US Citizens and Saving on Tax Overseas
As a U.S. Citizen, you are subject to taxation on your worldwide income. This means that even if you live and work overseas, you are still required to file a tax return and pay taxes on your income. However, there are some ways that you can save money on your taxes while living abroad. But how do you do this? If you’re tired of losing a high percentage of your income or retirement money, this is the guide for you.
One way to save on tax when living overseas is to take advantage of the foreign earned income exclusion. This exclusion allows you to exclude a certain amount of your income from taxation. For 2018, the exclusion was $103,900. This means that if you earn less than this amount, you will not have to pay any taxes on your income.
Another way to save on taxes while living overseas is to utilize the foreign housing exclusion. Similar to the foreign earned income exclusion, this allows you to exclude a certain amount of your housing expenses from taxation. The amount that you can exclude depends on the country in which you live and the size of your home.
What’s more, you can also deduct your travel expenses when you file your taxes. So, if you travel back to the United States for a visit, you can deduct the cost of your airfare, hotel, and other travel expenses.
Lastly, you may also be eligible for the foreign tax credit. This means that you can offset any taxes that you pay to a foreign government with your US tax liability. The credit is available for both income and estate taxes.
Reduced Tax with Mail Forwarding
All these methods of saving on tax while living overseas add up, but there is another huge step that you can take to reduce your tax burden in the first place, and it’s called mail forwarding. With a Mail Forwarding Company, the idea is that you would send your mail to their US address. They would then open and scan the contents of the envelope, and email you the scanned copy.
Depending on the service you choose, the company will offer various forwarding options. For example, some simply mail everything to your new address while others use a digital portal through which you can decide what mail is sent to you and what mail is shredded or thrown in the trash.
However, we’re moving away from the important part. When you use a mail forwarding service, you can become a resident of a particular state of the United States. All your mail is sent to this address before then being passed to you. What does this mean? You can choose a service that registers clients in states like South Dakota. Among other things, these states have no income tax.
Of course, some requirements come with this. You’ll need to spend a certain number of days in the state each year and set up a physical mailing address there. But if you’re already spending most of your time overseas, this shouldn’t be a problem. With the right service, you can just spend one night in the state and get a South Dakota address for mail forwarding and tax purposes.
There are many other benefits of using a mail forwarding service. For example, it can help you stay organized while you’re on the go. It can also help you keep your identity safe by providing a physical address for your important documents.
Why not utilize the tips in this guide today?
