Posted on Oct 17, 2012 | Comments 0
Although U.S. is a large country, it still isn’t enough for some people who have the dream of living and working abroad to make sure that their bank accounts become healthier. If you would like to have this experience as well, it is possible that you could benefit from some tax benefits during the time you are living abroad.
If you are a resident or a citizen of the U.S., your income is a subject to the income tax laws of the country regardless where you live or work. Nonetheless, based on where you work or live, it is possible that you qualify for certain tax benefits.
If your tax home is in another country and you are working abroad, you might have the possibility to have $91,400 of your yearly income qualified as non-taxable by the U.S. government. In order to qualify for this you must meet the residence test of bona fide.
This kind of deduction applies only to the amounts of money that you paid from your self-employment earnings. If you don’t have an income of this kind, you don’t qualify for this type of deduction. If you worked in self-employment at any moment of the year, it is possible that you will be able to deduct a part of your earnings.
Some people have the possibility to deduct a part of the housing expenses from the taxable income or to have a part of the expenses considered non-taxable by the U.S. government.
Tax treaty benefits
In some cases a part of your income while working abroad might be excluded from tax for a given amount of time. In order to have this advantage you have to file for tax return. There are numerous countries that the U.S. has tax treaties with. So, take advantage of offshore bank accounts.
Why to use these benefits
The main point of the benefits is to make your life easier while working abroad. If you had to pay taxes for all the money that you make abroad, most probably it wouldn’t be worth it for you to leave the country. This is why it is just normal to deduct the amount of money that is an absolute necessity for you to pay in foreign countries.
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