Tax Filing Requirements for Maryland Residents Living Abroad

For Maryland residents living abroad, understanding tax filing requirements is essential to ensure compliance with both state and federal regulations. This article outlines the key aspects of tax obligations for Maryland expatriates, including important deadlines, forms, and potential credits.

Federal Tax Obligations

Maryland residents living overseas are generally required to file a federal income tax return with the IRS, just like any other U.S. citizen or resident. The due date for filing is typically April 15. However, expatriates are granted an automatic extension until June 15 to file their tax returns. If additional time is needed, they can request an extension that allows them to file by October 15.

Maryland State Tax Requirements

Maryland residents abroad must also meet state tax filing requirements. Maryland law mandates that state residents continue to file Maryland state income tax returns, reporting their worldwide income. The state does not provide specific exemptions for those living outside the United States. Therefore, Maryland expatriates should file their state return by the usual deadline, which is April 15, with federal extensions applicable.

Foreign Earned Income Exclusion (FEIE)

Maryland residents working abroad may benefit from the Foreign Earned Income Exclusion (FEIE), which allows qualifying individuals to exclude a certain amount of foreign-earned income from U.S. taxation. For the 2023 tax year, the maximum exclusion is $120,000. To qualify, residents must meet either the bona fide residence test or the physical presence test. Proper completion of Form 2555 is necessary to claim this exclusion.

Tax Credits and Deductions

In addition to the FEIE, Maryland residents can also take advantage of the Foreign Tax Credit (FTC). The FTC allows individuals to credit foreign taxes paid against their U.S. tax liability, helping to avoid double taxation. To claim this credit, expatriates must complete Form 1116. Deductions for certain expenses such as housing abroad may also be available, if certain criteria are met.

Filing Resources and Assistance

Maryland residents abroad can access a variety of resources to assist with their tax filing needs. The IRS provides a comprehensive website with essential information tailored to expatriates, including instructions on how to file from outside the U.S. Moreover, consulting with a tax professional who specializes in expatriate tax issues can help ensure compliance and maximize potential benefits.

Conclusion

Filing taxes as a Maryland resident living abroad involves understanding both federal and state requirements. By staying informed about necessary forms, deadlines, and available credits, Maryland expatriates can effectively manage their tax obligations while living overseas. Timely and accurate filing not only ensures compliance but may also lead to significant tax savings.