American Expats in Jordan
Updated on August 20, 2025.
Jordan is an increasingly popular destination for US expats, offering a stable political environment, strategic location in the Middle East, and rich cultural heritage. From the bustling capital of Amman to the ancient city of Petra and the therapeutic waters of the Dead Sea, the country provides diverse lifestyles for professionals, entrepreneurs, and retirees.
Recent developments, including the Jordan Investment Commission's enhanced investor programs, streamlined business registration processes, and new digital economy initiatives, have positioned Jordan as one of the Middle East's most welcoming destinations for Americans seeking career opportunities and quality of life in a culturally rich, historically significant environment.

Jordan & U.S. Tax Timeline: Critical Dates for Dual Filers
Managing dual tax obligations between Jordan and the United States requires careful attention to two distinct tax calendars. Understanding these timelines is crucial for maintaining compliance and avoiding penalties in both jurisdictions.
Key Timeline Overview:
- January 1: Jordanian tax year begins (calendar year basis)
- March 31: Jordanian corporate tax return deadline
- April 15: U.S. tax payment deadline (regardless of filing extension)
- April 30: Jordanian individual tax return filing deadline
- June 15: Automatic U.S. filing extension for expats with foreign address
- June 30: Jordanian quarterly advance payment for businesses
- September 30: Jordanian quarterly advance payment
- October 15: Final U.S. tax filing deadline with extension
- December 31: Tax year ends for both countries
- January 31 (next year): Jordanian employer annual tax reconciliation
The Jordanian tax system operates on a pay-as-you-earn basis for employees, with employers withholding income tax monthly. Self-employed individuals and those with significant non-employment income must make quarterly advance payments based on estimated annual income. These advance payments are due at the end of each quarter, creating a continuous cycle of tax obligations that must be carefully managed alongside U.S. requirements.
Strategic Payment Planning to Avoid U.S. Penalties
The most critical aspect of dual tax compliance for U.S. expats in Jordan is understanding that the June 15 automatic extension applies only to filing, not to payment obligations. This distinction has significant financial implications that require proactive planning to avoid unnecessary interest and penalties.
Critical Payment Strategy: Even though your Form 1040 isn't due until June 15 (or October 15 with Form 4868), any tax owed must be paid by April 15 to avoid interest charges. The IRS charges interest from April 15 regardless of filing extensions.
To effectively manage this payment timing challenge, expats should implement a multi-pronged approach. First, conduct a preliminary tax calculation by early March using your Jordanian income documentation and estimated U.S. tax obligations. This projection doesn't need to be perfect but should provide a reasonable estimate of your U.S. tax liability. Consider working with a tax professional familiar with both systems to ensure accuracy in this crucial calculation. As an expat CPA firm, we can help you with these items.
Second, establish a tax reserve account specifically for U.S. obligations. Since Jordanian taxes are paid through wage withholding and quarterly advance payments throughout the year, you'll need separate liquidity for U.S. payments. Many expats find it helpful to set aside funds monthly, treating U.S. tax reserves as a fixed expense in their budget. This approach prevents the April 15 payment deadline from creating a cash flow crisis.
Third, leverage safe harbor provisions to minimize penalties. If you're unable to calculate your exact tax liability by April 15, you can avoid penalties by paying either 100% of your prior year's tax liability (110% if your prior year AGI exceeded $150,000) or 90% of the current year's tax. This safe harbor payment strategy provides protection while you finalize your actual tax calculations. As an expat CPA firm, we can help you with this.
For those with irregular income or significant Jordanian-source income, consider making quarterly estimated tax payments to the IRS. While Jordan handles tax through wage withholding and advance payments, the U.S. system may require quarterly payments if your withholding is insufficient. These payments are due April 15, June 15, September 15, and January 15, and help spread the tax burden throughout the year rather than facing a large payment in April.
Currency fluctuations between the Jordanian dinar and dollar add another layer of complexity to payment planning. Since you'll likely earn income in dinars but owe taxes in dollars, exchange rate movements can impact your tax liability. Consider using the yearly average exchange rate for income reporting (as permitted by the IRS) to smooth out volatility, and monitor exchange rates when planning your April payment to optimize the conversion timing. As an expat CPA firm, we can help you with these items.
Jordan vs. U.S. Tax Systems: Direct Comparison
Understanding the fundamental differences between Jordanian and U.S. tax systems is essential for effective tax planning as an American expat. While both countries tax worldwide income for residents, their approaches to rates, deductions, and income classification vary significantly.
