If you’ve chosen to leave the US for a new
cultural experience in Peru, there are a few financial issues you’ll need to be
prepared for, including new tax rules and regulations. As a US expat,
unfortunately taxes tend to get more complicated when you move to a new country.
Why? Because although you may be working in Peru, you are still required to
file US tax returns.
As a result, you’ll need to be aware of
your tax commitments in both Peru and
the US.
Filing Peruvian Taxes
Taxes in Peru are filed with the Superintendencia
Nacional de Administración Tributaria (SUNAT).
Taxes are due within three months of the end of the previous tax year – tax
years end on Dec. 31.
Resident
Status in Peru
For income tax purposes, individuals in
Peru are considered to be either Peruvian residents or Peruvian non-residents.
The category you fall under will determine how much and what kind of income
taxes, if any, you must pay.
Peruvian
Residents vs. Non-Residents
In Peru, domiciled individuals, or those
who are in Peru for many than 183 days (need not be consecutive) during any
12-month period, are considered residents.
Peruvian
Income Tax Rates
If you are a Peruvian Resident, you are
required to pay tax on your worldwide income. The amount that you pay will depend
on your net income. Peru uses an Annual Tax Unit or UIT that is equivalent to
PEN3,650 ($1,251.85). The income tax rate is calculated according to the
following table:
Peru Income Tax Rates
|
|
UIT
|
Tax Rate
|
0
to 7
|
0%
|
7
to 27
|
15%
|
27
to 54
|
21%
|
More
than 54
|
30%
|
For Non-Residents, you are only required to
pay taxes on Peruvian sourced income. This is taxed at a fixed rate of 30%.
Taxable
Income
In Peru, income is classified into 5
categories, which are listed below:
Cat. 1: Rental
or subleasing income
Cat. 2: Capital
Revenue – Interest, royalties, patents, dividends, capital gains
Cat. 3: Trade or
business partnership
Cat. 4: Income
from self-employment
Cat. 5: Earned
income
Filing US Taxes
As a US citizen or Green Card holder, you arerequired to file a US tax return each year even if you reside in a foreign
country. Fortunately, as a US expat you receive an automatic two-month filing
extension.
NOTE:
This extension is for filing purposes only and does not apply to any money owed
to the IRS. If you owe taxes, you are still required to pay by April 15th or you may be
subject to late payment penalties.
Depending on how much money you have in
foreign bank accounts and institutions, you may also be required to complete
FBAR Form TD 90.22.1. This form is required for individuals who have more than
$10,000 (cumulative) in foreign bank accounts. This form must be filed by June
30th.
Fortunately, there are certain provisions
that help prevent double taxation, including:
o
The foreign
earned income exclusion, which allows you to exclude up to $95,100 of
foreign earned income from your US taxes (this will increase to $97,600 for the
2013 tax year),
- 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.
If your income is over the
minimum thresholds for filing US taxes you are required to file regardless of
where in the world you live, even if you don’t owe any money. Choosing not to file or filing late could
result in late payment and late filing penalties if you owe money on your
taxes. Failure to file the FBAR can
result in fines, seizure of assets or even jail time, in extreme cases.
Need Help Preparing Your US
Taxes
If you’re feeling a bit overwhelmed and
need some help preparing your US Tax Returns or FBAR Forms, Greenback Expat
Services can help. For questions or tax preparation inquires, contact us today.
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