for an exclusion of gains for the sale of your main home, which means you can exclude up to $250,000 ($500,000 if you file a joint tax return with your spouse) of capital gains from the sale of your main home.
Did you know that there are four different types of rental properties? All of them are taxed differently. If you are considering utilizing a rental property for an additional stream of income, find out which way will make the most sense for your expat taxes so that you are maximizing your investment.
What You Will Learn:
Ways that investing in real estate can save you money. Yes, really!
Host country requirements
How different types of properties will affect your expat taxes
This year, the 2018 US expat opinion survey forged a new frontier: social issues. Yes, we also researched their opinions on taxes, but we felt compelled to learn more. At Greenback, we feel a deep sense of community with the expats that we work with, and for good reason: many of us are expats ourselves! Expats can often feel excluded from the American political framework; sometimes the one lingering connection they feel to America comes when they are filing taxes abroad. But as we found in this year’s results, that does not mean they are disengaged. We’re so excited to share with you more of the findings from this year’s survey! Let’s begin.
How Do Expats Feel About Filing Taxes Abroad?
The majority of expats consistently feel that they should not be required to do so. In fact, 66.8% believe that the requirement is unfair. For a more detailed examination of the tax component of the survey results, read our recent blog post.
How Well Do Expats Feel Represented By the US Government?
For those who keep up on our annual surveys, it should come as no surprise that expats feel essentially forsaken. 86.3% feel that the US government does not represent them. In fact, for expats who are seriously considering renunciation, 17.9% are doing so because their opinions differ so vastly with the current direction of the government.
Beyond Filing Taxes Abroad: Social Issues
Expats made their thoughts known on the state of American social issues. We asked what issue they thought was most important, and the breakdown is as follows:
Percentage of Respondents
All three of the above
What’s interesting is that on gun control and healthcare – the top two most important issues – expats agree. Of the expats that indicated gun control was the most important, 96.0% believe America needs to enact more regulations. Of the expats who felt most strongly about healthcare, 87.8% either agreed or strongly agreed that the US government should guarantee healthcare for its citizens. But the expats who agreed that immigration reform was the most important disagreed on why. 50.7% either agreed or strongly agreed that the government should do more about illegal immigration, which is a majority, but just barely.
Why Do These Issues Matter?
These issues matter to Greenback because expats often experience barriers to voting, and so sometimes completing a survey is the only way to take a stance. It matters because expats deserve to have a say in the course of the country they call home. We are so grateful to be able to engage in discourse with our fellow expats, and the people who took the time to share with us are invaluable to our mission to protect and promote expat interests.
Need Help Filing Taxes Abroad?
Maybe you’re one of the expats we surveyed that has never filed taxes. If your taxes are late, we can help make the process anxiety-free. Contact us today, and we’ll be happy to answer any questions you have!
As a major manufacturing hub, China is where many Americans find themselves relocating to for work purposes. With the incredible rate of growth in the last 25+ years, it is easy to see why people are investing their time and money in China. However, China also has one of the most complex tax structures for expatriates. It is important to understand US tax for expats both in China and in the US.
US Tax for Expats in China
If you are a citizen or permanent resident of the United States, then you are obligated to file US taxes with the IRS each year, no matter where you live. In addition to the regular income tax return, you could also be required to file an informational return on your assets held in foreign bank accounts with the FBAR FinCEN 114 Form (which must be filed on Tax Day, April 15th). However, you can request an extension until October 15, 2018.
While the US taxes the international income of its citizens and permanent residents who reside overseas, it has special provisions to help protect them from double taxation, including:
The Foreign Earned Income Exclusion, which allows you to decrease your 2017 taxable income by the first $102,100 earned as a result of your labor while a resident of a foreign country (and $104,100 on your 2018 taxable income),
A foreign tax credit that could allow you to lower your tax bill on your remaining income by certain amounts paid to a foreign government, and
A Foreign Housing Exclusion that allows an additional exclusion from income for certain amounts paid for household expenses that occur as a consequence of living abroad.
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 US tax for expats. Please note that even if you do not believe you will owe any US income taxes, you will more than likely still be required to file a return.
Who Is a Resident of China?
China has one of the most complicated residence status systems in the world for foreign nationals and generally will require reviewing multiple taxation agreements with the US. Normally, a non-People’s Republic of China (PRC) national who resides in China for an entire tax year is considered a resident for tax purposes. If you spend more than 30 consecutive days or more than 90 cumulative days outside of mainland China in any given calendar year, you will lose your resident status for that year.