Tax Feature | Jordan | United States |
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Tax Year | Calendar year (January 1 - December 31) | Calendar year (with fiscal year option for businesses) |
Taxation Basis | Source-based (Jordanian-source income for all) | Citizenship-based (worldwide income for citizens) |
Income Tax Rates | 5% - 30% (progressive rates) | 10% - 37% (federal) + 0% - 13.3% (state) |
Capital Gains Tax | 0% - 10% (varies by asset type) | 0% - 20% (long-term) / Ordinary rates (short-term) |
Social Security | 7.5% employee + 14.25% employer | FICA: 7.65% employee + 7.65% employer |
Wealth Tax | None | None at federal level |
Inheritance Tax | None (Islamic inheritance law applies) | 18% - 40% above $13.61 million (2024) |
VAT/Sales Tax | 16% standard / 0% or 4% reduced rates | 0% - 10% state/local sales tax |
Property Tax | Musaqafat tax: varies by municipality | 0.5% - 2% on market value (local) |
Filing Deadline | April 30 (individuals) / March 31 (corporations) | April 15 (June 15 automatic extension for expats) |
The Jordanian progressive tax system applies rates ranging from 5% on income above JOD 10,000 to 20% on income exceeding JOD 20,000, with a top rate of 30% applying to income over JOD 1,000,000. Additionally, a national contribution tax of 1% applies to most income. This compares to U.S. federal rates ranging from 10% to 37%, though U.S. expats may benefit from the Foreign Earned Income Exclusion (FEIE) of $120,000 for 2023 and $126,500 for 2024.
One crucial difference lies in the treatment of investment income. Jordan applies varying rates to capital gains depending on the asset type and holding period, with exemptions for certain long-term investments. The U.S., conversely, distinguishes between short-term gains (taxed as ordinary income) and long-term gains (taxed at preferential rates of 0%, 15%, or 20% depending on income levels). This difference can significantly impact investment strategy for expats managing portfolios across both countries.
The Jordanian Tax System Explained in Detail
The Jordanian tax system presents unique characteristics for American expats accustomed to U.S. tax principles. Jordan's approach to income classification, taxation methods, and available deductions differs substantially from the American system, requiring careful study to optimize tax positions and ensure compliance.
Understanding U.S. Income Classifications
Before diving into the Jordanian system, it's essential to understand how the United States classifies and taxes different types of income, as this provides the framework for comparison and planning strategies.
Earned Income (Active Income)
What it includes: Wages, salaries, tips, bonuses, commissions, self-employment income from sole proprietorships, income from partnerships or S-corporations where you materially participate.
How it's taxed: Subject to progressive tax rates from 10% to 37% based on income brackets. Also subject to Social Security and Medicare taxes (FICA) up to applicable limits.
Special considerations: Eligible for Foreign Earned Income Exclusion (FEIE) if you qualify, potentially excluding up to $126,500 (2024) from U.S. taxation.
Passive Income
What it includes: Rental income from real estate, royalties from intellectual property, income from limited partnerships where you don't materially participate, income from businesses in which you're not actively involved.
How it's taxed: Generally taxed at ordinary progressive rates. However, qualified dividends and long-term capital gains receive preferential treatment. Passive losses may be limited and carried forward.
Special considerations: Distributions from retirement accounts (401(k), IRA, pensions) are generally taxed as ordinary income. Social Security benefits may be partially taxable depending on total income levels.
Capital Gains
What it includes: Profits from selling assets like stocks, bonds, real estate, businesses, collectibles, or cryptocurrency.
How it's taxed: Short-term gains (assets held ≤1 year) taxed at ordinary rates. Long-term gains (assets held >1 year) taxed at preferential rates: 0% for lower incomes, 15% for middle incomes, 20% for high incomes, plus potential 3.8% Net Investment Income Tax.
Special considerations: Primary residence sale may qualify for $250,000/$500,000 exclusion. Losses can offset gains and up to $3,000 of ordinary income annually.
Interest Income
What it includes: Interest from bank accounts, CDs, corporate bonds, Treasury securities, peer-to-peer lending, and most other debt instruments.
How it's taxed: Generally added to ordinary income and taxed at progressive rates. Municipal bond interest may be exempt from federal tax (and sometimes state tax).
Special considerations: Foreign bank account interest must be reported and may trigger FBAR and Form 8938 requirements.
Dividend Income
What it includes: Distributions from corporations, mutual funds, ETFs, and certain foreign companies.
How it's taxed: Qualified dividends (meeting holding period and other requirements) taxed at long-term capital gains rates. Non-qualified dividends taxed at ordinary rates.
Special considerations: Foreign dividends may qualify for preferential rates if from treaty countries. PFIC rules may apply to certain foreign investments.
