American Tax Services - Top Ways to Save

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4 Ways your American Tax Services Provider can Save You Money! By Greenback Expat Tax Services.

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American Tax Services - Top Ways to Save

  1. 1. Helping you piece together the US Expat tax puzzle American Tax Services – Top Ways to Save on Your US Expat Tax Return
  2. 2. Introduction Moving to a foreign country comes with unique challenges and requires you to learn new information about many things, and your American tax services provider should help guide you through the tax puzzles you face. In this presentation we will discuss four great ways your American tax services provider can help you to save on your US expat return .
  3. 3. Take Advantage of the Foreign Earned Income Exclusion <ul><li>The Foreign Earned Income Exclusion aka Form 2555 or FEIE allows you to exclude a big chunk of your foreign earned income from your US </li></ul><ul><li>taxes. A good American tax services advisor will tell you that: </li></ul><ul><li>All of the income you make inside and outside of the United States is subject to identical tax rates </li></ul><ul><li>You can use the FEIE to exclude up to $91,500 of your foreign earned income from US taxation </li></ul><ul><li>You can use this along with the Foreign Tax Credit (discussed next) </li></ul><ul><li>If you qualify for the FEIE you will likely qualify for US expat tax savings on your Foreign Housing Expenses (see below) </li></ul><ul><li>To qualify you will need to meet either the: </li></ul><ul><li>Bona Fide Resident Test, or </li></ul><ul><li>Physical Presence Test </li></ul>
  4. 4. Take advantage of the Foreign Tax Credit <ul><li>Your American tax service provider should advise you that this can help you: </li></ul><ul><ul><li>Avoid Double Taxation - by claiming a credit on your US taxes for taxes you paid abroad </li></ul></ul><ul><ul><li>Build up tax credits in the US – which can reduce future income taxes </li></ul></ul><ul><ul><li>Reduce you US expat tax burden </li></ul></ul><ul><li>To qualify you must meet either: </li></ul><ul><ul><li>The Physical Presence Test </li></ul></ul><ul><ul><li>The Bona Fide Resident Test </li></ul></ul>A good American tax services provider will fully explain how the Foreign Tax Credit works . You can save a lot of money on your US expat taxes by taking advantage of the Foreign Tax Credit - Form 1116 , especially if you live in a high tax country, such as the UK or Germany.
  5. 5. Adjust your Foreign Housing Allowance <ul><li>American tax services providers should be very familiar with the Foreign Housing Allowance. This allows you to deduct up to $27,450 of your foreign housing costs from your US expat taxes. It is calculated as a percentage for your FEIE, so make sure your American tax services provider has completed Form 2555 correctly! </li></ul><ul><li>Here is how it works: </li></ul><ul><li>Your American tax services provider calculates your FEIE amount </li></ul><ul><li>30% of this is then eligible as a deduction on your US expat taxes </li></ul><ul><li>Eligible expenses include – rent, repairs, utilities (excluding your phone bill), personal property insurance, and other such expenses </li></ul><ul><li>Your American tax services provider should now adjust your Foreign Housing limit based on the country you live in . </li></ul><ul><ul><li>London limit = $83,400 </li></ul></ul><ul><ul><li>Paris limit = $84,800 </li></ul></ul><ul><ul><li>Hong Kong = $114,300 </li></ul></ul><ul><li>When applied correctly this can produce significant US expat tax savings ! </li></ul>
  6. 6. Use the Most Advantageous FX Dates A good American tax services provider will look at the best date to use for currency conversion on your US taxes. <ul><li>The IRS requires that your foreign income be converted to US Dollars on your US Expat taxes, but the IRS allows you to use either: </li></ul><ul><li>The Foreign Exchange rate on the day you earned the money </li></ul><ul><li>The average FX rate for the month or </li></ul><ul><li>The average FX rate for the year </li></ul>Your American tax service provider should look at how you earned your income and the FX rates on the specific day, the monthly average and the annual average to make sure you get the very best conversion rate.
  7. 7. Watch Out for Hidden Fees It’s imperative to know what your American tax service provider will charge you for your expatriate tax return, before you start! It happens all too often that expats believe they’ll be paying one amount only to be hit with extra charges and fees on their final bill . Make sure you know the final price before you start! <ul><li>Many providers charge extra for things like: </li></ul><ul><li>Itemizing your taxes </li></ul><ul><li>Filing jointly with your spouse </li></ul><ul><li>Extra Schedules </li></ul><ul><li>Some even try to charge as a percentage of your refund! (how prudent do you think they will be!) </li></ul>
  8. 8. Conclusion There are numerous ways to save money on your US expatriate tax return. A good American tax service provider is essential to make sure you receive all of the credits and exemptions you are due . Greenback Expat Tax Service is an American tax Services provider focused on US citizens living abroad. We charge a flat rate fee of $329 to prepare your US expat tax return and there are no hidden fees . Visit us today at: www.GreenbackTaxServices.com

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