US Expat Taxes for Americans Living in Qatar – What You Need to Know
It has been estimated that there are several thousand Americans living in Qatar.
Living in Qatar is an incredible experience for a number of reasons, including the low taxes, the climate and culture, and the thriving expat community. As an American expatriate living in Qatar though, what exactly do you need to know regarding filing US expat (and Qatari) 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 Qatar, 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.
“Qatar operates a territorial taxation system which means an individual should be taxable in Qatar if they have generated qualifying Qatar-source income, regardless of their tax residence.” – PwC
While most expats won’t pay any income tax in Qatar, 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 a Qatari 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.
Qatari 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/Qatari dual citizen, and you have been living in Qatar 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.
Qatari taxes – what you need to know
Both Qatari residents and non-residents are only taxed on income arising in Qatar. Salaries and wages aren’t taxed however, although some-self-employment and other types of income are. This means most expats won’t have to pay any Qatari income tax. Other types of income are taxed at a flat rate of 10%.
Qatar currently has no wealth, inheritance, estate or gift taxes.
Foreigners are considered residents in Qatar if they have a permanent home in Qatar, or if they are physically present in Qatar for at least 183 days in 12 month period.
Most expats living in Qatar won’t need to file pay Qatari income tax or file a tax return, unless they are self-employed. The Qatari tax authority is called the General Tax Authority.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Qatar that you contact a US expat tax specialist.