Social Security Income
What it includes: Monthly retirement benefits, disability benefits (SSDI), survivor benefits, and spousal benefits from the Social Security Administration.
How it's taxed: Tax-free for low income level. Up to 50% or 85% may be taxable depending on your total income level.
Special considerations: As a U.S. citizen/green card holder in Jordan, the U.S.-Jordan tax treaty gives the U.S. exclusive taxing rights on Social Security benefits, meaning Jordan cannot tax these benefits.
The Jordanian Income Tax Categories
Jordan categorizes income into distinct classifications, each with specific rules and tax treatment. This categorical approach differs from the U.S. system and requires careful analysis to properly report income and claim applicable benefits.
1. Employment Income (دخل الوظيفة)
This category encompasses all compensation from employment including salaries, wages, bonuses, and allowances. Jordan provides generous personal exemptions including JOD 9,000 for individuals, JOD 18,000 for families, plus additional exemptions for dependents. Employment benefits like housing allowances, education allowances for children, and transportation benefits may be partially or fully exempt depending on structure and amounts.
Income Type | Tax Treatment | Special Provisions |
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Basic Salary | Progressive rates 5% to 30% (after exemptions) |
Monthly withholding by employer Annual reconciliation required |
Housing Allowance Employer-provided benefit |
Exempt up to 10% of basic salary Excess taxable as income |
Direct provision often more tax-efficient than cash allowances |
Education Allowance Children's schooling |
Tax-exempt if paid directly to educational institutions |
2. Business and Professional Income (دخل المهن والأعمال)
Business income covers earnings from commercial enterprises, professional practices, and self-employment activities. Jordan distinguishes between different business sizes with varying compliance requirements. Small businesses with annual revenue under JOD 75,000 may opt for simplified taxation based on deemed profit margins. Professional services including doctors, lawyers, engineers, and consultants face standard progressive rates on net income after allowable deductions.
Deductible business expenses include rent, utilities, employee salaries, professional fees, and depreciation on business assets. The tax authority (ISTD) provides specific depreciation rates for different asset categories ranging from 5% for buildings to 25% for computers and technology equipment.
3. Investment and Capital Income (دخل الاستثمار ورأس المال)
Investment income receives preferential treatment in Jordan to encourage capital formation. Interest from bank deposits faces 5% withholding tax as final tax. Dividend income from Jordanian companies is generally exempt from individual income tax (already taxed at corporate level). Capital gains from selling shares listed on the Amman Stock Exchange are exempt from tax, while gains from unlisted shares face 10% tax.
Foreign investment income requires careful attention to avoid double taxation. Treaty benefits with the U.S. provide reduced withholding rates and foreign tax credits. Rental income from Jordanian real estate faces progressive taxation after deducting maintenance costs, depreciation, and property taxes.
4. Agricultural Income (الدخل الزراعي)
Agricultural income enjoys significant tax incentives in Jordan. Most agricultural activities are exempt from income tax to support food security and rural development. This includes income from crop cultivation, livestock farming, and agricultural land leases. However, agro-industrial processing activities may face normal business taxation depending on the level of value addition.
5. Other Income Sources (مصادر الدخل الأخرى)
This residual category captures income not classified elsewhere, including pensions (taxed progressively with exemptions), lottery and gambling winnings (20% withholding), royalties and licensing fees (varying rates), and certain government benefits. Private pension distributions face progressive taxation after considering applicable exemptions and deductions.
Jordanian Taxes and Foreign Tax Credit Eligibility
Understanding which Jordanian taxes can be claimed as a credit on Form 1116 is crucial for reducing your U.S. tax liability. While most income taxes are creditable, social security contributions and certain other taxes are not.
Creditable Taxes (Form 1116) | Non-Creditable Taxes | Social Insurance Contributions |
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ISTD and Tax Assessment: Understanding Jordan's Tax System
For American expats, navigating Jordan's tax system means becoming familiar with two key concepts: the Income and Sales Tax Department (ISTD) and the Tax Assessment Notice. These are central to the process of filing your Jordanian tax return and receiving your final tax assessment.
What is ISTD?
ISTD (Income and Sales Tax Department - دائرة ضريبة الدخل والمبيعات) is Jordan's official tax authority responsible for administering and collecting income tax, sales tax, and other related taxes. It's the Jordanian equivalent of the IRS, managing tax registration, collection, audits, and enforcement. The ISTD has increasingly modernized its systems, offering online services for tax filing, payment, and correspondence through their e-services portal.
