Foreign Earned Income Tax Exclusion for US Expats

Learn about the huge tax benefit for US Expats:

 In this video, Darryl Albuquerque explains the Foreign Earned Income Exclusion, how you can qualify and what the benefits are.

In order to qualify you need to be living and working outside the US moving your Tax Home to another country and you must have a Foreign Earned Income overseas such as a salary.

There are two tests that deem if you are living and working outside of the United States.

Test 1: Physical Presence Test (PPT)

  • You need to have spent 330 days in any 12 month period overseas

Test 2: Bonefide Residence Test (BFR)

  • You need to have spent a full calendar year overseas

What are the major benefits of the Foreign Earned Income Exclusion?

  • In 2015 you can exclude your first $100,800 of income from US Tax calculations
  • The amount can be adjusted each year for inflation
  • Your spouse, should they qualify, can get the same benefits

In effect then, you can work and live outside of the United States and only be subject to tax on overseas income greater than $100,800. If you worked in a tax free zone such as Dubai in the United Arab Emirates and earn under the $100,800 threshold you can live tax free!

Many countries in the Middle East are tax free zones so it is easy to understand why there are hundreds of thousands of US Expats in the region.

It's important that you submit a tax return to the IRS every year, and that goes for all American Citizens and Green Card Holders. You may not have to pay any tax at all but you must file your return, the penalties for not filing can be severe.

Here at Expat US Tax all our Tax Accountants only do one thing, tax for US expats. It's our specialty, US expatriate tax has some complexities and you can only get the very lowest tax bill from the most experienced expat tax accountants.

We take care of the whole process for you for a fixed fee, so get in touch today for a free consultation.

Click here to contact Darryl via his profile page

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