Navigating dual tax obligations: Essential tax tips for American expats in Czechia

This article was written in partnership with Greenback Expat Tax Services Read our policy

American expats have dual legal obligations this tax season. In addition to filing their annual Czech returns, US citizens living in the Czech Republic must also report their worldwide income to the IRS. They might not owe any taxes, however, they still must file a federal return – or risk facing stiff penalties.

The United States has a citizenship-based tax system. This means if you are an American citizen living abroad you have to disclose and may have to pay tax on income earned anywhere in the world to the federal government. The US is one of only three countries that follows this system.

Is this all news to you? Don’t panic, you aren’t alone. In fact, the IRS has several amnesty programs set up to help US expats straighten out their tax reporting oversights, including those who haven’t filed a return for years. The paperwork, however, can be time-consuming and confusing, which is why turning to a trusted expat tax professional is your best bet.

Greenback: tailored guidance for streamlined tax filings

Whether you’re looking to get compliant or are facing your first tax season as an American citizen living aboard and would like help navigating the process, Greenback Expat Tax Services can walk you through every step.

Our goal is to make complying with US tax obligations for American expats as hassle-free as possible. While there is no blanket tax exemption for American citizens, there are a couple of tax deductions and credits that the IRS provides for those living abroad to alleviate the burden of double taxation. Our accountants try to make sure that a person really understands their options in simple, clear terms,” says Mike Wallace, CEO of Greenback.

Started by expats for expats, Greenback recognizes that each person has a unique situation and offers tailored guidance for streamlined tax filings.

Regardless if you are a digital nomad, self-employed, dual citizen, retiree, foreign bank account holder or late tax filer, Greenback can help untangle which forms you need to fill out.

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The company’s experienced accountants – all CPAs or IRS Enrolled Agents specializing in complex international tax matters – are ready to handle everything from standard streamlined tax filings for individual and small businesses to more nuanced tax-related scenarios facing American expats.

While many American expats have long complained about the unfairness of having to file a US tax return while living aboard, the only way around this legal requirement is to renounce your citizenship – a costly move that won’t wipe out any taxes you may still owe the US government.

But thanks to tax treaties and certain expat tax benefits, most Americans living abroad don’t end up owing the IRS anything. The Foreign Earned Income Exclusion for the 2024 tax year is $126,500. This means you can earn up to $126,500 abroad and won’t have to pay Uncle Sam a dime.

Compliance made easy – even if you’ve never filed an expat tax return

For those who have never filed a US tax return while living abroad, there is some good news for you, too. The Streamlined Filing Compliance Procedures, an IRS amnesty program, allows people who were unaware of their filing requirement to get up to date on their expat taxes without being penalized.

“It is not uncommon to come across expats who have not submitted tax returns in years, because they were unaware of the need to do so or were told by their US-based accountant that they didn’t have to file,” says Wallace. “If this applies to you, the IRS’s Streamlined Filing Procedures may be the answer you are looking for. The amnesty program was created in 2012 to incentivize taxpayers to become tax compliant voluntarily.”

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Under this program, you’ll only have to file just the past three years of federal tax returns no matter how many years you’re missed. The program also allows you to file six years of late FBAR reports without facing any consequences.

FBAR and FACTA reporting obligations

In addition to filing annual federal tax returns, American citizens must also provide the US government with an itemized report, known as the FBAR, of all foreign bank and investment account assets that collectively total more than $10,000 at any point during the calendar year. If they have foreign bank and investment assets totaling more than $200,000, American expats must file a FACTA report as well.

If you were unaware of these reporting obligations, the Streamlined Filing Procedures can help get you compliant.

“The amnesty program has been a massive success, helping over 65,000 US taxpayers become compliant, but still there’s a lot of paperwork involved, and it’s easy to make mistakes, which is why bringing in an experienced expat tax accountant is so important,” says Wallace.

Greenback can help you sort through all this red tape and lay out your tax options clearly. Send a query directly to Greenback or set up a one-one-one consultation with one of its accountants. You’ll be one step closer to completing your 2025 expat tax return, which must be filed no later than June 16.