Boost Your US TAX RETURNS FOR NON RESIDENTS With These Tips
Quest for exploration and adventure has always driven mankind. And in modern times, with the world becoming a global village, it is not very uncommon for citizens of a country to travel abroad for better opportunities in life and a plethora of other reasons. One thing that is essential for the functioning of any society and Government is taxation and the United States is one of the very few countries that taxes its overseas citizens, therefore, it does not matter where you are residing but if you are an American citizen or even a green card holder, you need to file the taxes with the concerned authorities. Hence, if you are an expatriate, you are liable to file expat taxes - US tax returns for non residents.
In this blog, we will share some of the tips that can handsomely boost your returns and doing taxes won’t be an Achilles hill anymore.
One of the most widespread misunderstandings among Americans residing overseas is that they are exempt from filing US taxes. Many American ex-pats assume that their reporting and filing requirements end once they leave the country. Others believe they do not need to file since they may deduct international income from their US taxes. This is unfortunately not the case. The US government levies taxes on residents' international earnings.
Failure to file a return might result in serious civil and criminal penalties. Because an IRS audit has a three-year statute of limitations, it makes sense to submit a return even if it isn't necessary and no taxes are owed, only to start the clock ticking and avoid future issues with taxing officials.
Many people are concerned about double taxes when they relocate overseas. It's scary to think of having tax responsibilities in two nations. Fortunately, two significant tax incentives can help you save money on your US taxes while residing overseas. One of the most common choices is the Foreign Earned Income Exclusion (FEIE). The FEIE permits ex-pats to deduct over $100,000 from their taxable income. To be eligible for the FEIE, Americans living abroad must either be permanent citizens of another nation or spend less than 30 days per year in the United States. Alternatively, the Foreign Tax Credit (FTC) can save ex-pats a lot of money. For taxes paid to a foreign government on foreign-sourced income, the FTC provides a dollar-for-dollar tax credit.
While most jobs require you to start working overseas on a specific date, you may have greater flexibility in other cases. Your move's date concerning the tax year may have an influence on your filing. Expats who left earlier in the year have more time to qualify for the Foreign Earned Income Exclusion (FEIE) before filing their tax returns. If the ex-pat relocates in the middle of the year, the total amount of savings may remain the same. They may, however, need to file for a tax extension because they require additional time to qualify. This is not an issue if you use the Foreign Tax Credit instead of the FEIE.
If you are thinking that ex-pat taxes are more complex than you initially thought them to be, we understand and share your concern. For this reason, we at USA Expat Taxes exist. We try to make the job simpler for you and is always there with you until the taxation formalities are completed in case you feel, you have more doubts, we are always there and just a click away.
