No matter what country you live in, taxes are inevitable. If you are an expatriate from the United States living in Guatemala, you likely will not be able to avoid paying U.S. taxes. Additionally, you might have tax obligations in Guatemala, depending on your living and working situation. It is best to speak to a tax professional about your situation before you file any tax returns.
If you are a U.S. citizen living and working abroad in Guatemala, you may owe both U.S. and Guatemalan taxes. As a citizen, you must file U.S. taxes no matter where you are. The United States taxes people based on their worldwide income, meaning the income you earn living in Guatemala might be subject to taxation. Depending on how long you have lived in Guatemala and your life there, you might be a tax resident and owe taxes there. However, we can help you determine if certain tax breaks and credits in the U.S. can help you avoid losing too much money to taxes.
Call our tax CPAs for American expats in Guatemala at US Tax Help at (541) 362-9127 to review your tax situation.
How to Pay Taxes as a U.S. Expatriate Living in Guatemala
Taxes are a near universal experience. Whether you move to a new country and start working abroad or remain in the United States, you must always submit U.S. tax returns. The only way you would not have to file U.S. taxes would be if you renounced your citizenship to move to Guatemala. On top of it all, you might also be required to pay taxes in Guatemala, even if you are not a citizen.
Your U.S. Taxes
The United States taxes citizens based on their worldwide income. As long as you are a citizen subject to taxation, you must file your U.S. taxes no matter where you live. Even the income you earn while living and working in Guatemala may be subjected to taxation by the United States government. For example, if you live in Guatemala and work for a business there, you still have to consider your U.S. tax obligations even if the money does not come from the United States at all.
On top of it all, you might also have to disclose information to the United States government regarding foreign accounts and assets. If you meet specific criteria, you might have to file a Report on Foreign Bank and Financial Accounts (FBAR). You must file an FBAR report if you have a financial interest in or authority over financial accounts outside the U.S. Additionally, those accounts must have an aggregate value of more than $10,000 at any time during the calendar year before you file taxes.
Your Guatemalan Taxes
Depending on your unique situation, you might have tax obligations in Guatemala. Many expats living in Guatemala are not citizens but are tax residents. This means that even though they do not have Guatemalan citizenship, expats still owe taxes in Guatemala. Tax residency laws vary from country to country, and you can ask our team for help determining whether you are a tax resident of Guatemala.
Generally, people may be considered tax residents of a foreign country if they have lived there for an extended period of time, own property, have a job, and have ties to their local communities. Again, these requirements will vary, and you should consult with a professional about your specific situation.
Possible Tax Breaks or Benefits You Can Utilize as a U.S. Expat in Guatemala
You might be able to take advantage of certain tax benefits in the United States to hopefully reduce your tax obligations and avoid being taxed twice on the same income. Remember, these tax credits and credits apply to your U.S. taxes, not your taxes in Guatemala.
Foreign Tax Credit
You might be able to claim a foreign tax credit to reduce your tax obligations in the U.S. This credit may be claimed if you actually paid foreign taxes in Guatemala. More specifically, this credit may only apply to specific types of taxes, including income, war profits, and excess profits. The credit works like a deduction. Whatever money you paid in foreign taxes may be deducted from the deductible income on your U.S. taxes. If you paid $1,000 in taxes in Guatemala, you may claim a $1,000 foreign tax credit.
Foreign-Earned Income Exclusion
You might instead take advantage of the foreign-earned income exclusion. To qualify, you must earn income from foreign sources, and your tax home must be in a foreign country. If you work in Guatemala, the foreign-earned income exclusion might greatly help you.
Foreign-earned income may be almost any sort of income earned in a foreign country. This even includes income earned from a U.S. based business or company as long as you are working abroad. For example, you might work in Guatemala, but the company you work for is a large company based in the United States. Your income may still be considered foreign-earned. However, people working abroad for the U.S. government may not qualify.
In 2024, you may exclude up to $126,500 of your foreign-earned income from your U.S. taxes. For many taxpayers, this might cover their entire income, drastically reducing their tax obligations.
How to Prepare Your Taxes in the U.S. and Guatemala
The best way to make sure your taxes are correct and filed on time is to work with a tax CPA. Taxes are notoriously complicated in almost any country, and dealing with taxes in more than one country might be a logistical nightmare. The sooner you talk to a tax professional about your situation, the sooner you can begin preparing.
We might need time to determine your tax obligations and whether you are eligible for any credits or exclusions. You might also have to gather information from the Guatemalan government regarding your tax residency status.
Contact Our Tax Accountants to Discuss Your Situation
Call our tax CPAs for American expats in Guatemala at US Tax Help at (541) 362-9127 to review your tax situation.