Top 5 Tax Mistakes U.S. Expats Make in 2025
1. Not Filing U.S. Taxes
The first common mistake is thinking that living abroad exempts you from filing U.S. taxes. This is far from true. U.S. citizens and Green Card holders are required to file a U.S. tax return, regardless of where they live. Failure to file can result in penalties and interest charges.
The United States is one of the few countries that taxes its citizens on global income. To avoid surprises, you should familiarize yourself with the rules. If you need help navigating your obligations, consider using our expat tax services.
2. Ignoring FBAR Requirements
Another common mistake is overlooking the Foreign Bank Account Report (FBAR) requirement. If you have foreign bank accounts with a total value exceeding $10,000 at any point during the year, you must file an FBAR. The penalty for failing to do so can be severe.
Complying with FBAR requirements is crucial. It can be a complex process, but it’s a requirement we can assist with. To learn more, book a consultation with us.
3. Misunderstanding Tax Treaties
Tax treaties between the U.S. and other countries can offer significant benefits. They can often prevent double taxation, allowing you to claim a credit for taxes paid to a foreign government.
However, these treaties can be complex. Misinterpreting them is a common mistake. It’s essential to seek professional guidance when dealing with tax treaties. We can help you understand and apply these treaties correctly.
4. Incorrectly Claiming the Foreign Earned Income Exclusion
The Foreign Earned Income Exclusion (FEIE) allows U.S. citizens working abroad to exclude a portion of their foreign income from U.S. taxes. However, to qualify for the FEIE, you must meet specific residency requirements.
Claiming the FEIE incorrectly can lead to back taxes, penalties, and interest payments. If you’re unsure about your eligibility, it might be time to seek professional advice. Check out our transparent pricing for this service.
5. Filing Late
The final common mistake is filing your taxes late. Expats do receive an automatic 2-month extension, but any taxes owed must still be paid by April 15 to avoid interest charges.
Filing late can result in penalties. To avoid this, ensure you file your taxes on time. If you need assistance with timely filing, our team is here to help.
Conclusion
Navigating U.S. taxes as an expat can be complex. Avoiding these common mistakes is crucial for remaining compliant with the IRS and avoiding unnecessary penalties.
Whether you need assistance with FBAR requirements, understanding tax treaties, or claiming the FEIE, PCCI provides professional help. To ensure you’re meeting all your tax obligations, book a consultation with us today.
Don’t let common tax mistakes put a damper on your expat experience. With the right knowledge and professional help, you can navigate U.S. taxes with ease.
