US Expat Taxes for Americans Living in Argentina – What You Need to Know
There are an estimated 60,000 Americans living in Argentina.
There are plenty of things for Americans to love about living in Argentina, the lifestyle, the landscapes, the wines, cuisine and culture to name but a few. As an American expatriate living in Argentina though, what exactly do you need to know regarding filing US expat (and Argentinian) taxes?
All US citizens and green card holders who earn a minimum of $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 Argentina, 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.
“Individuals resident in Argentina are taxable on worldwide income and may obtain a foreign tax credit for taxes paid on income from foreign sources.”
– PriceWaterhouse Cooper
If you pay income tax in Argentina, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS. 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 Argentinian resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Argentina. 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 Argentinian governments share taxpayer info, and Argentinian 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/Argentinian dual citizen, and you have been living in Argentina 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.
Argentinian taxes – what you need to know
Residents in Argentina pay income tax on a scale from 5% to 35%. VAT is 21%, and there is a wealth tax on property and cars of between 0.5% and 1.25% a year. There are also high import taxes on all imported goods, including personal items.
Foreigners are considered residents for tax purposes if they are assigned to Argentina for over 5 years, or if they reside in Argentina for more than 12 months.
Foreigners who reside in Argentina for less than 6 months a year as well as those assigned to Argentina for less than 5 years have a different status with lower tax rates.
The Argentinian tax year is the same as in the US. Argentinian tax returns are due by June 30th. The Argentinian tax authority is called AFIP.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Argentina that you contact a US expat tax specialist.