Key features of ISTD e-services:
- Online tax return filing for individuals and businesses
- Electronic payment options for tax obligations
- Tax clearance certificate issuance
- Access to tax account statements and payment history
What is a Tax Assessment Notice?
The Tax Assessment Notice (إشعار التقدير الضريبي) is your official tax determination from ISTD. After you submit your tax declaration, ISTD processes your information and issues this document. It's the final determination of your Jordanian tax liability for the year. The assessment will clearly state:
- Your total calculated income tax
- The 1% national contribution tax
- The amount of tax already paid through employer withholding or quarterly prepayments
- Whether you owe additional tax or are entitled to a refund
The Tax Assessment Notice is a critical document for U.S. tax purposes, as it provides the official amount of Jordanian tax you paid that can be used to claim the Foreign Tax Credit on your U.S. Form 1040.
Important Note: The Tax Assessment Notice is legally binding. If you disagree with the assessment, you must file an objection within 30 days of receiving it. Failure to do so means you are legally obligated to pay any tax owed as stated in the notice.
U.S.-Jordan Social Security Agreement
The U.S. and Jordan do not currently have a Social Security Totalization Agreement. This absence has significant implications for U.S. expats working in Jordan, as they may be subject to social security taxes in both countries simultaneously.
Without a totalization agreement, U.S. citizens working in Jordan as employees must contribute to Jordan's social security system (21.75% combined employer/employee rate) while also potentially owing U.S. self-employment tax if they're self-employed or U.S. FICA taxes if working for a U.S. employer. This creates a situation of double social security taxation that cannot be offset through foreign tax credits, as social security contributions are not creditable income taxes.
For self-employed individuals, the burden is particularly heavy as they may owe both the full 21.75% Jordanian social security contribution and the 15.3% U.S. self-employment tax. Some relief may be available through careful structuring of business entities and employment relationships, though this requires careful planning with tax professionals familiar with both systems.
Employment Situation | Social Security Obligations |
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Jordanian Social Security and Pension System
Social Security System Overview
Jordan's social security system is administered by the Social Security Corporation (SSC) and provides comprehensive coverage including:
- Old-Age Pension: Mandatory participation for all employees and optional for self-employed. Benefits vest after 180 months of contributions with retirement at age 60 for men and 55 for women.
- Disability Insurance: Provides income replacement for work-related and non-work-related disabilities.
- Survivor Benefits: Provides pensions to eligible family members upon the death of an insured person.
- Work Injury Insurance: Covers medical expenses and compensation for workplace injuries.
- Unemployment Insurance: Provides temporary income support for involuntary job loss.
- Maternity Insurance: Covers maternity leave benefits for female employees.
Jordanian Retirement Accounts and U.S. Tax Treatment
The U.S. tax treatment of Jordanian retirement accounts is complex as the IRS does not recognize most Jordanian plans as "qualified" retirement plans. This leads to potential current taxation and reporting requirements that differ significantly from the treatment of U.S. retirement accounts.
Social Security Corporation (SSC) Pension
- Contributions: Mandatory for employees. Employer contributions are not included in current U.S. income. Employee contributions are not deductible for U.S. tax purposes.
- Distributions: Taxable in the U.S. as foreign pension income.
- Reporting: Not required on Form 8938 as it's a foreign social security equivalent.
- PFIC Status: Not applicable.
Private Pension Funds
- Contributions: Not recognized as qualified plans. Employer contributions may be currently taxable income.
- Reporting: Required on Form 8938 if account value exceeds thresholds.
- PFIC Concerns: High risk if invested in foreign mutual funds.
Provident Funds
- Contributions: May be treated as foreign grantor trusts requiring Forms 3520/3520-A.
- Reporting: Required on Form 8938 if value exceeds thresholds.
- PFIC Risk: Depends on underlying investments.
Insurance-Based Savings Plans
- Contributions: Treated as investment in non-qualified annuity. Growth may be currently taxable.
- Reporting: Required on Form 8938 if cash value exceeds thresholds.
- PFIC Risk: High for unit-linked policies invested in foreign funds.
PFIC Mitigation Strategies for Jordanian Investment Accounts
A Passive Foreign Investment Company (PFIC) is a foreign corporation that meets specific income or asset tests. Many Jordanian mutual funds and collective investment schemes fall into this category, leading to complex and often punitive U.S. tax consequences. Navigating PFICs is one of the most significant challenges for U.S. expats with Jordanian investment accounts.
Identifying PFICs in Jordanian Investment Plans
- Request detailed investment allocation from your fund manager or broker.
- Look for collective investment schemes, unit trusts, or mutual funds.
