Taxes
Dealing With Taxes If You Live and Work Outside The United States
If you live and work outside of the United States, I may have some very good news for you. Although Americans are taxes on their worldwide income, you may be able to claim a huge deduction.
Dealing With Taxes If You Live and Work Outside The United States
As the global economy continues to integrate companies and workers, you may find yourself living and working full time in another country. From a tax point of view, this can be a bit problematic since the Internal Revenue Service demands you pay taxes on all of your income regardless of where it is earned. If you are paying taxes in the country you are working in, the double whammy can wipe you out. Alas, there is a solution to this problem.
If you meet certain requirements, the IRS allows you to exclude up to $80,000 of your income from being taxed. You may also be able to deduct certain amounts you paid for your housing.
To qualify for these exclusions and deductions, you must have earned the income abroad and be living abroad. You must also claim residency in a foreign country for the entire tax year or be present in that country for 330 days out of 12 consecutive months. If you meet these fairly simple requirements, you will save a bundle on taxes. Please keep in mind that you must file a tax return with the IRS even if you do not owe any money because of the exclusion.
In certain situations, you may also be able to claim the exclusion and deduction if United States and country have a tax treaty covering the issue. To promote trade, many countries enter into tax treaties to address double taxation issues that would otherwise make most trade financially impossible. Many such treaties exist between the United States and other countries, so make sure to review any for your location.
Living and working abroad is much more common than it use to be. Make sure you understand the above requirements so you can avoid unfortunate tax consequences.
Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.
Richard Chapo
Tags: tax, taxes, irs, internal revenue service, income, exemption, foreign, deductionsSimilar articles
Cheating the Taxman
Go on admit it, you?ve often contemplated what it would be like to keep most if not all of your paycheck instead of being fleeced by the Taxman. It doesn? Read more →Congressional Democrats and Republicans Talk Taxes
The Democrats are pointing at the Republicans, and they are pointing back. Both sides of Congress took their turns portraying the other party of wanting to boost taxes for middle class American taxpayers. Read more →Deducting The Cost of Moving To A New Job
In our modern society, moving to a new location because of a job is a fairly frequent event. While moving is hardly enjoyable, you do get some deductions out of it. Read more →Don't Just Worry About Federal Estate Taxes
Many states have their own estate tax laws that you need to worry about. With the current law phasing out the estate tax over the next few years, the state's are beginning to feel the pinch of having less federal estate-tax revenue coming in. Read more →Aphorism
Things should be as simple as possible, but no simpler.
Albert Einstein