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U.S. EXPAT TAX GUIDE – SAUDI ARABIA

Who is required to file a US tax return while living in Saudi Arabia?

Living as an American expat or dual national in Saudi Arabia comes with unique tax responsibilities. The US taxes its citizens and green card holders on worldwide income, meaning your global earnings are subject to US tax laws even if you’re residing in Saudi Arabia.

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What are the income thresholds for filing a US tax return?

The thresholds for filing a US tax return are based on your total income, regardless of where it is earned:

  • Single filers: Must file if your income exceeds $13,850.
  • Married filing jointly: Required to file if your combined income is over $27,700.

Married filing separately: Must file if you earn at least $5.

Do non-working spouses need to file a tax return?

Yes, even if you are married to a non-US person and have minimal income, you might still need to file a tax return. For example, earning as little as $5 in bank interest could require filing.

How can you determine your filing status?

Determining your filing status can be complex, especially with various income types or a non-US spouse. It’s advisable to consult a tax professional who can evaluate your financial situation and offer guidance.

What should self-employed individuals know about filing?

If you are self-employed and earn over $400 in net income globally, you must file a US tax return. This includes income earned in Saudi Arabia or any other country.

What are the requirements for FBAR and Form 8938?

If the total value of your foreign bank accounts exceeds $10,000 at any point during the year, you must file an FBAR.

However, for Form 8938, you need to report certain foreign financial assets if they exceed specific limits. These limits vary based on your residency and filing status:

  • For US residents:
    • Single/married filing separately: Report if assets exceed $50,000 at year-end or $75,000 at any time.
    • Married filing jointly: Report if assets exceed $100,000 at year-end or $150,000 at any time.
  • For those living abroad:
    • Single/married filing separately: Report if assets exceed $200,000 at year-end or $300,000 at any time.
    • Married filing jointly: Report if assets exceed $400,000 at year-end or $600,000 at any time.

Form 8938 requires a broader range of asset reporting than FBAR, including foreign bank accounts, certain foreign securities, and interests in foreign entities. Failing to comply can result in significant penalties, so it is advisable to consult a tax professional to ensure accurate reporting and compliance.

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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