- ETFs traded on the Amman Stock Exchange are typically PFICs.
- Insurance wrappers do not eliminate PFIC status of underlying funds.
Compliance Options
Since Qualified Electing Fund (QEF) elections are rarely possible due to lack of required documentation from Jordanian funds, the most common strategies are:
- Mark-to-Market Election: Often the most practical choice, requiring annual gain/loss calculation based on fair market value.
- Default Excess Distribution Regime: The most punitive method with deferred tax and interest charges.
Documentation Requirements
To comply with PFIC rules, maintain:
- Annual statements showing year-end values
- Records of all contributions, distributions, and transfers
- Breakdown of underlying fund investments
Jordanian Financial Account Reporting Requirements
U.S. tax law requires reporting of foreign financial accounts if their aggregate value exceeds certain thresholds. This includes FBAR and FATCA reporting requirements.
FBAR and FATCA Reporting
Accounts that must be reported include:
- Bank Accounts: Current accounts, savings accounts, time deposits at Jordanian banks.
- Investment Accounts: Brokerage accounts at Jordanian financial institutions.
- Retirement Accounts: Private pension funds and provident funds.
- Insurance Products: Policies with cash surrender value.
- Business Accounts: If you have signature authority or ownership exceeding 50%.
Form 8938 Thresholds for U.S. Expats
These are the reporting thresholds for U.S. citizens living abroad:
- Single/Married Filing Separately: $200,000 on the last day of the year or $300,000 at any point during the year.
- Married Filing Jointly: $400,000 on the last day of the year or $600,000 at any point during the year.
Jordanian Government Benefits and Their U.S. Tax Treatment
Certain Jordanian government benefits are not considered taxable income for U.S. tax purposes:
- National Aid Fund Benefits: Social assistance payments are not taxable income.
- Military Service Benefits: Certain military allowances may be excluded.
- Disability Benefits: Government disability payments are generally not reportable.
- Housing Subsidies: Government housing assistance is typically not taxable.
Jordanian Business Structures and U.S. Reporting
For self-employed individuals and business owners, U.S. reporting requirements vary based on the Jordanian business structure. Incorrect classification can lead to significant penalties.
Individual Establishment (مؤسسة فردية)
- U.S. Filing: Report income and expenses on Schedule C. File Schedule SE for self-employment tax.
Limited Liability Company (LLC - شركة ذات مسؤولية محدودة)
- U.S. Filing: Required to file Form 5471 if you own 10% or more. Can elect check-the-box treatment.
- Additional Considerations: GILTI and Subpart F rules may apply if CFC.
Partnerships (شركات الأشخاص)
- Common Forms: General Partnership, Limited Partnership.
- U.S. Filing: Generally requires Form 8865. Pass-through treatment for U.S. tax.
Important Considerations
- Tax Treaty Benefits: Always claim applicable treaty benefits using Form 8833.
- Documentation: Maintain detailed records in both Arabic and English.
- Tax Year: Jordan uses calendar year, aligning with U.S. tax year.
- Exit Tax: Jordan does not impose exit tax on departing residents.
Jordanian Visa Options and Their Tax Implications
Jordan offers various visa categories for American citizens, each with distinct requirements, benefits, and tax implications. Understanding these options is crucial for optimizing your tax position while ensuring legal residence status.
Investment Visa
The Investment Visa represents Jordan's premier option for entrepreneurs and investors, offering permanent residence pathways and business opportunities. Requirements include minimum investment of $150,000 in approved sectors, business plan approval from Jordan Investment Commission, proof of financial resources, and clean criminal record. The visa provides residence for investor and family, work permit included, and pathway to permanent residence.
Tax implications favor investment visa holders through potential tax holidays for qualifying investments in development zones. Free zone enterprises enjoy 0% income tax on exports and reduced rates on local sales. Investment incentives include customs exemptions on equipment and machinery. The visa enables tax-efficient structuring of regional business operations.
Work Permit and Employment Visa
The standard employment visa suits professionals with job offers from Jordanian companies. Requirements include employment contract with Jordanian entity, employer sponsorship for work permit, professional qualifications or degree attestation, and medical examination. This visa provides one-year renewable residence and family residence permits available.
Employees face standard progressive taxation on employment income with monthly withholding by employer. Social security contributions are mandatory at 7.5% employee rate. Certain allowances (housing, education) may receive favorable tax treatment. The visa's straightforward compliance makes it suitable for corporate assignments.
Aqaba Special Economic Zone Visa
The ASEZA visa targets businesses and professionals in Jordan's special economic zone. Requirements include employment or business registration in Aqaba, sector-specific qualifications, and zone authority approval. The visa offers significant tax advantages with 5% flat income tax rate, exemption from sales tax, reduced corporate tax rates, and duty-free imports.
