Americans Living in the UAE – Filing a US Expat Tax Return Explained

expat filing taxes in the uae

The UAE is an exciting and popular expat destination for Americans. Many Americans living in the UAE work in the oil industry, or in support roles to the military. With a year-round hot climate, an abundance of entertainment , and an internationalist culture, it’s a great place to spend some time. With the US dollar currently strong, it’s a good time to move to the UAE, so read on to find out what you need to know about filing your US expat tax return as an American expatriate living in the UAE.

General Requirements

All US citizens and green card holders living abroad are required to file a US federal tax return every year reporting their worldwide income. So if you’re American and you live in the UAE, whether you work for an Emirati or international company, or if you’re self-employed, you still have to file a US return declaring your worldwide income. In theory, you’re liable to pay US taxes too, however in practice many people don’t end up paying US tax as they claim the Foreign Earned Income Exclusion (which excludes up to the first around $100,000 of foreign earned income from US tax liability), possibly as well as the Foreign Housing Exclusion if they rent their UAE accommodation. These both need to be actively claimed by filing the relevant form when you file your federal tax return.

Filing Dates for Expats

While any tax you may owe to the IRS still has to be paid by April 15th, expats get an automatic filing extension until June 15th, with a further extension available upon request until October 15th. The reason for this extra time to file is that there’s often more to file when you’re an expatriate.

Extra Filing Requirements for Expats

“Social security contributions are applicable in the UAE only for UAE nationals. Neither the employer of an expatriate nor the expatriate employee are required to make any social security contributions.”

American expatriates have to declare any overseas assets worth over $200,000 per person (excluding property and other tangible assets like cars and jewelry) using form 8938. If you have a total of over $10,000 in foreign bank or investment accounts at any time during a tax year meanwhile, you are required to file an FBAR (foreign bank account report) declaring the account details and balances. This includes accounts you have any kind of signature authority or control over, such as a company bank account, or a joint account. If you have been living in the UAE for a while but weren’t aware of your US filing requirements, don’t worry though, as there’s an IRS amnesty program that lets you catch up on your filing without paying penalties (which can be steep if the IRS finds you first) called the Streamlined Procedure.

What about Emirati Taxes?

The UAE has no income tax, no capital gains tax, and no gift or estate taxes.

While there’s currently no VAT, it’s due to be introduced in 2018.

Local and municipal taxes are added to utility bills, and health insurance in mandatory for residents.

As there’s no income tax, no UAE income tax return needs to be filed.

Need some help?

US Expat tax filing requirements are complex compared to Americans filing from the US, and they also have to be filed potentially as well as a Emirati tax return. We recommend that for your US expatriate taxes you consult an expat tax specialist who will ensure that you employ the right strategies and claim the right exemptions to minimize your US tax liability with respect to your individual situation.

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