Your Definitive Guide to Paying Taxes as a U.S. Expatriate in Sweden

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As a US Citizen Living in Sweden, compliance with expat taxes may be hard work. Firstly, because you two deadlines that you must keep track of. And secondly, because losing your focus may leave you open to double taxation! Thirdly, Sweden has one of the highest tax rates, so you’ll want to keep your wits about you!

We can help you by pointing out the following things about expat taxes in the US:

Provisions Preventing Double Taxation

To not pay taxes twice on the same income – in both the US and Sweden – you can begin by declaring which bank accounts you have and where. Then determine if you are entitled to Expat Tax Relief Sweden, such as Foreign Earned Income Exclusion. By applying for it, you won’t have to pay taxes on $105,900 of what you earn.

US expats may also want to check if they qualify for foreign tax credit. It will reduce your tax liability to the US government. The tricky part is that you may be eligible for one of the two!

Don’t forget to see if you also qualify for Foreign Housing Exclusion. It allows a US citizen living in Sweden to separate money for their household expenses before they pay taxes.

Tax Due Date in Sweden

US expats will owe taxes to the Swedish Tax Agency or Skatteverket by May 2nd of the following year. If you have financial assets that are located overseas, you may have to file additional paperwork, such as the FBAR (FinCEN Form 114) and FATCA (Form 8938). 

Moreover, delays can be costly for US expatriates living in Sweden! Delay your Swedish taxes, and you will be paying a 40% penalty on hidden income is 40%. File incorrectly and it will cost you 10%. You already live in a foreign country that is taking more than half of your pay as taxes. Don’t add to it by missing the due date!

Learn more about US tax due dates and worldwide country by country tax deadlines, tax year and extension.

The US-Sweden Social Security Agreement

The US and Sweden Tax Treaty determines whether you will be paying taxes to Sweden, the US, or both. Moreover, US expats don’t have to pay social security for the first three years if staying in Sweden temporarily. Again, you will need guidance in finding out whether you qualify for this benefit or not. Usually, not being a Swedish citizen, working for one, or being employed for less than 5 years should do the trick. 

Residency in Sweden

Since the amount you will pay as a US expat in taxes will depend on residency, it is crucial to know how Sweden defines it. Owning a home or regularly staying there for six months makes you a Swedish resident. Leaving the country won’t change your status for at least five years with family or home still within Sweden. 

Income Tax Rates in Sweden

The Tax in Sweden For Foreigners begins after you deduct a basic allowance of 13,400-35,100 Swedish Krona (SEK). For the income tax, the rate is 20% for those who earn SEK 455,300 and 25% for salaries higher than SEK 662,300. 

Besides housing exclusion, you may be entitled to remuneration for expenses concerning moving or schooling. Confirm how much you could receive.

Other Taxes in Sweden

Besides that, you must pay 32.12% as municipal tax. Capital gains are taxed at a flat rate of 30%. A Value Added Tax (VAT) – at a rate of 25% — applies to all goods and services, except for food (12.5%), newspapers (6%), and passenger transport (6%).

Are you Filing US Taxes in Sweden? Did you know that Sweden has no wealth tax? Or inheritance tax? Contact us for important information like this!

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