As a foreign national, you are required to register with the State Administration of Taxation (SAT) as soon as you are eligible for taxation in China.
After being a resident for five years, you will be subject to tax on your worldwide income.
Chinese Income Tax Rates
Income from employment is taxed monthly at a progressive tax rate that caps at 45%.
The tax rates from China’s State Administration of Taxation (SAT) for 2017 are as follows:
Earnings in RMB
Rate Applicable to Income Level (%)
1,501 – 4,500
4,501 – 9,000
9,001 – 35,000
35,001 – 55,000
55,001 – 80,000
80,001 and above
Note that there is a monthly standard deduction for foreign nationals of RMB 4,800.
Your employer should withhold taxes on a monthly basis. For income on stocks or investments, you will need to get in touch with a Chinese tax expert, as there are complex rules regarding taxation of foreign nationals.
Some deductions to income are allowable, but you will need to submit relevant documents to the tax authorities for registration. You will also need to submit registration papers to enjoy any benefits of the US-China tax treaty on your US tax for expats.
US-China Tax Treaty
The US and China have a tax treaty in place, which is helpful when determining which country should be paid specific taxes and at what point those taxes should be paid. The US-China tax treaty is an expat’s guide to ensuring the taxes are paid to the right country. Note: you need to register with the tax authorities of China to take advantage of any of the benefits of the treaty. If you are unsure of the language in the treaty or have any other questions, be sure to talk to a tax advisor to ensure the correct taxes are paid to the correct country.
Chinese Tax Due Date
Being aware of the tax due dates in China is important because they are different than the US deadlines. For example, you will need to file your Chinese tax return before you file your US tax for expats.
The tax year in China is the same as the United States: January 1st through December 31st. Unlike the US, Chinese taxes must be filed with the State Administration of Taxation by March 31st. China does not offer extensions for any taxpayers and does apply penalties in the event of a late filing.
Your employer will be required to pay taxes for you on a monthly basis. You are also required to file a return if you meet the following criteria:
Have more than one Chinese employer
Have income earned in China from which taxes were not withheld
Have an annual income of RMB 120,000 or more
If a taxpayer is not domiciled in China, they are exempt from filing Chinese tax returns if they were not in China for the entire tax year.
Social Security in China
Only recently has China required that foreign nationals participate in China’s social insurance system, without details on what types of insurance foreign nationals are obligated to contribute to, which benefits foreign nationals will be eligible for, or what amount can be withdrawn by foreign nationals in the case that they no longer live or work in China.
The US does not have a Social Security agreement with China; this is one area where US tax for expats may be doubled.
Is Foreign Income Taxed Within China?
While Chinese nationals are taxed on their foreign earned income, foreign nationals are only taxed on their income earned from a Chinese source. That said, if a taxpayer has been a resident in China for more than five years, they will be required to pay taxes on their worldwide income.
Other Taxes in China
In addition to income tax on salaries paid, there are other forms of income that are taxed in China.
There is a standard value added tax (VAT) rate of 17% on consumer goods, with a reduced rate of 13% applying to certain items, such as food, books, and utilities. Exports are generally tax exempt.
Chinese-sourced investment income (including capital gains) is taxed at a flat rate of 20%. If you have been a resident of China for more than five years, you will also be taxed on investment income and capital gains sourced outside of China.
There is no inheritance, estate, or wealth tax in China.
China is a beautiful country with a fascinating culture and unending opportunities. If an American expatriate moves to China, they should be aware of the tax rates, deadlines, and regulations of the tax authorities in China, while not forgetting their obligation to file US expat taxes.
Questions About Your US Tax for Expats in China?
Greenback can help! Our team of expat-expert CPAs and IRS Enrolled Agents are here to help you understand the intricacies of US taxation, no matter where in the world you’re living. Contact us today!
Originally published in 2012; updated June 11, 2018.
Thanks for checking in! We made it to the home stretch: only one more week until the June 15th deadline. If you haven’t already filed, now is a great time to get your 2017 US tax year closed out. Read below for five important reminders as we approach the deadline. While you’re here, have a look at the results of our 2018 US Expat Opinion Survey and a glowing customer review.
Greenback Featured in CNBC
Expats, you made the headlines! Our 2018 survey was recently featured in CNBC, specifically the fact that 20% are unaware of the FATCA reporting requirements. Read the full article for details. iExpats picked up the article which you can find here. And Accounting Today provided some fantastic insights as well which you can find here.
