US citizens with dual citizenship face unique tax obligations. You must report your worldwide income to the IRS annually, regardless of where you live.
This requirement applies even if you pay taxes in your country of residence.
To help avoid double taxation, you can utilize the Foreign Earned Income Exclusion (FEIE), which allows you to exclude up to $126,500 of foreign income for the tax year 2024. Additionally, the Foreign Tax Credit (FTC) can reduce your US tax liability by allowing you to offset taxes paid to foreign governments.
Filing requirements include Form 1040, as well as the Foreign Bank Account Report (FBAR) and possibly other forms.
The automatic extension for expats to file until June 15 is also beneficial.
Understanding the expatriation tax is crucial if you’re considering giving up US citizenship. If you renounce your citizenship after June 2008, be aware of the income and net worth thresholds, which are $168,000 in income and $2 million in net worth.
Navigating these tax obligations can be complex, especially with the considerations of tax treaties and rules varying by country. With over 9 million US expats, seeking professional assistance is often advisable to ensure compliance and optimize your tax situation.