The U.S. is one in the only two countries in the world that taxes foreign earned income based on citizenship.
What this means is that if you are a U.S. citizen or a Green Card Holder, it does not matter in what country you are residing, or where you earn your income: You are required to file your U.S. taxes every year if your income is above the legal threshold.
You may ask yourself, if I’m not living in the U.S. why would I have to comply with this?
In fact, there are two main reasons:
- It’s what the law states.
Thus, if you knowingly decide to not file your taxes while living abroad you’d be engaging in a violation of the law.
- Your U.S. Passport can be denied or revoked.
The IRS is required to notify the State Department of taxpayers who are certified as owing a seriously delinquent tax debt. From this point on, the State Department is generally prohibited from issuing or renewing a passport to a taxpayer who has seriously delinquent tax debt.
Therefore, If you currently have a valid passport, the State Department may:
- Revoke your passport, or
- Limit your ability to travel outside the United States by issuing you a limited validity passport good for direct return to the United States, if you’re overseas.
Don’t risk this happening to you. Stay informed and seek help to avoid the negative consequences.
If you need further information or you’re trying to avoid these consequences, contact me today and let’s start with a free online legal consultation over the phone, zoom, or email.