U.S. EXPAT TAX GUIDE – UNITED ARAB EMIRATES
Do American expats in the UAE have to pay US taxes?
Not often, but it depends on your income level and time spent outside of the United States.
For example, consider a US citizen residing in Dubai with an annual income of $100,000. For the tax year 2023, they may be eligible for the Foreign Earned Income Exclusion (FEIE), which for 2023 is $120,000.
If the individual qualifies for the FEIE, they can exclude up to $120,000 of their foreign-earned income from US taxation. In this scenario, their entire income of $100,000 can be excluded from US taxation
Table of contents
With the FEIE, the individual’s taxable income for US tax purposes could be reduced to zero. This means they wouldn’t owe any US taxes on their foreign-earned income.
See if you qualify for the Foreign Earned Income Exclusion here.
Do I still have to file a US tax return if I don’t owe any tax?
Yes, it is mandatory. Despite not owing taxes, US expats are still required to file a US tax return. This is mandatory for all US citizens and green card holders who meet the minimum income thresholds, regardless of where they live or where their income is earned.
Filing a tax return in UAE is crucial for maintaining compliance with US tax laws. It’s a legal obligation that also allows you to claim any applicable exclusions or deductions, such as the FEIE.
What should I understand from the video?
- Assess Your Tax Situation: It’s important to assess your individual tax situation each year, considering factors like income levels and residency status.
- Seek Professional Advice: Given the complexities of US tax laws for expatriates, consulting with a tax professional experienced in expat taxation can be invaluable. They can help determine your tax liabilities and ensure proper filing.
- Utilize Benefits: Exclusions like the FEIE can significantly impact your tax liabilities, emphasizing the importance of staying informed and compliant with US tax regulations.
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 the UAE. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.
