Tax Guide for US Expats Living in Colombia

Perhaps you moved abroad for a new job or just wanted to be closer to family. If you moved to Colombia from the United States, you should speak to our team about your potential tax obligations in both countries.

As a U.S. expat living in Colombia, you have certain tax obligations and liabilities in both countries, depending on your situation. Even at the best of times, taxes are complicated. If you have lived and worked in Colombia long enough, you might be considered a legal tax resident and be required to pay taxes even if you are not a Colombian citizen. If you retain your U.S. citizenship, you might also have certain tax obligations here. Even if you renounce your U.S. citizenship, you might be taxed as a covered expatriate. Our team can help you look into taking advantage of certain tax breaks or benefits like the foreign-earned income exclusion or the foreign tax credit.

Contact our team at US Tax Help for assistance with your taxes by calling (541) 362-9127.

How to Pay Taxes as a US Expat Living in Colombia

Living in Colombia can be a very exciting time, and you might be extremely busy building your new life there. It is important to consider whether you have to pay taxes while living in Colombia. On top of that, you must figure out how to pay your taxes in the United States while living in a different country. Our CPAs can work with you to determine your international tax obligations.

Tax Residency in Colombia

You do not have to be a Colombian citizen to be obligated to pay Colombian taxes. Rather, you must be considered a tax resident. Whether someone is considered a tax resident depends on the laws imposed by their country of residence. This means Colombian law determines whether you are a tax resident, not the United States.

According to tax laws in Colombia, a person who remains continuously or discontinuously in Colombia for at least 183 calendar days during any period of 365 days may be considered a tax resident at the end of this period. Those who move to Colombia permanently or intend to remain there for the long term will likely be considered tax residents and will have to pay Colombian taxes.

Alternatively, if you are a national living in Colombia, you may be a tax resident if you have significant financial dealings in the country. If enough of your income is derived from Colombian sources or you have significant financial assets administered in the country, you might be a tax resident.

United States Taxes

You must also think about whether you are still obligated to pay taxes in the United States. If you have not renounced your U.S. citizenship, you likely still have to pay some form of U.S. taxes. This is especially true since the United States taxes citizens on their worldwide income, not just income derived from the U.S.

Under the Foreign Account Tax Compliance Act (FATCA), U.S. taxpayers who hold financial accounts or assets in other countries might have to report those assets to the IRS. Foreign assets usually must be reported if their value exceeds $50,000. You can use Form 8938 to report FATCA information if it applies to you. If you do not need to file an income tax return in the U.S., you do not have to file Form 8938.

You might also have to file a Report of Foreign Bank and Financial Accounts (FBAR). You need to file FBA reports if you have authority over or interest in a financial account outside the U.S. and the aggregate value of those accounts is more than $10,000 at any point during the calendar year. Whether the accounts have produced any taxable income is irrelevant.

Talk to our team about what kind of holdings, accounts, and financial assets you might have in Colombia. Depending on your situation, you might need to disclose information about those holdings when you file your U.S. taxes.

Possible Tax Breaks or Benefits for US Expats in Colombia

Having tax liabilities in more than one country is not exactly ideal. It can quickly become very expensive. To ease your financial burden, our team can help you explore possible tax breaks and benefits to reduce your tax obligations in the United States.

Automatic Extension

First, we should think about when you must file your taxes in the United States. While the tax deadline is usually the same from year to year, people living abroad may have additional time to prepare their taxes. There is an automatic 2-month extension for those paying federal income tax and living outside the United States, and your main place of business is outside the U.S.

Foreign-Earned Income Exclusion

It might feel a bit unfair to have to pay taxes on your income in Columbia and then again in the United States. To avoid paying taxes on the same income twice, you should consider claiming the foreign-earned income exclusion.

Using this tax break, you may exclude the income you earn in Colombia from your U.S. taxes, at least up to a certain amount. As of 2024, taxpayers may exclude up to $126,000 from their U.S. taxable income. For many, this is all or nearly all the income they earn, greatly reducing their tax liabilities in the U.S.

Foreign Tax Credit

Another option is to claim a foreign tax credit. This only works if you have already paid taxes on your income in Colombia. Additionally, you cannot claim a foreign tax credit if you have already elected to use the foreign-earned income exclusion.

Essentially, the money you pay in taxes to Colombia may be taken as a deduction on your U.S. taxes, reducing your taxable income. Talk to our team about which tax breaks and benefits will help you the most.

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