Guide To US Expat Tax In Qatar
The Tax Samaritan country guide to US expat tax in Qatar is intended to provide a general review of expat tax in Qatar and how that will impact your U.S. expatriate tax return as a U.S. Expat In Qatar.
As a U.S. taxpayer, all worldwide income is subject to taxation and reporting and for most expatriates you are required to file a U.S. tax return on an annual basis due on April 15 each year (June 15 if you are residing overseas on the April 15 deadline). The tax treatment for different classes of income can vary greatly from Qatar and the U.S. For example, certain benefits may be tax free or excluded from taxable income in the Qatar, but in the U.S. these benefits are likely to be non-qualified benefits that are subject to being included as taxable income in U.S. As such, there are a number of considerations related to US expat tax in Qatar and this brief article will address a few of those considerations.
Qatar Expat Income Taxes
Who Is Liable For Income Taxes In Qatar
You are considered a resident of this country if you have a permanent home, have a physical presence for 183 days or more during a calendar year, or have “vital interest” in the country. Qatar, however, does not impose any taxes on employee earnings or employer-provided benefits on either local or expatriate employees. There are no estate or gift taxes.
Tax Year In Qatar And Tax Filing And Payment Rules
There are no income taxes in this country.
Expat Tax Withholding In Qatar
Qatar has no social security taxes and therefore has no need for a Totalization Agreement (see below). The United States does not have a tax treaty with the Qatar. Consequently, tax returns of US expats, especially in Qatar, require analysis by an international tax specialist like Tax Samaritan.
US Expat Living In Qatar
Any US Expat living in Qatar will tell you this is the one of the richest countries not just among the Gulf Cooperation Council (GCC), now called the Cooperation Council for the Arab States of the Gulf, but in the world; See the Tax Samaritan Takeaways below for other US Expat Guide articles about the important influence of the GCC among Arab countries in the Persian Gulf region. This tiny monarchy, though a small stretch of land on a peninsula pushing out from the Arabian landmass into the Persian Gulf, casts a giant shadow over other Arab countries, western Asia, and around the world. The ruling family in Qatar does not allow political groups, business syndicates, trade unions, or any group discourse regarding public policy. The country is not known for policies of civil liberties, equal gender rights, a free press, or any form of open media.
Below is our top 10 list of cities in Qatar for expats (in no particular order):
- Al Rayyan
- Umm Salal / Umm Said
- Al Khor / Al Khawr
- Al Wakrah
- Al Jumaliyah
- Madinat Al-Shamal
- Al Ruawais
- Ar Khuwayr
Non-Arab expats including people from the US actually make up the majority in this country’s population. Nevertheless, US Expats need to remember that the Qatari monarchy mixes both civil and Sharia law in its legal proceedings. The culture in this country shows a strong Islamic influence since most Qataris belong to the conservative Wahhabi sect of Islam; a small percentage of the population are Shi’a Muslim. Penalties for legal infractions are consequently exceedingly harsh and unconventional when compared to practices in the US and Europe. There are, however, exceptions applied to non-Muslims residing or visiting this country. In fact, Qatar has strong relations with both the US and United Kingdom and hosts the Al Udeid Air Base critical for military operations in the Gulf region.
What You Need To Know About US Expat Tax In Qatar
When dealing with US expat tax in Qatar, there are a number of preferential expat tax treatments that may benefit your U.S. expatriate tax return. In fact, for many U.S. expats, the Foreign Earned Income Exclusion (IRS Form 2555) and other deductions will reduce your U.S. taxes to zero.
Some of these preferential tax treatments or benefits for US expat tax in Qatar include:
- If you are a U.S. citizen or a resident alien of the United States and you live in Qatar, your US expat tax in Qatar is based on your worldwide income and as such you must file a U.S. return for all the years that you are residing in Qatar. However, as a U.S. expat you may qualify to reduce your U.S. taxable income up to an amount of your foreign earnings that is adjusted annually for inflation ($99,200 for 2014). In addition, you can exclude or deduct certain foreign housing amounts. This is known as the Foreign Earned Income Exclusion and foreign housing exclusion.
- When it comes to your US expat tax in Qatar, most US expatriates worry about “double taxation” – paying taxes to two different countries – the U.S. and Qatar. A U.S. taxpayer working overseas in Qatar may be able to reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116. Should any foreign income not be fully offset by the foreign earned income exclusion, housing exclusion or housing deduction, the foreign tax credit paid or accrued may be used as a deduction or credit on the U.S. tax return. Taxpayers can elect to either deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is to your advantage to take foreign income taxes as a tax credit.
A common but dangerous mistake is the assumption that if there are zero taxes owed with these tax benefits that a return for US expat tax in Qatar does not need to be filed. That is not true. If you are working overseas, it is likely that you meet the filing requirements to file a tax return and must do so. It is important to note that the preferential tax treatments, such as the foreign earned income exclusion and foreign tax credit are not applicable to the outcome of your tax liability until they are claimed on a filed tax return.
When faced with US expat tax in Qatar there are many tax items to consider, but the above are by far the most common preferential tax benefits. With top-notch experienced and knowledgeable expat tax preparation from Tax Samaritan, you can be assured that you are paying the minimal amount of U.S. taxes that you are legally obligated for.
Qatar Foreign Bank Account Reporting – The FBAR (FinCen Form 114)
Another important tax deadline that frequently applies to US expat tax in Qatar is in regards to the disclosure of foreign assets on the FinCen Form 114.
The FBAR filing deadline is June 30th (or the preceding business day if June 30th falls on a weekend). Unfortunately, requesting an extension on your individual return does not extend the FBAR due date – there is no extension available for the FBAR deadline. Any reports filed after this date are considered a delinquent FBAR. In addition, the FBAR is different than many other tax forms in that it must be received by the deadline date (and not postmarked by the deadline date).
The FBAR must be filed with the Treasury Department (it is not filed with your federal income tax return) whenever you meet the FBAR filing requirements, which in a nutshell is whenever a U.S. person has a financial interest in, or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account (including an insurance policy with a cash value such as a whole life insurance policy) maintained with a financial institution, with an aggregate value of over $10,000 at any time during the calendar year based on the highest value of each foreign account during the tax year.
If you have bank accounts at [Bank] or at another bank in Qatar or any other foreign country, you may meet the filing requirement to disclosure your foreign accounts on the FBAR. Please don’t hesitate to contact Tax Samaritan to learn more about your filing requirements.
U.S. Social Security Totalization Agreement
The United States has entered into special agreements called Totalization Agreements with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country. Since, as of this time, Qatar has not entered into a Totalization Agreement with the United States, there is no opportunity to avoid double taxation of social security income for US expat tax in Qatar. We strongly recommended you consult with an experienced tax practitioner like Tax Samaritan to learn more about your tax-reporting options.
Tax Relief For US Expat Tax In Qatar
The United States does not currently have a separate tax treaty with the Qatar. The US Internal Revenue Code offers tax credits against any Qatar income tax. See our Tax Samaritan Takeaways below for other valuable references.
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Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our US expat tax in Qatar. We are not only tax preparation and representation experts, but strive to become valued business partners to American expatriates in Qatar. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.
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Tax Samaritan Takeaways
Please click on the hyperlinks below for additional takeaways for your expat tax in Qatar:
US Embassy in Qatar – Qatar City
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US expat tax in Qatar and throughout the world. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts) that is experienced and knowledgeable about US expat tax in Qatar. If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals and experienced with US expat tax in Qatar. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional US expat tax in Qatar advice based on your individual needs.