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As an American expatriate, you are required to file your federal tax returns yearly, just like a U.S. citizen or resident who doesn t live abroad. Because, fact is, it s not just your U.S. income single travel packages that determines your tax rates, but your total income from any country. In other words, your foreign income counts. On the plus side, you re entitled to a bunch of expatriate tax benefits: foreign tax credits, income exclusion, and housing single travel packages allowances to name a few. If you re careful, you can also score some bonus points with a couple single travel packages of the less apparent benefits, which we ll outline below. Remember, you must file your Federal tax return to get these exclusions!
To take advantage of the Foreign Earned Income Exclusion (Form 2555 and Form 2555-EZ), all you have to do is 1) live in another country and 2) file your taxes there. Additionally, if you and your spouse both qualify, you may be able to file jointly.
single travel packages What income can you claim? For these purposes, the income we re talking about is just what you make from services rendered. In other words, income from any interest, dividend, or rental income doesn t count. In 2010, American expatriates were able to claim up to $91,500 as U.S. tax exempt income through tax exclusions.
Ok, now what counts as foreign? As far as the IRS is concerned, it s anything aside from the 50 American States and any of its controlled territories: American Samoa, Micronesia, Guam, Norther single travel packages Marina Islands, Puerto Rico, or Republic of Marshall Islands.
Guess what? If you paid foreign taxes on your income, you don t have pay U.S. income taxes on the same income! To take advantage of this, file the Foreign Tax Credit Form ( Form 1116 ). (If you re a corporation, use Form 1118 instead.) Any income tax you still owe to the U.S. (if any), will be substantially reduced, because you can subtract whatever you paid abroad!
Note: these treaties extend a few other rules too, like ones relating to IRS audits. Since the IRS actually single travel packages has up to 3 years to audit your returns after you ve filed them, filing any return begins this 3-year period (regardless of whether you have any taxable income).
If you re self-employed and working abroad, you re still typically subject to a foreign income tax. Since you still have to pay all Federal taxes, you will have to pay the self-employment tax. File your Schedule single travel packages SE and Schedule C, same as you would at home. (Note the SE rate is approximately %15.3 of the income you claim for Schedule C and it is not reduced by foreign income credits.)
On the plus side, you re not going to be paying other taxes, such as the Medicare or Social Security tax. The U.S. has a Social Security Totalization Treaty with some countries, allowing you to benefit from a participating country s social insurance system. If you opt in to this system, you may have to pay their Social Security tax, but you won t have to pay a U.S. one as well.
If you can show evidence of your foreign-based income, you will probably qualify for an automatic extension, meaning your return is due by June 15, not April 15. Citizens or residents who are serving in a military capacity abroad may also qualify.
For even more time, you can file for another extension and your returns single travel packages won t be due until October 15. But, be aware that this extension isn t simply mean you get more time until you pay! Taxes will continue to accrue during these extra months, and they may be hit with additional interest or penalties. Form 2210 gives you some options to possibly single travel packages reduce these penalties.
For more information about Costa Rica or any other topic see Costa Rica Books , Live in Costa Rica Tours or contact Christopher Howard personally at Email . To learn about Costa Rica first-hand, sign up for Christopher s Relocation/Retirement/Investment tour and highly informative two-day seminar. It s absolutely the BEST investment you can make before making the move.
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