US Expat Taxes for Americans Living in Angola – What You Need to Know
It has been estimated that there are several thousand Americans living in Angola.
Living in Angola is an incredible experience for a number of reasons, including the friendly locals, the relaxed pace of life, and the climate and beaches. As an American expatriate living in Angola though, what exactly do you need to know regarding filing US expat (and Angolan) taxes?
All US citizens and green card holders who earn a minimum of around $10,000 (or just $400 for self-employed individuals) anywhere in the world are required to file a US federal tax return and pay taxes to the IRS, regardless of where in the world they live or their income is generated.
The good news is if you are paying income tax in Angola, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If you earn over US$10,000 (or just $400 of self-employment income), wherever the income originates in the world you have to file IRS form 1040.
While any US taxes due are still due by April 15th, expats get an automatic filing extension until June 15th, which can be extended further on request until October 15th.
If you have overseas assets worth over US$200,000 per person, excluding your home if it is owned in your own name, you also have to file form 8938 to declare them.
If you had a total of at least US$10,000 in one or more foreign bank and/or investment accounts at any time during the tax year, you also have to file FinCEN form 114, otherwise known as a Foreign Bank Account Report or FBAR.
If you pay income tax in Angola, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS.
“Employees do not file tax returns. Employment income tax is assessed and paid on a Pay As You Earn (PAYE) basis. Self-employed workers file an annual return disclosing their annual income during March of the following year.”
The main exemptions are the Foreign Earned Income Exclusion, which lets you exclude the first around US$100,000 of foreign earned income from US tax if you can prove that you are a Angolan resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Angola. These exemptions can be combined if necessary. Remember though that even if you don’t owe any tax to the IRS, if your income is over US$10,000 (or $400 if you’re self-employed) you still have to file a federal return.
The US and Angolan governments share taxpayer info, and Angolan banks pass on US account holders’ account info to the IRS, so it’s not worth not filing or omitting anything on your return. The penalties for incorrect or incomplete filing for expats are steep to say the least.
If you’re a US citizen, green card holder, or US/Angolan dual citizen, and you have been living in Angola but you didn’t know you had to file a US tax return, don’t worry: there’s a program called the IRS Streamlined Procedure that allows you to catch up on your filing without paying any penalties. Don’t delay though, in case the IRS comes to you first.
Angolan taxes – what you need to know
Angolan residents (and non-residents) are only taxed on their income sourced in Angola. Self-employment income is taxed at a flat rate of 15% of 70% of the income (so an effective rate of 10.5%), while employment income is taxed on a progressive scale from 0% to 25%.
Foreigners living in Angola are considered a resident for tax purposes if they have a permanent home in Angola at the end of the tax year, or if they spend over 90 days in Angola in total during the tax year. However both residents and non-residents are only taxed on income sourced in Angola.
The Angolan tax year is the same as in the US, which is to say the calendar year. If your only source of income is from employment in Angola, your income will be taxed at source and you won’t have to file a tax return. Otherwise, tax returns are due by March 31st. The Angolan tax authority is called the General Tax Administration.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Angola that you contact a US expat tax specialist.