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Residing and earning in foreign country whether temporary or permanent can be unforgettable and exciting experience. Migrating to another country can be exciting, but it also brings some challenges along with it. And for this we need to have some information and learn a bit of new things about U.S. taxes. In order to avail full benefit of living in foreign country you need to do some research about U.S. tax obligation before you file for it. This article will provide you with valuable information of how save your money while filling U.S. taxes. Given below are the four important ways to save your U.S. expat tax. While residing in foreign state and filing your U.S. taxes, the foremost thing is that you take full advantage of form116 and 2555,which is also known as the Foreign Tax Credit and Foreign Earned Income Exclusion. The Foreign Tax Credit provides you a credit on U.S. expat taxes for the money you have paid to foreign government. The Foreign Income Earned exclusion helps by to exclude big chunks of your foreign income from your U.S. taxes. It is important because being an expat all of the foreign earned income is subjected to identical taxes as someone who is working and living inside U.S. That is where Form 2555 comes in. Completing this form helps us in excluding $91500USD of the income earned from your U.S. expat tax. The Foreign Tax Credit (form 1116) differs from (Form 2555) but they have the same function. They help you save money on your expat tax return. Sometimes people take a wrong decision by using these two forms assuming that their taxes will be offset by the numbers they have worked out, they decide not to file for their Expatriate Tax Services at all but this will not provide you with any good! If you are earning in abroad it is necessary for you to file in order to receive tax breaks and to avoid heavy tax penalties. Secondly, while filing for your US expatriate tax return. It’s important to your Foreign Housing Credit gets adjusted for the country you live in. This differs from country to country which seriously affect the end result. So it is really very important that you get them adjusted. Being a US citizen a working and earning in abroad you can deduct some of your housing cost from your income in order to save your money. In order to avail this service you need to have a “bona fide residence’’ or the “physical presence test”. This test makes sure that you are living and working in abroad. The IRS allows this deduction because they come to know that you need to spend more money on housing outside US. Mostly the maximum deduction is of $27,450 or 30% of your Foreign Earned Income. This rate is adjusted according to the place you live. If you are looking for Individual Tax Services and living in USA then visit to usautax.com as they are providing tax services to individual and expatriate at very affordable price and more over they have had experience of more than 20 long years of experience in providing tax service in United States, Australia and New Zealand. Author Info Thomas is a director at United States Australia Tax Service. USAUTAX.COM He enrolled to practice before the Internal Revenue Service. He has over 17 years of Tax and Financial Industry experience. If you are looking for Individual Tax Services or any question for expatriate tax services or you are looking for Individual Tax Services then feel free to him at THOMAS@USAUTAX.COM
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