The 9 million Americans who live outside of the U.S. all have one thing in common: they have to report their income to the U.S. and file taxes because taxes are based on citizenship, not residency.
An expatriate is a person who lives outside their native country. Expatriates that don’t renounce their citizenship have to pay taxes to both the U.S. and the country they reside in. The United States and Eritrea — a country in the Horn of Africa — are the only two countries in the world that do this.
Foreign Earned Income Tax Exclusion exempts income under a certain amount. In 2018 the amount is $104,100 income, according to CNBC.
If a person has a bank account with over $10,000 in a foreign account, they have to report the balance to US Department of the Treasury. If people don’t report the amount, they can be fined $10,000. If people intentionally fail to report the amount, they may have to pay a $100,000 penalty or 50% of the balance on the account, whichever is greater.
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