Expat Tax Tips

3 Expat Tax Tips Before Moving Abroad

Expats must keep tabs on many aspects of modern living when they relocate to a country that might differ from them culturally and in other elements. For example, calculating the taxes that apply to you correctly and then filing them can be daunting. Still, it is essential when living in any country as you may also fall within the tax net in your home country, mainly if you belong to the US. 

1. Be Aware Of Tax Exemptions 

There is plenty of good news regarding tax filings as an expat. Due to various agreements and treaties between multiple countries, tax exemptions can be availed, although paperwork needs to be filed extensively in some cases. For example, the Foreign Earned Income Exclusion clause details that if an expat spent upwards of 330 days in another country, they could file for an exclusion from their taxes due yearly in their home country. 

The Foreign Housing Allowance works similarly for accommodation and utility expenses, even luxury apartments. If an expat tax CPA has consulted, the expat will know what provisions to apply for saving disposable income from excessive taxation. For example, some countries can use it for moving expenses. The foreign tax credit also curbs double taxation. 

2. Tax Filings For Home

Since expats relocate to a foreign country, they may be unaware they are still liable to pay taxes back home in most cases. Income that falls outside a certain amount still incurs a surcharge even if the expat has not set foot in their home country for the tax year. For US citizens, different yearly incomes make an individual liable for taxation. 

For single individuals under 65 years, an income up to $10,000 makes them liable for taxes, and similarly, married spouses with a joint income of $21,000 will need to file for taxes back home on top of any income they are earning in the foreign country. Although failing to pay taxes in your home country may not be classified as a criminal offense, regular contact with an Orlando criminal defense attorney can be beneficial to avoid unknowingly committing any illegal actions related to tax filing procedures. 

3. Medicare & Social Security 

As an expat medical insurance can play a huge role in how comfortable they are in the new country, especially if an individual has a chronic medical condition. Medicare and social security taxes are typically paid in one’s home country, and how these are transitioned to the new government an expat has moved to varies from one country to another. Corporate employees only stationed elsewhere for a term under five years may only need to pay medicare taxes back home. 

Furthermore, if you live in a country that falls within the totalization treaty the US has with several countries, you will pay taxes in the new government and not have to renew your payments back home for that period. The same applies when an expat is an employee of a foreign employer for a long time; they may be exempt from social security payments in their home country.

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