U.S. Tax Preparation for Expats in the UAE
Life as a U.S. expatriate has many benefits, but it’s not always easy. Being a U.S. expatriate means understanding and complying with two different tax systems. U.S. expats living in the United Arab Emirates must often make some extra considerations while paying their taxes, since they are usually military personnel. U.S. expats living in the UAE should use the services of a foreign tax accountant that specializes in U.S. tax preparation for expats living in the UAE.
If you are a U.S. expat or member of the military who is living in the UAE (or who is planning to move to the UAE in the near future), get in touch with an experienced foreign tax accountant from US Tax Help today. Ted Kleinman, CPA, can put more than 30 years of experience helping American expats with their taxes to use to help you. To learn more about using foreign tax accounting services to help you with your tax preparation as an expat in the United Arab Emirates, call US Tax Help today at (541) 362-9127.
How to Know If You Are a Covered Expatriate Living in the UAE
U.S. citizens that are living abroad are required to report the income they make in both the United States and other countries. This applies to U.S. citizens that are living in any country, including the United Arab Emirates. People that are considered to be “covered expatriates” must meet additional tax requirements (also known as the expatriation tax or exit tax).
Covered expatriates are those whose expatriation date was after June 16, 2008, and who meet the following criteria: a net worth of over $2,000,000 on the date of expatriation, the inability to certify with the IRS that all tax reporting requirements during the five years preceding the date of expatriation were satisfied, or an annual net income exceeding a certain amount during the five years preceding expatriation.
U.S. Tax Preparation for Military Personnel in the United Arab Emirates
United States expatriates that relocate to the United Arab Emirates are usually military personnel, which means they have tax obligations that differ slightly from those of civilians.
Tax Deadlines for U.S. Military Personnel in the UAE
Members of the military who are living abroad benefit from an automatic two-month extension for filing their United States taxes. Military members that are serving in a combat zone (which includes the United Arab Emirates, as well as Iraq, Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Serbia, Albania, and Afghanistan) or other qualified hazardous duty areas, have a post of duty outside of the United States and Puerto Rico, or that are in military or naval service outside of the United States and Puerto Rico automatically qualify for this extension.
Military personnel that miss the automatic extended deadline for filing their taxes can apply for another tax filing deadline by filing Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return), which will give them until October 15 to file.
Tax Breaks for U.S. Military Personnel in the UAE
Members of the United States military can benefit from certain tax breaks. They can receive combat pay, which is not counted as income, reducing their tax liability. Enlisted members of the military may also benefit from other tax benefits, such as being exempt from counting repayments on student loans and bonuses on reenlistments as income. Military personnel that are in the Reserves can write off travel expenses if they travel more than 100 miles away from home.
Why Expats in the UAE Have to File an FBAR
American expats living in other countries, including the United Arab Emirates, are required to file certain tax preparation forms. United States residents that live abroad must report their foreign income and assets to the federal government, regardless of the country they live in. The United States is unique in that it’s one of the only countries to tax based on citizenship, not residence.
To report their foreign income and assets, American expats can file a Report of Foreign Bank and Financial Accounts, also known as an FBAR. U.S. expats must file an FBAR if they have either signature authority or financial interest in any foreign financial account and if the total value of that foreign financial account exceeded $10,000 at any point in the year. American expats can file their FBAR online using FinCEN Report 114.
Using the Streamlined Offshore Procedures
If you are an American expat living in the UAE that has been noncompliant with U.S. tax law, you may be able to avoid criminal liability by participating in the Streamlined Offshore Procedures through the IRS. Through this program, noncompliant taxpayers can resolve their tax liabilities and reduce their chance of penalties or prosecution by voluntarily disclosing their tax information. However, these procedures only apply to expats whose lapse in reporting was accidental, and it can only be used once to come into compliance with U.S. tax law.
Call Our Accountant for U.S. Expats Living in the UAE
Because they have to navigate two different systems of taxation, U.S. expatriates living in the United Arab Emirates don’t always have it easy. Luckily, there is help available for U.S. tax preparation for expats in the UAE. U.S. expats in the UAE are encouraged to get in touch with Ted Kleinman, the foreign tax accountant at U.S. Tax Help, for assistance with tax planning and preparation. For more information, call U.S. Tax Help today at (541) 362-9127.