International Taxation FAQs

July 23, 2021

If you are a U.S. citizen currently living and working outside of the United States, you might have a few tax questions. Use this guide from your local accountant service in Los Angeles to ensure you file correctly and avoid tax problems, such as audits. 

I Live and Work in Another Country. Do I Still Have to File U.S. Income Taxes?

Whether you are a U.S. citizen or resident alien living and working outside of the country, you must file U.S. income taxes. Your “worldwide income” is subject to taxation regardless of your current address. Even if you pay income taxes in your host country, you still have to pay U.S. income taxes unless you file Form I-407 with the U.S. Citizen & Immigration Service and therefore forsake your green card status. Exemption from American tax filings also applies if you renounce your citizenship according to expatriation tax provisions. 

What Should I Do About the Currency Exchange Rate? 

If you receive employment payments in Euros or other foreign currency, you must convert the income to U.S. dollars to file your taxes. The IRS does not use an official exchange rate, and typically accepts whatever rate the taxpayer uses so long as it is evident throughout their tax documents. 

Are There Any International Tax Credits and Deductions I Can Use?

You can use the same deductions you would if you were filing on U.S. soil, such as business meals and travel if you work as an independent contractor. If you accrued or paid foreign taxes, you might be able to use an itemized deduction on eligible foreign taxes. A foreign tax credit might also be available. However, if you decide the foreign earned income exclusion is right for your taxes this year, your deduction or credit will lower. 

Can I Claim an Exemption For a Foreign Spouse?

Marriage to a foreign citizen generally calls for “Married But Filing Separately” tax status unless you pay for half or more of the cost of the home you maintain, and have a qualifying relative, such as a child. You can file with your foreign spouse on U.S. taxes to enjoy the benefits; however, your partner’s earnings will be subject to U.S. income taxes.
If you need international tax prep assistance, rely on the Encino tax consultants at Wallace & Associates, the Los Angeles accounting firm.