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Overseas Expat Taxes Review
As we continue our expatriate series we defined in the last article about how a expatriate can be happy but we are going to turn to a more serious role. Taxes uggh. Yes they are horrible but it is something that each expatriate should think about.
Taxes come in all forms and are imposed on individuals who are expats in other countries. Specifically if you are a US expat it is a good idea to get to know the tax rules. Because even though you reside in another country you will still have to pay US income taxes on the income earned while over there. so it is a good idea to start a small savings account for those unexpected returns in case you do need to pay money.
As you are preparing to become an expat or already are you need to be aware of any tax exclusions that are available to you so that you can file the correct information to the IRS. For example A US based expat residing in a foreign county there are certain exclusions that you have because you are a United States Citizen. All of this based on earned income in that country that you are currently residing. The tax laws can be cumbersome as well with many rules and amendments in US tax laws. If you are unsure it is a good idea to hire a professional that will go over them with you.
If you are self employed, the United States requires individuals to pay the local income tax as well as the self employment tax based on foreign income. This is important to remember if you are self employed in a foreign country. This results in almost a double tax for U.S citizens living in a foreign country. Although there is rules and regulations that you can jump through to bypass some of it again if you are not sure about the tax code hire a professional tax advisor that has experience in foreign tax returns. If you end up having to pay both these taxes it can become very burdensome for individuals if they are not prepared. So as you work and earn money throughout the year stash 10-20 percent in a savings account for those ends of year expenditures.
It is very important to know the details of all tax regulations in your home country and in your new residence. Remember other people have been there too so do not worry there are hundreds of forums and chat rooms all over the internet that will assist you in getting connected to a professional or helping you through questions if you are preparing your own. If you would like more information on expat taxes for your home country please visit Expatcrossing.com there is hundreds of articles and forums for information related to your tax questions.