As specialist US tax accountants to US Expats we are all too familiar with the issues that occur when US Expats overlook their tax filing obligations. Below are our top 10 tax tips for Americans living abroad.
1. File your US tax return
It may seem obvious, but with millions of US Expats failing to file their tax return every year it has to be mentioned. You must file a US tax return if your income exceeds the filing threshold, which is set extremely low.
2. Foreign Earned Income Exclusion (FEIE) will save you money!
Foreign Earned Income Exclusion can be used to exclude up to $100,800 of foreign income on your US tax return. In order to claim FEIE you must pass a residency test, as well as the physical presence test.
3. Use Foreign Tax Credit (FTC) to reduce taxes
Foreign Tax Credit allows you to offset US taxes that you have already paid tax on in another country.
4. File your FBAR
The FBAR deadline falls on Tax Day, 18th April 2017. US Expats receive an automatic extension to the 15th June, which can be extended further to 17th October. You are required to file an FBAR if you have $10,000 or more in your foreign accounts at any point during the year.
5. You can offset your housing costs
Foreign Housing Exclusion means that US Expats are able to offset some living expenses incurred abroad.
6. Be aware of FATCA
The Foreign Account Tax Compliance Act means individuals must report their foreign financial assets if they exceed a set level.