Tax Guide for US Expats Living in Turkey

Choosing to expatriate is a massive decision that has tax implications for American citizens, including those who move to Turkey.

Expats who live in Turkey still have to report their incomes and other financial information to the IRS annually. While the due date for expats is Tax Day, they can get a two-month extension to submit, though interest will start accruing on unpaid tax on the original due date. After you move abroad, you can still claim beneficial credits and exclusions. In fact, you could be eligible for even more, like the foreign earned income exclusion, which could effectively erase your taxable income. Becoming an expat might introduce additional filing requirements, such as Form 8938, depending on the size of your foreign financial assets. Expats may also have to file a Report of Foreign Bank and Financial Accounts if they have more than $10,000 in foreign bank accounts.

For help figuring out your tax liability abroad, call the tax CPAs for American expatriates living in Turkey at US Tax Help at (541) 362-9127.

What You Need to Know About US Taxes as an Expat Living in Turkey

Expatriating to Turkey or another foreign country as an American citizen might change how you approach tax season. To start, you need to straighten out if you still have a tax liability, and, if so, what forms you have to file and by what due date.

Do You Have to File US Taxes?

The short answer is yes. Any American citizen who moves abroad still has to file Form 1040 and any supplemental schedules or forms with the IRS annually. Our tax CPAs for American expatriates living in Turkey can identify the right filing status for you based on your household and income after moving abroad. Generally, the only way expats can totally eliminate their tax filing liabilities is to renounce their American citizenship, which many expats do not want to do, as that creates a whole host of issues, especially if they ever want to return to the United States.

If you do not file your taxes while residing abroad in Turkey and fall seriously delinquent with the IRS, the U.S. Department of State might revoke your American passport until you settle outstanding debts with the IRS.

Note that you will likely have a tax liability to the Turkish government as well.

What is the Tax Due Date for Expats?

Tax Day is when all tax returns must be submitted to the IRS. That said, in most cases, expats can benefit from an automatic two-month filing extension, which would effectively push back their due date until the middle of June.

Expats who need even more time to prepare and file their taxes, which happens in some cases, especially when expats are initially unaware of their tax liabilities following a move abroad, can request it from the IRS. Our tax accountants can help you submit IRS Form 4868 to request a six-month extension from the original Tax Day due date. If the IRS approves your request, you will have until mid-October to submit your taxes from Turkey.

Can You Still Claim Credits and Deductions?

Moving abroad does not make you ineligible for tax credits and deductions. In fact, you can claim even more appealing exclusions after moving to Turkey. For example, the foreign earned income exclusion allows expats to lower their taxable incomes substantially. While the IRS taxes worldwide incomes, expats can exclude up to $126,500 of their foreign incomes from taxation. Each taxpayer can exclude this amount, meaning married expats filing their taxes together can each exclude it, totaling $253,000. We can help you do this by completing IRS Form 2555.

Another attractive credit is the foreign tax credit. By filing Form 1116 and noting income, war, or excess profits taxes paid on your income to Turkey, you can lower your tax liability to the IRS. This reduces cases of double taxation on the same income, as you can apply taxes paid to Turkey, dollar for dollar, to your would-be tax liability to the United States. For some expats, claiming the foreign tax credit might totally eliminate their tax responsibility.

Through tax planning, we will review all possible perks you are eligible for to lower your taxable income and tax liability as much as possible while complying with IRS rules. Whether or not you can claim these tax benefits will depend on your residency status, and we can confirm if you pass either the bona fide residency test or the physical presence test before filing your U.S. taxes.

Do You Have Additional Filing Requirements?

Moving abroad might create new filing requirements for expats they did not have when living in the United States. For example, if you transfer your savings to a foreign bank account after moving to Turkey, and, at any time, that account exceeds $10,000, you must file a Report of Foreign Bank and Financial Accounts, also known as an FBAR. Our tax accountants can file these reports with the Financial Crimes Enforcement Network by Tax Day.

On top of an FBAR, you may need to file Form 8938, depending on your foreign financial assets in Turkey or other overseas countries. Form 8938 is not just for expats but for any U.S. taxpayer with foreign assets over the reporting thresholds.

If you have more than $200,000 in foreign financial assets while living in Turkey or any foreign country on the last day of the tax year, you must file Form 8938. This is also true if you have more than $300,000 in foreign financial assets at any time during the tax year while living in Turkey. If you are married and file a joint return with your spouse, your reporting threshold for Form 8938 will double.

Like most other IRS reporting requirements, failure to submit an FBAR or Form 8938 when required will likely result in financial penalties, which our tax accountants can help you avoid by submitting all necessary forms on time.

Call Our Tax Accountants for Help Now

Call the tax CPAs for American expatriates living in Turkey at US Tax Help at (541) 362-9127.