US Expat Taxes Explained: Filing Taxes as an American Living in Qatar
How will living in Qatar affect your US expat taxes? Opportunities have been available in the Middle East for decades. Various countries have experienced rapid development in the past decade especially, and Qatar has become a very popular choice for expatriates around the globe. Nevertheless, you will be required to file taxes and other forms with the US authorities while residing in Qatar.
US Expat Taxes in Qatar
If you are a citizen or permanent resident of the United States then you are obligated to file US taxes, in this case US expat taxes, with the IRS each year regardless of the country in which you reside.
In addition to the regular income tax return, you could also be required to file an informational return on your assets held in foreign bank accounts with Foreign Bank and Other Account Reporting (FBAR) Form 114, in addition to Form 8938 Statement of Specified Foreign Financial Assets.
While the US is one of the few governments that tax the international income of their citizens and permanent residents who reside overseas, it does have special provisions to help protect them from double taxation including:
- The foreign earned income exclusion allows you to decrease your taxable income on US expat taxes by the first $108,700 for 2021 ($107,600 for 2020) earned as a result of your labors while a resident of a foreign country.
- The foreign tax credit, which allows you to offset the taxes you paid in your host country with your US expat taxes dollar for dollar, and
- The foreign housing exclusion, which allows you to exclude certain household expenses that occur as a result of living abroad.
With proper planning and quality tax preparation, you should be able to take advantage of these and other strategies to minimize or even eliminate your US expat taxes. Please note that even if you do not believe that you owe any US income taxes, you will more than likely still be required to file a return. For more information, see US Expat Taxes Explained.
Qatar Income Tax Rates
One of Qatar’s biggest draws for expatriates is the fact that there is no income tax for employees. There is no obligation to file a tax return with Qatar’s Public Revenues and Taxes Department (PRTD) unless you have business activities in Qatar. For businesses in Qatar, there is a flat 10% tax rate on income earned from activities or capital gains.
Who is a Resident of Qatar?
In Qatar, you are going to be required to meet one of the following requirements in order to be considered a resident of Qatar.
- You have been physically present in Qatar for more than 183 days (do not need to be consecutive) in any 12 month period.
- You have a permanent home in Qatar
- You have a center of vital interest in Qatar
Qatar Tax Date
The tax year in Qatar is the same as the US – January 1st through December 31st. As there is no income tax on earnings from employment, there is no need to file tax returns with the Qatari tax authorities. If you have business income in Qatar, you are required to file a tax return four months after the end of the tax year; there is no extension available on the filing date for business returns.
Social Security in Qatar
Due to the high gross domestic product and small population, there are minimal financial obligations for residents of Qatar for all social services. Expatriates will be eligible for medical assistance, but other social services will be limited. With little to no financial obligations, Americans will not need to worry about double taxation coming from social security obligations. Note also that there is no social security agreement between the United States and Qatar.
Is Foreign Income Taxed Within Qatar?
Because there is no income tax in Qatar, expatriates residing in Qatar will not need to worry about income derived outside of the country.
US – Qatar Tax Treaty
Although both the US and Qatar have tax treaties with other countries, there is currently no tax treaty between Qatar and the US. But because Qatar has no income tax, double taxation is not likely (though it is a possibility for Americans who operate businesses in Qatar). Do note, however, that you may owe more on your US expat taxes because you do not pay taxes to the Qatari authorities.
Other Taxes in Qatar
Not only are there no income taxes from employment in Qatar, other forms of taxation are limited. There is no capital gains regime, which eliminates any gift, estate, or wealth taxes that would be present in other foreign countries. There is currently no value added tax (VAT) either, though there has been talk in Qatar of introducing a 5-7% VAT after 2018.
Saving on US Expat Taxes
The Middle East offers exciting opportunities that are currently unmatched by any other region in the world. Qatar’s attractive tax regime means that taxation in the country will be limited, but bear in mind that this may result in owing more on your US expat taxes. To figure out what you will owe on your US expat taxes, seek expat tax advice.