Tax benefits make ASEZA attractive for service businesses and regional headquarters. The zone's proximity to Saudi Arabia and Egypt provides strategic advantages. Simplified business registration and one-stop-shop services reduce administrative burden. However, residence requirements within the zone must be carefully managed.
Retirement and Passive Income Visa
Jordan's retirement visa suits Americans with passive income seeking Middle Eastern residence. Requirements include proof of $2,000+ monthly income, health insurance coverage, background security check, and age typically 50+. The visa provides renewable annual residence but prohibits employment.
Retirees benefit from no tax on foreign-source passive income brought into Jordan. U.S. Social Security and pensions remain taxable only in the U.S. under treaty provisions. Living costs significantly lower than the U.S. provide lifestyle advantages. Strategic timing of fund transfers optimizes tax positions.
Student and Graduate Visas
Student visas offer pathways to Jordanian residence with post-graduation opportunities. Requirements include university acceptance letter, proof of financial resources, health insurance, and educational credential attestation. Students can work part-time with university permission.
Students face minimal tax implications with most income below taxable thresholds. Part-time work income enjoys generous personal exemptions. Post-graduation employment transitions require work permit conversion. Education expenses may qualify as deductible when transitioning to employment.
Jordan's Business Facilitation and Remote Work Options
Jordan has modernized its approach to business and remote work, creating opportunities for digital professionals and entrepreneurs. While lacking a dedicated digital nomad visa, several programs accommodate modern work arrangements.
Jordan Pass and Extended Tourism Options
The Jordan Pass system combines visa fees with tourist site access, providing cost-effective entry for short-term visitors. Americans receive visa on arrival valid for 30 days, extendable to 90 days through local police stations. Multiple entries possible with proper documentation. This allows remote workers to test Jordan's environment before committing to longer-term residence.
Tax implications remain minimal for true tourists staying under 183 days. However, regular visa runs or extensions may trigger tax residence regardless of day count. Maintaining foreign employment contracts and avoiding local business activities preserves non-resident status. Document all entries, exits, and business activities for both Jordanian and U.S. tax compliance.
Startup Jordan Initiative
Startup Jordan provides support for tech entrepreneurs including visa facilitation, incubator access, and potential funding. Requirements include viable tech business concept, commitment to hiring Jordanians, and participation in ecosystem programs. Benefits include streamlined company registration, access to accelerators, and networking opportunities.
Tech startups may qualify for reduced 5% income tax rates in certain sectors. R&D expenses receive enhanced deductions. Export-oriented services benefit from exemptions. Careful structuring optimizes benefits while maintaining U.S. tax efficiency.
Digital Worker Tax Optimization Strategies:
- Maintain contracts with non-Jordanian entities to preserve foreign-source characterization
- Limit Jordan presence to under 183 days if avoiding tax residence
- Utilize treaty provisions to prevent double taxation on employment income
- Consider ASEZA zone for 5% flat tax rate on qualifying income
- Document work location and Jordanian business days for permanent establishment analysis
Home-Based Business Permits
Jordan permits certain home-based businesses for residents, accommodating consultants and online professionals. Permitted activities include consulting, translation, design services, online teaching, and software development. Registration with Ministry of Industry and Trade required, along with municipality licenses.
Home-based businesses face standard tax rates but benefit from home office deductions. Internet, utilities, and equipment costs partially deductible. No trade license fees for non-commercial activities. Structure carefully to avoid permanent establishment issues for U.S. tax purposes.
Frequently Asked Questions for U.S. Expats in Jordan
Q: How does the U.S.-Jordan tax treaty prevent double taxation?
The treaty provides several mechanisms to prevent double taxation. First, it assigns primary taxing rights - employment income is generally taxable where work is performed, while U.S. Social Security remains taxable only in the U.S. Investment income faces reduced withholding rates: 10% on dividends, 10% on interest, and 10% on royalties. Both countries provide foreign tax credits for taxes paid to the other country. The treaty includes tie-breaker rules for residence determination and mutual agreement procedures for resolving disputes. Notably, the treaty preserves U.S. rights to tax its citizens on worldwide income while providing foreign tax credit relief.
Q: Can I contribute to both Jordanian and U.S. retirement accounts?
