Use the Foreign Tax Credit to Reduce Taxes Paid to the US
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If you exclude some of your foreign income using the Foreign Earned Income Exclusion yet you still have additional income that incurs US tax liability, the Foreign Tax Credit is your best weapon. This is a dollar-for-dollar reduction on the taxes you pay to your host country. For every dollar that you paid in foreign tax, you can directly reduce that amount on your US taxes. This credit is designed to mitigate all or some of the double taxation that arises when US taxpayers earn money abroad and are also taxed in the foreign country. It’s important to note that you can’t use the Foreign Tax Credit on money sourced in the US-only foreign earned income.
Submitted on Jun 09, 2014 - Category: Expat Finance
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GreenbackExpatTaxServices
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David is an IRS Enrolled Agent, an MBA and an experienced finance professional and entrepreneur. David and his wife, Carrie, were frustrated with the process of filing their expat taxes. They found plenty of accountants, but few who could accurately prepare expat taxes. There were expensive accountants who treated them like a number and US CPAs who were well meaning, but not up to date on the rules as they apply to expats. Together they decided there had to be a better way. So they created the kind of company they wanted to work with - and Greenback Expat Tax Services was born!
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