US Expat Taxes for Americans Living in Jordan – What You Need to Know
It has been estimated that there are several thousand Americans living in Jordan.
Living in Jordan is an incredible experience for a number of reasons, including the friendly locals, the Arabic cuisine and culture, and the incredible landscapes and architecture. As an American expatriate living in Jordan though, what exactly do you need to know regarding filing US expat (and Jordanian) 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 Jordan, 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.
“There is a property tax in Jordan that is paid annually. The property tax rate is determined by the municipality and is based on the location and size of the property, or in some cases the annual rental value.”
If you pay income tax in Jordan, 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 Jordanian resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Jordan. 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 Jordanian governments share taxpayer info, and Jordanian 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/Jordanian dual citizen, and you have been living in Jordan 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.
Jordanian taxes – what you need to know
Jordanian residents (as well as non-residents) are solely taxed on their Jordanian income on a scale of 5% to 30%.
Foreigners living in Jordan are considered a resident for tax purposes if they spend over 183 days in Jordan in the tax year.
The Jordanian tax year is the same as in the US, which is to say the calendar year. Tax returns are due by April 30th. The Jordanian tax authority is called the ISTD (Income and Sales Tax Department).
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Jordan that you contact a US expat tax specialist.