US Expat Taxes for Americans Living in Oman – What You Need to Know
It has been estimated that there are several thousand Americans living in Oman.
Living in Oman is an incredible experience for a number of reasons, including the climate, the beaches, the expat community, and the quality of life. As an American expatriate living in Oman though, what exactly do you need to know regarding filing US expat (and Omani) 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 Oman, 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.
“In 2017 the Oman Government passed, by Royal Decree, a number of significant changes to Tax Law that will apply to companies and other entities which are subject to corporate income tax.” – EY
While most expats won’t pay any income tax in Oman, they can reduce their US tax liability by claiming 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 an Omani resident. 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.
Omani 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/Omani dual citizen, and you have been living in Oman 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.
Omani taxes – what you need to know
There are no personal taxes in Oman – no income tax, wealth tax, capital gains tax, or estate tax. The Omani government raises revenue from corporation taxes, in particular from oil firms. A number of changes were made to Omani corporation taxes in 2017, to compensate for continued low oil prices.
As there are no personal income taxes, there is no tax filing requirement for individuals. If you have any questions about taxes in Oman, direct them to the Omani Tax Authority, the Secretariat General for Taxation.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Oman that you contact a US expat tax specialist.