The June Deadline Approaches for the 2017 US Tax Year
As an American expat, you automatically receive an extension to June 15, 2018, to submit your 2017 US tax year filing. However, did you know that interest on taxes owed has been accruing since April 17th? Read our recent article on the June deadline for more on this, as well as the additional requirements for real estate and business owners, and considerations before deciding to renounce your US citizenship.
Results From the 2018 US Expat Opinion Survey
We would like to thank the more than 3,800 expats who shared their thoughts with us during this year’s survey. So, if you’re one of them, thank you! We tallied the results and can share how the collective expat community feels about expat taxes, financial reporting, and amnesty programs. Read our initial observations and see how your opinions compare to US expats more broadly.
Updates on the Repatriation Tax
The IRS announced that they will waive specific late-payment penalties relating to the Repatriation Tax, an update to the guidance they had recently issued about how the Repatriation Tax would be calculated. Read about the updates to the repatriation tax.
Another Great Greenback Review
Thanks to the Cyriers for the kind words! We always love to hear from our customers.
Love Greenback? Share the Love!
Did you know that if you refer a friend who then completes their Federal Tax Return with us, you get $25 off your next tax services? There’s no limit, so refer away.
Come Back Next Week for More
That’s all we have for now – we’ll be back again next week with the latest tax news. In the meantime, if you need help wrapping up your 2017 US tax year filings or have any other expat tax-related business, don’t hesitate to reach out.
The implications of the Tax Cuts and Jobs Act continue to be addressed by the IRS. Yesterday the IRS announced that they will waive specific late-payment penalties relating to the Repatriation Tax, an update to the guidance they had recently issued about how the Repatriation Tax would be calculated.
What Is the Repatriation Tax?
Section 965 of the tax reform requires that some business owners will face a one-time repatriation tax, as previously untaxed earnings will be included when calculating their American taxes. Before the tax reform was enacted, US owners of foreign businesses did not pay taxes on the organization’s earnings until they were distributed to the individual.
Who Is Affected by the Repatriation Tax?
This tax affects US shareholders with ownership in a specified foreign corporation with positive post-1986 earnings and profits. Wondering if you are a shareholder? You’re a shareholder if you are a US person with 10% ownership in a company by shares or by voting power. Constructive ownership is also a factor, meaning that certain relatives with interest in the company will contribute to your effective ownership level.
What Does the New Guidance on the Tax Reform Mean?
The IRS has offered to waive the penalty for missing the estimated tax deadline if the taxpayer incorrectly tried to apply a 2017 overpayment to their 2018 estimated taxes, as long as they catch up by June 15, 2018, which is just ten days away!
Further, for individuals who missed the April deadline, which was the deadline for the first installment of payment for this tax, the IRS will waive the penalty as long as the taxpayer is compliant by April 15, 2019. However, this only applies to taxpayers whose tax liability is less than $1 million, and interest will still accrue on the outstanding balance. The IRS noted that Americans living and working abroad have later deadlines since they receive the automatic extension until June 15th.
Lastly, those who already filed their 2017 taxes without paying the first installment can file an amended return by October 15, 2018.
Want the Experts to Handle the Details of How the Tax Reform Will Affect You?
Before we dive into the exciting results from this year’s expat opinion survey, we’d like to thank the 3,800+ expats who volunteered their time and their honesty to help us pull this off. Our data is more comprehensive, and our understanding of expats is more accurate because of those who participated. Our expat community is the greatest.
We Asked, You Answered
This year’s survey was different than previous years’ surveys because we departed from asking primarily tax questions. We covered the tax reform, IRS amnesty programs, thoughts on citizenship renunciation, and how expats feel about filing US taxes, but then we ventured into new topics. We asked what political issues expats believe are the most important, and which way they think issues such as healthcare, gun control, and immigration reform should be handled. The answers may surprise you.
So How Do Expats Feel About Filing US Taxes?
66.8% of US expats do not believe there should be a requirement for filing US taxes, up 1% from our findings last year. This number has remained relatively consistent over the past four years, and it’s not hard to understand why: the US remains only one of two countries with a citizen-based taxation system. The system is unusual, to say the least.
Given this, it stands to reason that the tax issue that expats most want addressed is the repeal of citizenship-based taxation – 57.5% of them, in fact. Coming in second is a simplification of the tax process – 19.6% of expats said this would be the most helpful step the American government could take to aid them in filing US taxes. The rest of the ideas spanned from repealing the recent tax reform to repealing the GILTI tax to repealing the costs associated with citizenship renunciation.
