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Who needs to file a US tax return?

Living in Saudi Arabia as an American expat or dual national brings its own set of challenges, especially when it comes to taxes. The US has a unique way of handling taxes—it considers the worldwide income of its citizens and green card holders. So, if you’re in Saudi Arabia, it’s important to keep in mind that your income, no matter where it’s earned, falls under the US tax umbrella.

Who should file a tax return?

Let’s break down who needs to file a tax return. It’s not just about where you earn your money; it’s about how much you earn and your marital status:

  • Single Filers: Earning more than $12,950? Time to file a tax return.
  • Married and Filing Jointly: The magic number here is $25,900.
  • Married but Filing Separately: This one’s a bit tricky. Even if you’re married to someone who isn’t a US citizen or green card holder, and even if you earn as little as $5, you still need to file.

Remember, these figures are about your total income from everywhere, not just the US or Saudi Arabia.

What about non-working spouses?

Here’s a scenario that often causes confusion: You’re married to a non-US person and not working. Maybe you’re taking care of kids or just taking a break. Even then, you might need to file a tax return. It sounds surprising, but even a small amount like $5 in bank interest can mean you have to file.

How do I figure out my filing status?

Deciding your filing status can be a bit of a puzzle, especially if you have different types of income or a non-US spouse. The best way to do it? Talk to a tax pro. They can look at your whole financial picture and tell you exactly what you need to do.

I’m self-employed, what do I need to know?

If you’re self-employed, the rules are a bit different. Earn more than $400 in net income from anywhere in the world, and you’ll need to file a US tax return. Yes, that includes income from Saudi Arabia or anywhere else.

What’s the deal with FBAR and Form 8938?

There’s more to the story than just tax returns. If you have foreign bank accounts that hit a total of more than $10,000 at any time during the year, you need to file an FBAR. This is all about keeping things transparent and fighting against tax evasion.

Then there’s Form 8938. This one’s for reporting certain foreign financial assets if they go over specific limits.The thresholds for reporting vary based on your residency and filing status. For instance:

  • For Individuals Living in the US: Single filers or those married filing separately must report if foreign assets exceed $50,000 on the last day of the tax year or $75,000 at any point during the year. For married individuals filing jointly, these thresholds double to $100,000 and $150,000, respectively.
  • For Individuals Living Abroad: The thresholds are higher. Single filers or those married filing separately must report if assets exceed $200,000 on the last day of the tax year or $300,000 at any point during the year. For joint filers, these amounts are $400,000 and $600,000, respectively.

Form 8938 covers a broader range of assets than the FBAR, including foreign bank accounts, certain foreign securities, and interests in foreign entities. It’s important to note that while there’s some overlap between FBAR and Form 8938, they are not interchangeable, and each serves a unique reporting purpose. Non-compliance with these forms can lead to significant penalties, which is why it’s best to consult with a tax professional in order to meet these obligations.

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