US citizens, including Kuwaitis, face tax challenge
John P Hayes
You’re a US citizen working in Kuwait and not filing tax returns. Uh oh, you’ve got a problem. Even worse: You’re a Kuwaiti with a US passport or a green card and you’ve never filed a US tax return. You’ve got a bigger problem! In a country where the word “tax” isn’t commonly uttered, filing a tax return is a foreign idea. Even some Americans mistakenly believe that since they’re not living in the USA, and the banks in Kuwait do not report their income to the US, they don’t have to file tax returns. But not so, and a new law is about to change the status quo.
Banks to report to the IRS
Next year, the Foreign Account Tax Compliance Act (FATCA), passed as a US law in March 2010, will force the world’s banks to report information to the US Internal Revenue Service (IRS) about their customers who hold US citizenship or a green card. The law is intended to catch money launderers, but the overreaching effects of the law will impact all US citizens and green card holders. No, it doesn’t matter that you are a Kuwaiti and that you don’t earn money from a US company. If you are a US citizen, or hold a green card, and you’ve earned money, you must file a tax return. This law will be enforced starting July 2014. What’s that? You say you will renounce your US citizenship or give back your green card? Go ahead. But if you are older than 18-and-a-half, you can be held liable to pay taxes to the US Internal Revenue Service for the previous 10 years. It doesn’t matter if you own your own business in Kuwait and never made a nickel from a US company. US citizens are required to file tax returns annually and pay up if they owe. There is one break – the first $97,600 of your 2013 income is tax free!(link)
UPDATE: A post from John P. Hayes, an American who contributes articles to Kuwait Times.
I know expats who have not filed for over 15 years and Kuwaiti-Americans who have never filed, this situation is critical and there is no one to help with questions. The US embassy DOES NOT help you with this, trust me I've asked and they pointed out a shelf with paper booklets for tax filing. There are only a handful of people here to do taxes and they are mostly contractors with limited time. Last year I hired someone for 20 KD to file taxes, he used the free H&R online form but he messed up my daughter's name so after sending all my documents again to the IRS I finally got my return in September, a full seven months later. I finally found him a month ago to give him my money and take back my original paperwork, he's a contractor who never had time and would not show up when an appointment was made.
Unless you know someone with links to APO, sending documents gets expensive here. Good thing I still have my friends on base!
Next year, the Foreign Account Tax Compliance Act (FATCA), passed as a US law in March 2010, will force the world’s banks to report information to the US Internal Revenue Service (IRS) about their customers who hold US citizenship or a green card. The law is intended to catch money launderers, but the overreaching effects of the law will impact all US citizens and green card holders. No, it doesn’t matter that you are a Kuwaiti and that you don’t earn money from a US company. If you are a US citizen, or hold a green card, and you’ve earned money, you must file a tax return. This law will be enforced starting July 2014. What’s that? You say you will renounce your US citizenship or give back your green card? Go ahead. But if you are older than 18-and-a-half, you can be held liable to pay taxes to the US Internal Revenue Service for the previous 10 years. It doesn’t matter if you own your own business in Kuwait and never made a nickel from a US company. US citizens are required to file tax returns annually and pay up if they owe. There is one break – the first $97,600 of your 2013 income is tax free!(link)
UPDATE: A post from John P. Hayes, an American who contributes articles to Kuwait Times.
I know expats who have not filed for over 15 years and Kuwaiti-Americans who have never filed, this situation is critical and there is no one to help with questions. The US embassy DOES NOT help you with this, trust me I've asked and they pointed out a shelf with paper booklets for tax filing. There are only a handful of people here to do taxes and they are mostly contractors with limited time. Last year I hired someone for 20 KD to file taxes, he used the free H&R online form but he messed up my daughter's name so after sending all my documents again to the IRS I finally got my return in September, a full seven months later. I finally found him a month ago to give him my money and take back my original paperwork, he's a contractor who never had time and would not show up when an appointment was made.
Unless you know someone with links to APO, sending documents gets expensive here. Good thing I still have my friends on base!
Great Blog, lot's of good Info.
ReplyDeleteI was just contacted by a Recruiter for Exelis-OMDAC-SWACAA Project
I have several questions: What are typical work schedules? I.E. 7days / 12 hrs?
When do you get a break? Work 4 months / 2 weeks off? How many days must I work out of US to get Tax Free Income up to 97,600?
What are the living qtrs like? Are meals free?
My e-mail is: cnstech1@gmail.com when you have the time - Thanks!