International & EXPAT Tax Returns, FBAR, and FATCA.

EXPAT Tax Returns, FBAR, and FATCA

If you’re a U.S. citizen or Green Card holders who earns income overseas, your income is taxable by the U.S. government, and you must pay U.S. income taxes on your foreign income.

Depending on the country you are living in, you may be able to take advantage of the foreign earned income exclusion and foreign tax credit to lower your foreign income tax obligation.

What foreign income is taxable by the IRS?

Wages or any income paid to you for services or goods sold. This includes income you received from your employer in a foreign country or if you’re self-employed and working overseas.

Interest earned on any money in a foreign bank account or interest-bearing financial instrument.
Dividends on foreign-owned stock.
Rental Income from foreign real estate you own or lease and rent out.

Reporting foreign income

If you have foreign earned or unearned income you need to report it on your Form 1040. You also may need to file a FinCEN Form 114 (FBAR) or FATCA Form 8938 to report foreign transactions.

For more information about FBAR, follow this IRS link >>.

At Far North Tax Service, we are committed to helping our clients fulfill their foreign tax obligations and requirements. We will work with you to ensure that you are in compliance with all of your foreign tax obligations.

Foreign tax forms you may need to file your return.

Form	Purpose
Form 1040 — U.S. Individual Income Tax Return	Form 1040 is used by U.S. taxpayers to file an annual income tax return.
Form 1042 — Annual Withholding Tax Return for US Source Income of Foreign Persons	Use Form 1042 to report tax withheld under chapter 3 on certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts. The tax withheld under chapter 4 on with-hold-able payments. The tax withheld pursuant to section 5000C on specified federal procurement payments. Payments that are reported on Form 1042-S under chapters 3 or 4.
Form 1042-S - Foreign Persons US Source Income Subject to Withholding	Use Form 1042-S to report income and amounts withheld as described in the Instructions for Form 1042-S. Specified Federal procurement payments paid to foreign persons that are subject to withholding under section 5000C. Distributions of effectively connected income by a publicly traded partnership or nominee.
Form 1116 — Foreign Tax Credit or Deduction (Individual, Estate, or Trust)	Form 1116 is used to claim the foreign tax credit if you are an individual, estate, or trust; and you paid or accrued certain foreign taxes to a foreign country or U.S. possession.
Form 1118 — Foreign Tax Credit	Corporations use this form to compute their foreign tax credit for certain taxes paid or accrued to foreign countries or U.S. possessions.
Form 2555 — Foreign Earned Income Exclusion	Form 2555 is used to figure your foreign earned income exclusion and your housing exclusion or deduction. You cannot exclude or deduct more than your foreign earned income for the year.
Form 3520 — Annual Return to Report Transactions with Foreign Trusts and Receipt of Foreign Gifts	U.S. persons (and executors of estates of U.S. decedents) file Form 3520 to report certain transactions with foreign trusts, ownership of foreign trusts under the rules of sections Internal Revenue Code 671 through 679, and receipt of certain large gifts or bequests from certain foreign persons.
Form 8621 — Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund	A U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC) files Form 8621 if they receive certain direct or indirect distributions from a PFIC, or recognize a gain on a direct or indirect disposition of PFIC stock, or are reporting information with respect to a QEF or section 1296 mark-to-market election, are making an election reportable in Part II of the form, are required to file an annual report pursuant to section 1298(f).

Form 8828 — US Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests	The tax withheld on the acquisition of a U.S. real property interest from a foreign person is reported and paid using Form 8288. Form 8288 also serves as the transmittal form for copies A and B of Form 8288-A. Generally, transferees must file Form 8288 by the 20th day after the date of the disposition.
Form 8828-A — Statement of Withholding on Certain Dispositions by Foreign Persons	Buyers and transferees use this form with Form 8288 for each foreign person that disposes of real property located in the U. S. to report withholding on the amount realized.
Form 8833 — Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)	Taxpayers use this form to make the treaty-based return position disclosure required by Internal Revenue Code section 6114. Dual-resident taxpayers use this form to make the treaty-based return position disclosure required by Regulations section 301.7701(b)-7.
Form 8865 — Return of U.S. Persons With Respect to Certain Foreign Partnerships	A U.S. person files From 8865 to report the information required under section 6038 (reporting with respect to controlled foreign partnerships), section 6038B (reporting of transfers to foreign partnerships), and section 6046A (reporting of acquisitions, dispositions, and changes in foreign partnership interests).

Updated 12/16/2023