Do you ever feel like the only expat who is behind on your taxes? Don’t. If our survey data is representative, 6.8% of expats are behind on their taxes. That means there could be more than half a million of you out there! (And if this happens to be you, ask us about Streamlined Filing Procedures!)
A new question this year pertained to the Tax Cuts and Jobs Act. We wanted to find out how expats expect to be affected by the tax reform. Nearly half (49.5%) are unclear on what is in store for them, while 29.5% expect no change. 10.3% expect to pay more in taxes, and 8.8% expect to pay less. So if you don’t know what the future holds for your expat taxes, you are in very good company.
Stay tuned, as we’ll detail more results from our survey soon!
Want Some Help Filing US Taxes?
Greenback accountants are here to help! Get started now, and leave the hard work to us.
The June deadline is almost here; do you have the US expat tax help you need? If not, you could read our recent article about why meeting this deadline is important. But, you’ll want to consider these five things so you are prepped for June 15th!
1: If You Bought or Sold Real Estate, You May Need Additional US Expat Tax Help
Buying and selling real estate can affect your expat taxes, and it can be complicated to figure out exactly what you owe. For instance, you must consider the effect of currency fluctuations because it affects how much capital was earned by purchasing and selling real estate overseas. Plus, gains from real estate transactions can move you into a different tax bracket and increase your US expat tax obligations. Fortunately, we’ve created a guide because we try to provide as much US expat tax help as we can! Have you downloaded it yet?
2: Renouncing Your Citizenship Won’t Immediately Eliminate Your Tax Burden
If you’re thinking to yourself that you’d rather renounce your citizenship than figure out your expat taxes, you’re in good company. However, citizenship renunciation can be a long, drawn-out process. The renunciation fee is $2,350, and it is irrevocable. Plus, before you are allowed to renounce, you must be caught up on your taxes.
3: If You Are Self-Employed, You May Be Required to Submit Extra Forms
Expats who own small businesses have an extra task at hand, depending on the type of entity of the business.
For a single-member LLC with direct ownership, file Form 1040-NR.
Foreign corporations should file Form 1120-F.
A multiple-member LLC should file Form 1065. Foreign partners would receive a K-1 and need to file Form 1040-NR individually; domestic partners would include this on their Form 1040.
If you’d like to get started, gathering your documents is a great way to expedite the process. Not sure which documents to gather? Download our checklist, and you’ll be well on your way!
5: You Could Request An Extension to October, But You May Pay More
Expats can request extensions to October; but if you owe taxes, interest has been accruing since the April deadline. So, though you are allowed to put your expat taxes off, the best option is to file by the June deadline. If you’d like an expert to file that extension for you, our team of CPAs and IRS enrolled agents are the best (and friendliest!) around. We file extensions for free for our clients, so begin entering your details here to kick off the process. We need everything by June 12th to ensure the extension is filed on time.
We Helped Barbara Meet the Deadline – and We Can Help You Too!
Searching For US Expat Tax Help?
Greenback accountants are ready to get you across the finish line with ease. Get started today!
Happy June, expats! We’re only about two weeks from the June deadline, so you know what that means: it’s crunch time. Read on to find out why you should meet the June 15th deadline, our recent commendation for our excellent US expat tax preparation, and how you can save money on your tax services next year by referring a friend!
Highly Commended Recognition
Thanks to the Forum for Expatriate Management, who gave us the honor of Highly Commended for Tax Provider of the Year! We’ve won EMMA awards before, and are so pleased to be recognized once again within our community for our US expat tax preparation services.
Why You Should Meet the June Deadline For US Expat Tax Preparation
We’ve said it before, but it’s worth reiterating: the June deadline is an important target for expats. If you’re considering filing an extension instead, read our blog before you make the decision. It just may save you some money.
Expat Taxes in Saudi Arabia
Some Gulf nations have reputations for being “tax havens,” since they do not tax income. Saudi Arabia happens to be one of these nations. If you’ve considered moving there, or are just curious about how expat taxes work in other countries, read our guide to find out more!
If you love Greenback, it’s safe to say your friends will too. Plus, if you refer Greenback to a friend who is a new customer and completes their Federal Tax Return with us, you’ll save $25 off your next US expat tax preparation service with Greenback! You can do that as many times as you’d like – there’s no limit. You get to help out a friend and receive $25 as well. Refer a friend today!
