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14 Jul 26
09:39
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06 Dec 03
Ask the question - "Do Americans pay tax when living abroad?" An answer found - "Yes, Americans living abroad are still required to pay US taxes on their worldwide income." In fact the US operates under a citizen based taxation system, meaning that moving overseas does not automatically end federal tax filing duties.
I was speaking to an American about this and he admitted he could claim various credits and exclusions and after that he might have to pay some US tax. I think the gist is that if you may pay more tax to the country you live in than what your US tax would be you would end up paying nothing. If you were paying less tax where you live than what the US tax be on that income you may have a tax bill to pay. You would claim whatever credits and exclusions you would be entitled giving you the final tax figure, if any, you would need to pay.
Is it not worth considering following the American taxation system and bring it in for our country? I mean now we face considerable financial challenges, with the latest being about defence spending. People paying tax here pay tax that amongst other things covers defence spending. Perhaps those living abroad should help support such things - shouldn't they as British citizens contribute to the defence spending and not have it fall on the taxation of only those living here?
If tax comes in from abroad then the tax bill for those living here could give politicians the opportunity to reduce the tax bill for those living here. I've said "could" here rather than "should" as many politicians could need pushing hard to reduce the tax take here.
I wonder what sort of comments I might get? Could be interesting?
I was speaking to an American about this and he admitted he could claim various credits and exclusions and after that he might have to pay some US tax. I think the gist is that if you may pay more tax to the country you live in than what your US tax would be you would end up paying nothing. If you were paying less tax where you live than what the US tax be on that income you may have a tax bill to pay. You would claim whatever credits and exclusions you would be entitled giving you the final tax figure, if any, you would need to pay.
Is it not worth considering following the American taxation system and bring it in for our country? I mean now we face considerable financial challenges, with the latest being about defence spending. People paying tax here pay tax that amongst other things covers defence spending. Perhaps those living abroad should help support such things - shouldn't they as British citizens contribute to the defence spending and not have it fall on the taxation of only those living here?
If tax comes in from abroad then the tax bill for those living here could give politicians the opportunity to reduce the tax bill for those living here. I've said "could" here rather than "should" as many politicians could need pushing hard to reduce the tax take here.
I wonder what sort of comments I might get? Could be interesting?
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Just had a quick look to see how much revenue it raises in the States and it seems to be half of one percent of their total income tax take. Assuming thats correct and is similar here you wouldnt be raising much at all. Once you include the extra costs needed to collect it any extra income is going to be tiny.
a great idea, keep them coming :)
As a U.S. citizen living abroad, you are generally required to file U.S. taxes on your worldwide income, regardless of where you live. However, this does not usually mean you will be taxed twice on the same income.
The U.S. has several measures in place to help reduce or prevent double taxation:
Foreign Earned Income Exclusion (FEIE): You may be able to exclude a certain amount of foreign earned income from U.S. taxation. For the 2026 tax year, the maximum exclusion is $132,900.
Foreign Tax Credit (FTC): If you pay taxes to a foreign government, you can often claim a credit on your U.S. tax return for those foreign taxes paid. This can reduce or even eliminate your U.S. tax liability.
Tax treaties: The U.S. has tax treaties with many countries to help avoid double taxation and clarify which country has the primary right to tax certain types of income.
While these provisions can significantly reduce or eliminate double taxation, the rules depend on your specific situation. Your income type, country of residence, local tax rate, and whether you qualify under the Bona Fide Residence Test or Physical Presence Test can all affect the outcome.
In short: you may still need to file a U.S. tax return while living abroad, but you will not necessarily owe U.S. tax
As a U.S. citizen living abroad, you are generally required to file U.S. taxes on your worldwide income, regardless of where you live. However, this does not usually mean you will be taxed twice on the same income.
The U.S. has several measures in place to help reduce or prevent double taxation:
Foreign Earned Income Exclusion (FEIE): You may be able to exclude a certain amount of foreign earned income from U.S. taxation. For the 2026 tax year, the maximum exclusion is $132,900.
Foreign Tax Credit (FTC): If you pay taxes to a foreign government, you can often claim a credit on your U.S. tax return for those foreign taxes paid. This can reduce or even eliminate your U.S. tax liability.
Tax treaties: The U.S. has tax treaties with many countries to help avoid double taxation and clarify which country has the primary right to tax certain types of income.
While these provisions can significantly reduce or eliminate double taxation, the rules depend on your specific situation. Your income type, country of residence, local tax rate, and whether you qualify under the Bona Fide Residence Test or Physical Presence Test can all affect the outcome.
In short: you may still need to file a U.S. tax return while living abroad, but you will not necessarily owe U.S. tax
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