American Expats and the IRS in Germany
One thing that Americans need to keep in mind when living and working in Germany is that they are still obligated to file their taxes with the Internal Revenue Service . There is often some confusion when it comes to the filing of taxes to the IRS when coupled with working in a foreign country. The penalties for not knowing this aren't very high as the IRS is rather lenient in these cases and they do understand the confusions that may occur. However, provided this has just been brought to your awareness, it is important that you contact the right authorities and figure out what steps you need to take next in order to have everything clarified.
Finding out information on taxes and the IRS in Germany is not very difficult. The Internal Revenue Service now has an office located in Frankfurt at the United States Consulate. This office was put in place to lessen the stress from Americans living and working in Germany when it comes to filing taxes. Now Americans have access to all the information that they will need and can always phone or write when additional information or documents are required.
If however, one is attempting to withhold information or hide their earnings from the Internal Revenue Service, the consequences may be harsh. Those who have tried to defraud the system may be looking at jail time, the seizure of property, high fines and possibly other consequences. So in this case it is better to stay on the right side of the law. Where as in the past, it may have seemed as though the IRS wasn't fully equipped to know when a citizen in living and working in a foreign country, today they are a lot more verse in finding these things out.
The contact details for the Internal Revenue Service in Frankfurt are:
Address: U.S. Consulate General Frankfurt,
Internal Revenue Service
Giessener Str. 30
Tel. Number: 069 7535 3834
Email Add. : firstname.lastname@example.org
There are some cases in which an American living outside of the United States may not be liable to pay taxes. This however, does not mean that they are exempt from filing. One instance where this is possible is when your salary does not exceed a certain amount. At this point you may be eligible for exemption from paying taxes on your foreign earned income.
To be excluded one of the following requirements need to be fulfilled:
Substantial Presence Test
Bona Fide Residence Test
Upon exclusion, a Form 2555 needs to be completed and attached to the Form 040.
In order to ensure that you are filing your paperwork correctly, be sure to contact the IRS if there is anything that you are uncertain about. They are there to help you and in the long run it's better to be safe than sorry.