Greenback Clients Are the Best
Wow, Glynnis! Thanks so much.
We’re here to help you meet that deadline in any way we can. Have some questions for our expat experts? Contact us today.
How will living in Saudi Arabia affect taxes for expatriates? The opportunities and favorable tax structures have made many Gulf nations desirable destinations for expats from around the globe. Even if you face an advantageous tax structure in your host country, you could be affected adversely on your US taxes for expatriates – and this is just one of the reasons why understanding your filing obligations to US authorities is important as you comply with Saudi tax law.
Taxes for Expatriates in Saudi Arabia
If you are a citizen or permanent resident of the United States and meet filing thresholds, then you are obligated to file your US taxes with the IRS every year, no matter where you live. You will be required to file a regular income tax return, and you might also be required to file an informational return on your assets held in foreign bank accounts with FinCEN Form 114 (also known as Foreign Bank Account Report – FBAR).
While the US taxes the foreign income of its citizens and permanent residents who reside overseas, the US does have special provisions to help protect taxpayers from double taxation. Such provisions include:
The Foreign Earned Income Exclusion, allowing you to decrease your 2017 taxable income by the first $102,100 (in 2018 the number rises to $104,100) earned as a result of your labors while a resident of a foreign country (indexed annually for inflation)
A foreign tax credit that could allow you to lower your tax bill on your remaining income by certain amounts paid to a foreign government, and
A Foreign Housing Exclusion that allows an additional exclusion from income for certain amounts paid for household expenses that occur as a consequence of living abroad.
With proper planning and quality tax preparation, you can take advantage of these and other strategies to minimize or even eliminate any taxes for expatriates owed. Please note that even if you do not believe you owe any US taxes for expatriates, you will still likely be required to file a return.
Saudi Arabia Income Tax
Saudi Arabia is a tax haven for those looking to avoid paying taxes on income earned from employment. Saudi Arabia is similar to other Gulf nations because it has no tax on individual income. Further, no taxes are levied on investment income for individuals; businesses are taxed on these capital gains.
Who Is a Resident of Saudi Arabia?
A person will be considered a resident in the Kingdom of Saudi Arabia if they have a permanent place of residence and reside in the country for at least 30 days, or if they reside in the country for at least 183 days in the year. Unlike many countries, Saudi Arabia grants residency to expatriates through resident permits. It does not matter how long you are in Saudi Arabia or what your connections are to the country; if you have a permit (Iqama), you are considered a resident. You can apply for a resident permit at any Saudi embassy.
Saudi Arabia Tax Date
Since there is no income tax on income earned or capital gains, the Government Authority of Zakat and Tax does not require a tax return from individuals. There is no tax year or tax due date in place.
Social Security in Saudi Arabia
There is a social security regime in Saudi Arabia, which covers private-sector and certain public-sector Saudi workers. There is voluntary coverage available for those who are self-employed, work abroad, or no longer fit the requirements for compulsory coverage. This coverage is paid for by an insured pension that takes 9% of gross earnings. For those who are self-employed, that rate is increased to 18%. Though the United States has totalization agreements with several countries to avoid double taxation regarding social security taxes, currently, there is no agreement with Saudi Arabia. So, depending on your situation, you may pay into US Social Security, Saudi Social Security, or both.
Is Foreign Income Taxed Within Saudi Arabia?
Income is not taxed in Saudi Arabia, regardless of where it was earned.
US – Saudi Arabia Tax Treaty
Saudi Arabia is not one of the many countries with which the United States has a tax treaty. Considering the low level of taxation in Saudi Arabia, this will not present an issue for most expats. A problem may arise, however, for those who are paying business taxes to both Saudi Arabia and the United States.
Other Taxes in Saudi Arabia
Saudi Arabia does not tax capital gains, wealth, gifts, or inheritance. Up until recently, there was no Value Added Tax (VAT) that expatriates had to worry about in the event of making large purchases. However, in a radical policy shift, the country has imposed VAT as of January 1, 2018, at a rate of 5% on all goods and services that are bought and sold by businesses, with a few exceptions. Even so, Saudi Arabia remains one of the lowest taxed nations on the globe.
Questions About Taxes for Expatriates in Saudi Arabia?
Our team of expat-expert CPAs and IRS Enrolled Agents are here to help! Contact us today for the tax advice you need regarding living and working in Saudi Arabia.
Originally published in 2012; updated May 30, 2018.