US Expat Taxes for Americans Living in Belize – What You Need to Know
It has been estimated that there are several thousand Americans living in Belize.
Living in Belize is an incredible experience for a number of reasons, including the friendly locals, the climate, the laid-back lifestyle, the beaches, the fact it’s English-speaking, and the low cost of living. As an American expatriate living in Belize though, what exactly do you need to know regarding filing US expat (and Belizean) 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 Belize, 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 the 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.
“Belize, has enjoyed a long history of economic, social and political stability, and is one of the few remaining pristine environments on earth.”
If you pay income tax in Belize, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS. The main one is 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 Belizean resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Belize. 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 Belizean governments share taxpayer info, and Belizean 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/Belizean dual citizen, and you have been living in Belize 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.
Belizean taxes – what you need to know
Belizean residents are only taxed on income sourced in Belize. Belizean income is taxed at a flat rate of 25% after the personal exemption, which changes regularly and depends on your circumstances, but is generous. Additionally, there is no capital gains or inheritance tax.
Foreigners living in Belize are considered a resident for tax purposes if they spend over 183 days a year in Belize, or if they have a permanent residency visa, which is straightforward to obtain.
The Belizean tax year is the same as the US, which is to say the calendar year. Tax returns are due by March 31st. The Belizean tax authority is called the Income tax Department.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Belize that you contact a US expat tax specialist.