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Do Americans in Germany Need to File U.S. Tax Returns?


Yes, American citizens and those holding green card status who are living in Germany must file a US tax return if their earnings surpass specific limits, which are dependent on their filing status. This obligation persists even if they have already paid taxes in Germany since the US imposes taxes on the worldwide income of its citizens.

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How high must my income be to necessitate a US tax return in 2023-2024?

For the 2024 tax period, the benchmarks for income that necessitate filing a US tax return have been updated. Individuals who are single must file if their income is above US$13,850. For married couples opting to file separately, the requirement to file kicks in if their income is more than US$5. Meanwhile, married couples filing together face a threshold of US$27,700 or more.

What does choosing ‘married filing separately’ mean for US expats in Germany with a German spouse?

For US expats married to a non-US citizen, like a German, and choosing the ‘married filing separately’ status, the obligation to file a US tax return is triggered with any income exceeding US$5.

Can American residents in Germany avoid paying US taxes altogether?

Indeed, they can, but it’s important to distinguish between the obligation to file a US tax return and the actual payment of US taxes for American citizens and green card holders residing in Germany. 

Most Americans or green card holders living in Germany find themselves not owing US taxes due to the international tax agreements in place. Germany’s approach to taxing its residents on their global income often results in higher taxation rates than those in the US. Consequently, the taxes paid in Germany can often fully offset any tax liabilities in the US, potentially reducing the amount owed to zero for many individuals.

What’s the deal with Foreign Tax Credits for American expats?

Americans living in Germany have the opportunity to leverage the taxes they’ve paid in Germany as credits against their US tax obligation. This foreign tax credit is designed to prevent the double taxation of the same income across different countries. Given that German tax rates usually exceed those in the US, these credits can often nullify any US tax liability and may even provide additional credits for future tax years.

What’s the best? Foreign Tax Credits or the Foreign Earned Income Exclusion?

The choice between utilizing foreign tax credits and claiming the foreign earned income exclusion is important for expatriates, as it requires a careful assessment based on their unique situation. The foreign-earned income exclusion allows eligible expats to exclude a certain amount of their foreign income from US taxation. However, it’s crucial to know that this exclusion doesn’t extend to self-employment taxes or income from investments.

For those navigating self-employment in Germany, understanding your US tax obligations is essential. Explore more about what you need to know here:

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.


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