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U.S. Income Tax Treaties

By H&R Block

Summary: The United States has entered into income tax treaties with more than 60 countries. However, there's very little U.S. tax relief available to a U.S. citizen who's living abroad under the terms of an income tax treaty.

Expat Taxes - U.S. Income Tax Treaties

The United States has entered into income tax treaties with more than 60 countries. If you're an expat who's working in one of those countries for a short time, you might be exempt from taxes in that foreign country.

However, there's very little U.S. tax relief available to a U.S. citizen who's living abroad under the terms of an income tax treaty. Income tax treaties usually contain a provision that allows the United States to tax its citizens and residents as if the treaty didn't exist.

U.S. income tax treaties might still provide tax benefits to citizens and residents by granting:

  • Exemption from U.S. tax on Social Security benefits
  • A special credit available for foreign tax paid on certain U.S. source income

Also, under the terms of certain treaties, U.S. taxpayers with foreign retirement accounts can:

  • Deduct contributions to the accounts
  • Defer tax on earnings in the accounts until distribution

These kinds of foreign retirement accounts don't usually qualify for such treatment.

As an expat, U.S. income tax treaties may provide you with an exemption from foreign country taxation. If you think you might qualify for treaty benefits available to U.S. expats in your foreign country of residence, ask the IRS for a residency certification. This certification is granted through Form 6166. Certification allows you to support your claim for treaty benefits in a foreign country. An H&R Block expat tax advisor can help you compile your information and request this documentation from the IRS.

For more information, contact an H&R Block Expat Tax Advisor at www.hrblock.com/expats.

About the Author

AS H&R BlockH&R Block is the global leader in tax preparation. Since 1955, H&R Block has prepared more than 550 million tax returns worldwide. We specialize in U.S. expat tax preparation for Americans living abroad.

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Comments about this Article

Vdix
May 9, 2014 13:33

I appreciate this information and would like to learn more, specifically about taxes regarding expat living in Saudi Arabia. Thank you

First Published: Jun 13, 2013

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