An expatriate is a person living in another country temporarily or permanently. Many U.S. citizens choose to live abroad for a period of time. You are considered an expatriate if you live in another country or combination of countries for 330 full days in a year.

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U.S. expatriates need to be aware that U.S. taxes are based on nationality, not on residence. If you are a U.S. citizen, you should report your income to the IRS no matter where you live. You can change nationality in order to avoid U.S. taxes, however, if you pay foreign taxes on your income, you may be able to offset the U.S. tax if there is a double tax treaty in the country you are a resident. A “tax home” is your general area of employment and residence, which is usually connected with the foreign residence.

If your “tax home” is in a foreign country, you can exclude from your gross income a limited amount of your foreign earned income. You have several ways that you can exclude your foreign earned income that must be made with one of the following income tax returns: A return filed by the due date, a return amending a timely-filed return, or a return filed with 1 year from the original due date of the return. The amounts of income you can exclude from your tax return can amount up to $183,000.

U.S. expatriates can also qualify for a foreign housing exclusion. This allows some of the expenses of housing to be reduced. Examples of these are rent and repairs, property insurance, parking fees, furniture and utilities. Limitation on housing expenses is 30% of of the foreign earned income exclusion.

Foreign tax credits can be used in place of deducting taxes. Foreign taxes are often credited against US tax liability. This means if you pay foreign taxes, you may not owe U.S. taxes. A foreign tax credit reduces U.S. tax liability, and any excess can be carried back and forward to other years.


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