If you are an American citizen or permanent resident, you are obligated to file US taxes with the federal government each year irrespective of where you reside in. Apart from just filing the US returns you might be required to report your foreign financial accounts called F BAR. USA is one of the few countries that tax the worldwide income of its citizens and permanent residents. However, it does have special provisions to help protect us from double taxation. Foreign Income Exclusion is one of the most popular ones, especially among Tax-free countries.
- The Foreign Earned Income Exclusion, allows qualifying expats to reduce their earned 2019 taxable income by $105,900. Earned income refers to any income that is compensation for services provided including salaries, wages, tips, freelance income and self- employment.
Expats who earn over the threshold and who rent their homes abroad may be able to claim the Foreign Housing Income Exclusion.
- A Foreign Housing Exclusion allows an additional exclusion from taxable income for certain amounts paid for household expenses that occur as a consequence of living abroad like rent, utilities, etc.
Contact us to learn if you qualify for foreign income exclusion and foreign housing exclusion. With proper guidance, you should be able to minimize or even eliminate your liability on US taxes.
Please note that even if you do not believe that you owe any US expat taxes, you may still be required to file a return. Our team of experts is here to help you navigate your tax obligations while living overseas.