U.S. TAX GUIDE IN SAUDI ARABIA
Who needs to file a US tax return?
Living in Saudi Arabia as an American expat or dual national means dealing with unique tax challenges. The US taxes its citizens and green card holders on worldwide income. If you’re in Saudi Arabia, your global income is still under the US tax umbrella.
Who should file a tax return?
- Single Filers: File if you earn more than $13,850.
- Married Filing Jointly: File if you earn more than $27,700.
- Married Filing Separately: File even if you earn as little as $5.
These thresholds are based on your total income, not just what you earn in the US or Saudi Arabia.
What about non-working spouses?
If you’re married to a non-US person and not working, you might still need to file a tax return. Even a small amount like $5 in bank interest could mean you have to file.
How do I figure out my filing status?
Deciding your filing status can be tricky, especially with different income types or a non-US spouse. It’s best to consult a tax professional who can assess your financial situation and guide you.
I’m self-employed, what do I need to know?
If you’re self-employed and earn more than $400 in net income globally, you need to file a US tax return. This includes any income earned in Saudi Arabia or elsewhere.
What’s the deal with FBAR and Form 8938?
- FBAR: If you have foreign bank accounts that total over $10,000 (to be adjusted for inflation) at any time during the year, you need to file an FBAR.
- Form 8938: Report certain foreign financial assets if they exceed specific limits:
- For US Residents: Single/married filing separately must report if assets exceed $50,000 at year-end or $75,000 at any time. Married filing jointly must report if assets exceed $100,000 at year-end or $150,000 at any time.
- For Those Living Abroad: Single/married filing separately must report if assets exceed $200,000 at year-end or $300,000 at any time. Married filing jointly must report if assets exceed $400,000 at year-end or $600,000 at any time.
Form 8938 includes a broader range of assets than FBAR, such as foreign bank accounts, certain foreign securities, and interests in foreign entities. Non-compliance can lead to significant penalties, so consulting a tax professional is advisable to meet these obligations accurately.