Yes, though coordination requires careful planning. Jordanian pension contributions through SSC or private funds are not deductible for U.S. tax purposes but create basis for future distributions. U.S. retirement contributions (IRA, 401(k)) remain available if you have U.S.-source earned income or elect to include foreign earned income above the FEIE limit. Without a totalization agreement, you may face double social security obligations. Jordanian private pension plans may require Forms 3520/3520-A as foreign trusts. Consider maintaining U.S. investment accounts to avoid PFIC complications with Jordanian funds.
Q: What happens to my U.S. state tax obligations when I move to Jordan?
State tax obligations depend on your former state and steps taken to establish non-residence. States like California, New York, Virginia, and New Mexico aggressively pursue former residents. Key steps include obtaining Jordanian residence permit (iqama), registering with U.S. Embassy in Amman, closing state bank accounts and establishing Jordanian accounts, updating voter registration to overseas status, and filing final part-year or non-resident state returns. Some states continue taxing certain income regardless of residence. States with no income tax (Texas, Florida, Washington) simplify expatriation. Document your move carefully to defend against state tax claims.
Q: How are Jordanian real estate investments taxed for U.S. expats?
Jordanian real estate faces multiple tax considerations. Rental income is taxed progressively after deducting depreciation, maintenance, and property taxes. Property sales face varying capital gains rates depending on holding period and property type. Annual property taxes (musaqafat) apply based on municipal assessments. For U.S. purposes, report rental income on Schedule E with 27.5-year depreciation for residential property. Capital gains face U.S. tax regardless of Jordanian treatment, with primary residence exclusion potentially available. Foreign tax credits apply for Jordanian taxes paid. Consider timing sales to optimize both Jordanian and U.S. tax impacts.
Q: Should I choose the Foreign Earned Income Exclusion or Foreign Tax Credit?
For Jordan's moderate tax environment, the choice depends on your income level and type. The Foreign Tax Credit (FTC) often provides better results for higher earners as Jordanian taxes on higher incomes may exceed U.S. taxes. FTC preserves eligibility for U.S. retirement contributions and doesn't require meeting physical presence or bona fide residence tests. However, FEIE might benefit those with income under $126,500 who can eliminate U.S. tax entirely, especially given Jordan's lower tax rates on moderate incomes. Many expats combine strategies, using FEIE for earned income and FTC for investment income. Consider that revoking FEIE requires waiting five years to re-elect without IRS permission.
Q: How do I handle Jordanian taxation of my U.S. investment accounts?
Jordan taxes residents on worldwide income but provides treaty benefits for U.S. investments. Interest and dividends from U.S. sources face 10% Jordanian tax after treaty reduction. Capital gains on U.S. securities may be taxable in Jordan depending on timing and residence status. Report U.S. investment income on Jordanian returns with supporting documentation. Claim foreign tax credits on Form 1116 for any Jordanian tax paid on U.S. investments. Consider holding growth stocks versus dividend-paying investments to minimize current taxation. U.S. mutual funds and ETFs avoid PFIC classification when held by U.S. citizens.
Q: What are the implications of maintaining U.S. LLCs or corporations while living in Jordan?
U.S. business entities require careful management from Jordan. Single-member LLCs may be treated as corporations in Jordan, creating potential double taxation. Multi-member LLCs might face partnership or corporate treatment depending on characteristics. C-corporations face double taxation with Jordanian tax on dividends plus U.S. corporate tax. S-corporations lose pass-through benefits for Jordanian tax purposes and may lose S-election if managed from Jordan. Jordanian permanent establishment rules could subject U.S. entity income to Jordanian corporate tax at 20%. Management from Jordan might create corporate residence issues. Consider restructuring before relocating or establishing Jordanian entities for local operations.
Q: How does Jordan tax U.S. Social Security benefits?
Under the U.S.-Jordan tax treaty, U.S. Social Security benefits received by U.S. citizens residing in Jordan remain taxable only in the United States. Jordan cannot tax these benefits regardless of residence duration. This exclusive U.S. taxing right provides significant advantages compared to many other countries. For U.S. tax purposes, up to 85% of Social Security benefits may be taxable depending on total income levels. This treaty protection makes Jordan attractive for retirees as Social Security income remains free from Jordanian tax while benefiting from Jordan's lower cost of living.
Q: Can I use the Jordanian healthcare system, and how does it affect my taxes?
Jordan provides universal healthcare coverage through a multi-tier system. Public insurance costs approximately 3% of salary for employees (split with employer) or fixed amounts for self-employed. Private insurance premiums vary by coverage level and provider. Health insurance premiums may be deductible as business expenses for self-employed or as itemized deductions within limits. Medical expenses exceeding 3% of income qualify for Jordanian tax deductions. U.S. expats satisfy ACA requirements through Jordanian coverage. Many maintain international insurance for U.S. visits or medical evacuation, with premiums potentially deductible depending on structure.
