As a US citizen, there are only two truths in life, death and taxes. While living in the US, we are taught, through our parents and practice, that taxes are a pain. Few can argue that taxes in the US are not a pain. And they are more of a pain if you live in a state which also has an income tax (I’m looking at your California).
So we were both surprised and relieved to see how taxes were done in Spain. First, I’ll share the pain, as long as you are a United States citizen (US passport holder), you must file US Federal Taxes. However, you get one fringe benefit, you get an automatic 2 month extension. So rather than having to file on April 15 (or there about), you have to file by June 15. This extension is only for the filing, not for the payment of taxes. In other words, suppose you will owe nothing in taxes, then you can safely file by June 15 and have no issues. If, on the other hand, your income results in you owing taxes to Uncle Sam, you can still file by June 15, but the government will charge you 2-month interest on the money you owed (not a fine, because you get the automatic extension). To file we used TurboTax. One problem, however, is that it requires payment via a US credit card (at least it did at the time), so make sure you can get a hold of one from a relative or friend living here.
Another pain 🙂 if you hold more than $10,000 in a foreign bank, at any time, you must file an FBAR statement by April 15 of the next year. For example, suppose you got a $10,000 bonus at work and your bank account swelled to $15,000 on June of 2015. Congratulations, you must file an FBAR statement between January 1 and April 15, 2016. The US Federal Treasury uses this system to make sure all of the money of it citizens is accounted for. And if you do not, and you get caught, there are hefty penalties… so make sure you file it. I used dollars specifically, because it’s your job to convert your current currency (Euros for us) to dollars.
Now, to the benefits. Taxes in the US are a pain. Taxes anywhere else are not. In Spain you simply fill out a couple of forms, which are mostly pre-filled, and you are done. Because the US and the EU have a treaty, you are not double taxed on your income up to a certain amount. While we were living there it was around $100,000. So as long as your income is less than $100,000, you only pay taxes in Europe (Spain) and you are done (you still have to file, but you won’t owe US Federal Taxes).
Are you tired of filing US taxes and never want to do it again? You can rescind your US citizenship. Be careful however, once you do that it may be very difficult to get it back. So until you do, I hope these experiences will help you.
