It is imperative to note that every American citizen must report all income to the IRS-weather residing in America or abroad. Foreign Earned Income Exclusion (FEIE), which is contained in a form 2555, excludes taxes on up to $ 91,500 of your wages or business income earned overseas.
However, this is only available when you file your tax returns. Although this exclusion allows you to avoid taxes on the earnings, the payment of your self-employment taxes on your business profits is solely still your responsibility.
On a second thought, FEIE may not be the best option for you daňové priznanie 2017. By reporting all your income, you could be eligible for certain refundable credits (child tax credits, for instance) or to fund your IRA or retirement accounts. You could not take advantage of these options if your income were not taxable.
Moreover, this does not exclude taxes on interest, dividends, pensions, and other types of unearned income. That income is taxable in the United States.
Do Not Just Avoid Filing
Many Americans do not bother filing their tax returns at all, thinking they are exempted from doing so. This is literally throwing away money you are entitled to receive. All is not lost, though. When you file tax returns in the countries where you reside, the taxes you pay can offset any other taxes you might owe in the United States.
Where to Look for Additional Help
In case you find yourself stuck, the U.S. has tax treaties with other countries whereby, only they or only the United States will tax certain kinds of income. Effective January 1, 2011, you can look up your own country in the State Department publication showing the treaties.
Further to that, taxpayers living abroad or foreigners working in the United States can gain access to more information by visiting the IRS website. On top of multiple local campuses, the IRS has permanent offices in England, Germany, France, and China. You can give any of these offices a call to get help from the IRS staff.
The IRS can provide you with information on how to submit issues to them. This is in cases where you may need special clarifications or assistance when tax issues between the United States and your country causes you any form of hardship or confusion. Do not hesitate to contact the tax authorities when having difficulties; the resources are all available for your convenience and satisfaction.