Q: What triggers Jordanian tax audits, and how should I prepare?
ISTD employs risk-based audit selection focusing on certain triggers. Common red flags include unreported foreign income or accounts (especially with CRS reporting), significant discrepancies between lifestyle and reported income, excessive business expense claims, late filing or payment patterns, and international transactions lacking documentation. U.S. expats face scrutiny due to complex international finances and information exchange agreements. Preparation strategies include maintaining documentation in Arabic with English translations, working with licensed Jordanian tax consultants familiar with expat issues, keeping proof of foreign taxes paid for treaty claims, documenting all international transfers and income sources, and responding promptly to ISTD inquiries (typically 15-30 day deadlines). Audits typically review three years but may extend to five years for substantial underreporting.
Why Choose American Expat CPA as Your Tax Partner
Navigating the intersection of U.S. and Jordanian tax systems requires specialized expertise that goes beyond traditional tax preparation. At American Expat CPA, we've built our practice specifically around the unique challenges faced by U.S. citizens living abroad, with particular depth in Middle Eastern tax matters including Jordan.
Our Specialized Expertise
Our team combines U.S. tax expertise with deep knowledge of Jordanian tax law and regulations. We maintain relationships with trusted Jordanian tax consultants to ensure seamless coordination of your dual filing obligations. Our professionals stay current with both U.S. tax reform and Jordanian legislative changes, including the impact of Jordan's business-friendly reforms and special economic zones on your overall tax strategy.
We understand that every expat situation is unique. Whether you're a professional working in Amman's growing tech sector, an entrepreneur leveraging Jordan's strategic location for regional business, or a retiree enjoying Jordan's rich culture and lower costs, we develop customized strategies that optimize your specific circumstances. Our approach goes beyond compliance – we proactively identify opportunities to legally minimize your global tax burden while ensuring full compliance in both jurisdictions.
Comprehensive Service Offering
Year-Round Tax Planning: We don't just prepare returns – we provide continuous planning throughout the year. This includes quarterly check-ins to adjust strategies based on life changes, income fluctuations, or new tax legislation. We help time income recognition, plan asset sales, and structure investments to maximize benefits under both tax systems.
Specialized Expat Forms: Our team expertly handles all required international forms including Form 2555 (Foreign Earned Income Exclusion), Form 1116 (Foreign Tax Credit), Form 8938 (FATCA), FBAR reporting, and complex Form 5471 or 8865 for business interests. We ensure accurate completion while maximizing available benefits.
Jordanian System Navigation: We help you understand and optimize within Jordan's tax system, including maximizing personal exemptions and deductions, navigating investment income taxation, managing social security obligations without totalization agreement, and coordinating with Jordanian tax advisors for local compliance.
Audit Representation: Should questions arise from either tax authority, we provide full representation and response services. Our team handles IRS correspondence, coordinates responses to ISTD inquiries, and ensures consistent positions that protect your interests.
Technology-Enabled Global Service
We've built our practice for the digital age, serving clients across Jordan and worldwide through secure, cloud-based systems. Our portal provides 24/7 access to your documents, secure messaging with your tax team, and digital signature capabilities that eliminate the need for physical meetings. We conduct video consultations that accommodate Jordan time zones, ensuring convenient access to expert advice regardless of your location in Jordan.
Transparent, Value-Based Pricing
We believe in transparent pricing with no surprise bills. Our comprehensive expat tax packages include all necessary forms and schedules, with clear pricing for additional services like amended returns or multi-state filings. Most importantly, our fee structure is designed to deliver value – the tax savings we identify typically far exceed our professional fees, making our services a smart investment in your financial future.
Getting Started with American Expat CPA:
- Free initial consultation to assess your situation and identify opportunities
- Comprehensive review of prior returns to identify missed deductions or credits
- Streamlined filing procedures for those behind on U.S. tax obligations
- Ongoing support for questions throughout the year
- Coordination with Jordanian tax consultants for seamless compliance
Your Success is Our Mission
Living in Jordan as a U.S. expat should be about enjoying the incredible history, hospitality, and opportunities – not stressing about tax compliance. We handle the complexity of dual taxation so you can focus on building your career and life in Jordan. Our clients consistently save thousands in taxes while gaining peace of mind that their obligations are properly managed.
Whether you're just planning your move to Jordan, already established as a resident, or anywhere in between, American Expat CPA provides the expertise and support you need. We understand the expat journey because we specialize exclusively in international tax matters for U.S. citizens abroad.
Schedule Your Free Consultation Today