Lots of people leave the United States for new experiences abroad. Some settle down in other countries for the long term or even permanently. While living and working abroad can be exciting, it can also be legally complex. For example, many U.S. expats are surprised to learn they still have tax obligations in the United States. They might be even more surprised to learn they have tax obligations in their new country of residence, like Jamaica.
Expats from the United States often still must pay U.S. taxes even after moving abroad to Jamaica. On top of that, depending on your circumstances in Jamaica, you might have to pay taxes there. Jamaican law determines whether you are a legal tax resident, and you should discuss your situation with a tax professional. Having tax obligations in multiple countries can be expensive. We can help you find tax breaks, credits, or exclusions that might help you reduce your taxable income in the United States to make your life more affordable.
You can contact our tax CPAs for American expatriates living in Jamacia for help by calling US Tax Help at (541) 362-9127.
Your U.S. Tax Obligations After You Move to Jamaica
Every American knows the frustration of filing their taxes. Some people believe they will never have to deal with their taxes in the U.S. again because they are moving to Jamaica or any other country. While your tax situation will almost certainly differ as an American expatriate, your tax obligations do not disappear. Whether on U.S. soil or across the globe, you must file your U.S. taxes.
If you are living in Jamaica but still a U.S. citizen, you likely still owe taxes in the United States. The U.S. taxes people on their worldwide income. This means that it does not matter where you work or where you are earning your income. It is all taxable by the United States government. Even if you are not a U.S. citizen but left the United States in the last year, you might still have to file your taxes one final time for the year leading up to your departure.
Expatriates often must file federal tax returns, and some might also have to file state tax returns. This may depend on which state you lived in before you moved to Jamaica. If you still own a home in the United States, you might have to pay state taxes wherever your home is located. Again, this might vary by state, and you should speak to our tax CPAs for American expatriates living in Jamacia for help.
One of the benefits of being an expatriate is having more time to figure out your tax situation. U.S. citizens living abroad have an automatic 2-month extension on their taxes. If this is your first year living in Jamaica, this extra time might be necessary to determine the extent of your tax obligations.
Your Jamaican Tax Obligations After Moving From the United States
Not only do you have to think about filing tax returns in the United States, but you must also think about whether you have tax obligations in Jamaica. Some expats assume that since they are not citizens of Jamaica, or whatever country they move to, they do not have to pay taxes. This is not true and might be an expensive mistake to make. Even though you might not be a Jamaican citizen, you might be a legal tax resident.
Whether you are a tax resident may be determined by Jamaican law. Factors used to determine tax residency tend to vary by country, but there are common factors that come up frequently. For example, your time in Jamaica may factor heavily into whether you are a tax resident. If you plan to stay in Jamaica for only a few months, you are likely not a tax resident. However, if you are there indefinitely or permanently and have been there for close to a year, there is a strong chance you are a legal tax resident and owe Jamaican taxes.
Many people relocate for work, and it is possible that you moved to Jamaica for a job opportunity or because your employer moved your position overseas. Earning income in Jamaica is a strong indicator of whether someone is a tax resident. Additionally, owning property in Jamaica makes you more likely to be considered a tax resident.
How to Reduce Your Overall Tax Obligations as a U.S. Expat in Jamaica
As an American expatriate in Jamaica, you might have tax obligations in both countries. This is not exactly ideal and may be incredibly expensive. We can help you find ways to reduce your tax obligations in the United States so that you can continue living and working abroad.
Foreign Earned Income Exclusion
As mentioned before, the U.S. government taxes citizens on their worldwide income, including income they earn working and living abroad in places like Jamaica. However, if you work in Jamaica, you might be able to claim a foreign-earned income exclusion to hopefully reduce your taxable income. The exclusion may apply to income earned while working in other countries, whether you are a citizen of that country.
To claim this exclusion, you must be a U.S. citizen who resides in a foreign country for at least one uninterrupted tax year or 330 full days during a 12-month period. Alternatively, you may be a U.S. resident alien who is a citizen of a country with a tax treaty with the U.S. who lives in another country for an uninterrupted tax year. As of 2024, you may exclude up to $126,500 of income while working in Jamaica, even if the income is from a U.S. source. For example, if you live in Jamaica but the company you work for is based in the United States, you may still claim this exclusion.
Foreign Tax Credit
Another option is to claim a foreign tax credit. This may be useful for those who pay larger taxes in Jamaica, as it allows them to deduct taxes paid to another country from their U.S. taxable income. If, for some reason, you owe significant Jamaican taxes, that money may be deducted from your U.S. taxes. This tax credit may only be applied to certain expenses, including income taxes, taxes on war profits, and excess profit taxes. This credit is taken as a deduction on Schedule A of Form 1040 of your U.S. taxes.
Contact Our Foreign Tax Accountants for Help with Your Taxes Today
You can get help from our tax CPAs for American expatriates living in Jamacia by calling US Tax Help at (541) 362-9127.