Dear Staff,
As an expat living and working in Colombia, you may still be required to file taxes in your home country (Ex. US and Canada) on your income. Here are some important things to keep in mind:
Filing Requirements: If your income exceeds certain thresholds, you may be required to file a tax return. The thresholds vary depending on your filing status, age, and other factors.
Reporting Requirements: You may also have reporting requirements for foreign bank accounts, foreign assets, and other financial interests. Failure to comply with these requirements can result in significant penalties.
Tax Treaty: Colombia has double tax treaties (DTTs) with the following countries:
Bolivia - Canada - Chile - Czech Republic - Ecuador - France (in force as of 2022) - India - Italy - Japan (in force since 2023) - Mexico - Peru - Portugal - South Korea - Spain Switzerland - United Kingdom
Currently there is NO US-Colombia tax treaty. Fortunately, the IRS has tax credits that can help reduce the risk of double taxation for most US expats, such as: Foreign Earned Income Exclusion.
US Foreign Earned Income Exclusion: You may be able to exclude a certain amount of your foreign earned income from taxation by claiming the Foreign Earned Income Exclusion (FEIE). To qualify, you must meet certain requirements, such as passing the bona fide residence test or the physical presence test.
US Foreign Tax Credit: You may be able to claim a credit for foreign taxes paid on your foreign income. This can help reduce your tax liability.
US Foreign Tax Relief: Fiscal residents subject to taxes in Colombia on a worldwide income basis have the right to include a tax credit in their Colombian income tax return. The cap of the tax credit is the income tax applicable to the same income in Colombia and can be credited in the year of payment or in any of the following four years.
Important: It's essential to note that the tax system is complex, and there may be specific requirements for expats that are not typical for residents. So, if you are unsure about your tax obligations or how to file your tax return while living in Colombia, it's advisable to consult with a qualified tax professional who has experience with international tax issues.