This week, we paid our first Spanish tax bill.
In Spain, June 30th is the equivalent of the U.S.’s April 15th Tax Day. But just because you’re paying taxes in Spain does not mean you escape the U.S.’s tax system. The United States is one of two countries in the world that requires its citizens to file taxes even when they live abroad. (Eritrea is the other one.)
So right after I completed our Spanish tax return (using a local gestoría), I had to turn right around and figure out the U.S. return.
As soon as the Spanish taxes were done, I started on our U.S. taxes, using Expatfile. I looked at several options, including TurboTax, Greenback Expat Tax Services, and MyExpatTaxes, but Expatfile had the most similar setup to TurboTax, which I was quite familiar with, and it included forms I needed as someone living abroad.
I’ve been doing our U.S. taxes for years and years. Before tax software became the prevalent method, I filed using paper and pencil. Taxes and me? We have a long history. Still, when you move abroad, it’s a whole different ballgame.
As a United States citizen, you’re granted an automatic two-month extension to file, so instead of an April 15th deadline, you have until June 15th. Sometimes, that’s plenty, but when Spanish taxes are due June 30th and your tax pro needs a little more time, you can file an extension, which is what Will and I did. That gave us until autumn to get our U.S. taxes in order and filed.
I learned a lot during this process, and one of the things I learned was that you should really get that physical Spanish bank account set up sooner rather than later. We’ve been using Revolut since we arrived in Spain, and it works perfectly for our daily needs, but they aren’t a partner of Agencia Tributaria, the Spanish tax agency. Our gestoría advised us to make sure we had a resident account set up with an Agencia Tributaria partner bank to ensure we could take advantage of the direct debit option for payment.
Just a month before taxes were due, I got that account set up, but if anything had gone wrong, we were cutting just a little too close for comfort.
Some visas require you to pay quarterly taxes, and then you “settle up” at the end of the year with your tax filing. In our situation, you calculate what you owe and pay the full sum all at once. Spain does allow you to split the bill, with 60% due on June 30th and the other 40% due November 5th when you do the direct debit option.
Spain has heavier taxes, without a doubt, but it’s a tradeoff. Will has a bit of a harder time accepting the tax numbers than I do, and that’s fair. We’re accustomed to a system that taxes you less and allows a ton of write-offs, pre-tax deductions, business structures, and ways to defer taxes. Spain has much, much less of that. Essentially, you pay what the calculations say you’ll pay. The end.
Before you freak out about the tax numbers, there are some things I personally think you should consider first.
Private healthcare is incredibly affordable here compared to the American system. We pay roughly $3,600/year for our family of four’s health insurance. With an employer-sponsored plan in the U.S., we were paying about $1,400/month. As self-employed individuals in Tennessee, we'd be paying a minimum of $2,000/month. (It’s likely much more expensive now than when we left in 2024.) Tennessee has less than five insurance companies that sell plans on the healthcare marketplace.
When you think about health insurance as a tax rather than an “option” (medical bankruptcy, anyone?), the differential between Spanish tax burdens and U.S. tax burdens lessens considerably.
Tax dollars also fund the things you notice every day once you’re here: high-speed rail (one of my favorite ways to travel, and something that barely exists in the U.S.), smooth roads, walkable sidewalks, and prescription drugs that cost about what a U.S. co-pay would.
Everyone has access to healthcare, whether it’s in the public or private systems. Those who aren’t on a working visa can opt into the public system by paying a monthly fee. No one here is going bankrupt because they got cancer and are drowning in medical bills. For visa holders who aren’t paying into public healthcare, they’re required to carry private health insurance without co-pays or deductibles.
I waited for the number to hit my inbox for over a month before it finally landed. I opened it, read it once, and told Will. We reviewed the forms, approved them, and that was it—done in under ten minutes, after a month of waiting for it. Next year, at least, we'll know what's coming.
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Jen, it's great that you have been doing your taxes even on paper! I know most people actually have fear over taxes. I always encourage people to figure it out as it might not be as hard as they think if they only have W2 or retirement income. However, if they have a business, even if it is self-employment, there are things an accountant can help with. Thanks for sharing.
Sorry if it’s in previous posts but do you work remotely for a US company or are you working locally? I’ve heard of US expats still having to file but curious what triggers the need to file in Spain if you don’t work for a Spanish company - simply residency?