Get to know the authorIt has been estimated that there are several thousand Americans living in Uzbekistan.
Living in Uzbekistan is an incredible experience for a number of reasons, including the friendly locals, the quality of life, and the culture and cuisine. As an American expatriate living in Uzbekistan though, what exactly do you need to know regarding filing US expat (and Uzbekistani) 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 Uzbekistan, 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.
If you pay income tax in Uzbekistan, there are several exemptions that allow you to pay less or no US income tax on the same income to the IRS.
“Expatriate individuals leaving Uzbekistan should file a ‘departure’ PIT return for the period from 1 January to the departure date one month in advance of the departure. However, if the expatriate leaves Uzbekistan before 1 February, they are not required to file a tax return.”
– PwC
The main exemption 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 Uzbekistani resident, and the Foreign Tax Credit, which gives you a $1 tax credit for every dollar of tax you’ve paid in Uzbekistan. 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 Uzbekistani governments share taxpayer info, and Uzbekistani 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/Uzbekistani dual citizen, and you have been living in Uzbekistan 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.
Uzbekistani taxes – what you need to know
Uzbekistani residents are taxed on their worldwide income at a flat rate of 12%. Dividends and interest are taxed at a flat rate of 10%. Non-residents are solely taxed on income sourced in Uzbekistan.
Foreigners living in Uzbekistan are considered a resident for tax purposes if they are physically present in Uzbekistan for 183 days or more in a 12 month period that ends within the tax year, or if they spend more time in Uzbekistan than in any other country in a year.
The Uzbekistani tax year is the same as in the US, which is to say a calendar year. Uzbekistani tax returns are due by April 1st. The Uzbekistani tax authority is called the State Tax Committee.
We strongly recommend that if you have any doubts or questions about your tax situation as a US expat living in Uzbekistan that you contact a US expat tax specialist.
