Whether you plan on moving overseas in the near future or you are currently living in a foreign country, it is important to make sure that you are prepared to handle various financial matters, including tax obligations. Aside from dealing with taxes in the country you move to, it is critical to understand your tax obligations if you are a US citizen, regardless of where you live.

Unfortunately, some people do not understand the law, whether they are given false information or they wrongly assume that they do not have to file taxes. This can result in harsh financial penalties and high levels of stress down the road.

Looking at tax obligations while living overseas

According to the Internal Revenue Service, a US citizen’s income is subject to income tax laws in the U.S. regardless of where they live or where they earned the money. As with those living in the states, filing deadlines apply and taxpayers are able to file their taxes online. Depending on your income and other details (such as the number of days you live overseas), you could have the ability to avoid paying taxes on your overseas income due to the foreign-earned income exclusion. However, you are still required to file a U.S. tax return.

Looking at the consequences of failing to file a tax return

Unfortunately, some people do not file tax returns or pay taxes they owe while living abroad. Regardless of the reasons why, many face harsh consequences down the road, such as financial penalties, overwhelming anxiety and even the revocation of a U.S. passport.