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us expat tax guide – germany

Who doesn’t have to file a US tax return from Germany?

A small percentage of US citizens and Green Card holders living in Germany don’t have to file US tax returns.

The need to file a US tax return is based on worldwide income and filing status. Individuals with worldwide income below their filing status threshold don’t need to file a 1040 tax return with the IRS.

An example of a person who doesn’t need to file is a person earning less than €9,000 as an employee and they are not married. Generally, they won’t need to file because their worldwide income is less than the filing threshold for a “single” person. However, it’s important to keep in mind that the threshold to file for a single person is over US$12,000, slightly increasing each year.

If the person above was married to a German, they would need to file a US tax return because their filing status is “married filing separately” and the threshold to file is when their worldwide income is more than US$5.

What does “Married Filing Separately” mean for US citizens in Germany?

US citizenship holders often get confused with the “Married Filing Separately” status, especially when married to non-US individuals. This status mandates a US tax return for any income over $5.

This is where it catches a lot of Americans and green card holders off guard, even a small amount of bank interest exceeding $5 can trigger the need for a tax return for Americans abroad, including those without active employment.

Additionally, a common mistake among US citizens is filing as “Single” when “Married Filing Separately” is the correct status. You cannot claim to be single if you’re married to a non-US person. This frequent misunderstanding can lead to complications, highlighting the importance of having a tax professional provide accurate guidance on tax responsibilities for US citizens living overseas.

Is filing an FBAR mandatory for US citizens in Germany?

Yes, it is. In addition to income tax considerations, US citizens in Germany with significant amounts in foreign accounts must comply with the Foreign Bank Account Report (FBAR). This separate filing requirement, unrelated to income levels, then adds another layer of complexity to the tax obligations of US citizens.

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