What is an expat?

For many, the answer to the question of “what is an expat” is not complicated. Most people think of an expat or expatriate as someone who lives abroad, whether it’s just for a few years or permanently.

However, confusion may arise if you’re talking about taxes versus the everyday definition of expat as described above.

Expatriate definition for U.S. taxes

When it comes to U.S. taxes, being an expat or expatriate has a clear-cut meaning — specifically a taxpayer who has given up their U.S. citizenship or abandoned their green card. We’ll get to more about what it means to be an expatriate according to this definition in a moment.

First, let’s clarify that if you’re a U.S. citizen or green card holder living or working abroad, you still must file a tax return with the IRS each year. What’s more, you should know there are additional rules to follow so you can stay in compliance.

Sound difficult? You can rest easy — our knowledgeable tax advisors have helped thousands of U.S. taxpayers file returns from abroad virtually. Learn more about our expat tax services.

Now, back to the expatriate definition for U.S. taxes. If your intent is to give up your U.S. citizenship or abandon your green card, we can help with that too.

Becoming an expatriate

If you’re ready to give up your U.S. citizenship or green card, there are specific steps to take to be an expatriate.

  • Most of the time, you’re required to file Form 8854 to certify that you’ve complied with your U.S. tax obligations from prior years.
  • If you meet certain income and wealth thresholds for the five years before you expatriate, you could be considered a covered expatriate and may have to pay a tax on all your assets which have yet to be taxed by the U.S. (as if you had sold all of your assets).

Once you are an expatriate, you’re usually taxed only on your U.S.-sourced income. For example, this could be stock or real estate income that’s based in the United States.

An important caveat to the tax definition of an expatriate for green card holders is that you must go through official procedures to expatriate. It is not possible to be a tax expatriate solely because your green card expires.

How H&R Block helps everyday expats and tax expatriates

No matter if you need help filing your return while you’re living abroad or if you plan to be an expatriate according to the definition from the IRS, our experts are here for you.

You’ll work with an experienced tax advisor who knows what’s required for your situation. Get started today with virtual Expat Tax Preparation from H&R Block.