Tax Samaritan Tax Tips For Americans Living Abroad
Filing income tax returns is a dreaded and stress filled time for most U.S. taxpayers. But the tax filing process for Americans living abroad is no easy task.
Millions of Americans live abroad immersing themselves in cultures often very different from the United States. But one thing in common to all Americans living abroad is the requirement to file and pay U.S. income taxes regardless of where you live and work.
As a result if you are one of the many Americans living abroad, you should be aware of our 2014 Top Tax Changes For Americans Living Abroad:
- Foreign Earned Income Exclusion Amount: The maximum foreign earned income exclusion is adjusted annually for inflation. For 2014, the maximum exclusion has increased to $99,200.
- Housing Exclusion: The computation of the base housing amount is tied to the maximum foreign earned income exclusion. The amount is 16 percent of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your 2014 tax year. For 2014, this amount is $43.48 per day ($15,872 per year).
- Tax Filing Requirements: Generally, the amount of income you can receive before you must file an income tax return has increased.
- Self-employment Tax Rate: For 2014, the maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $117,000. All net earnings are subject to the Medicare part of the tax.
- Figuring Tax On Income Not Excluded: If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions.
- Form 8938: If you had foreign financial assets in 2014, you may have to file Form 8938 with your return.
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Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation of Americans Living Abroad. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.