Tax Deductions for US Expats
As a US expat, the need to file taxes in a foreign country is one of your advantage. You are fortunate to avail of several credits, exclusions, and deductions for your tax filing. As the year begins, it is wise to be aware of these tax write-offs for you to get more savings for other expenses.
These taxes, when paid promptly and completely, may lessen the amount you have to pay for your general tax payment this year.
Property Taxes depends on the land you own. You may pay your land tax to a state, city, or another local agency. Paying your land taxes early may result in deductions in your annual tax bill.
State Taxes are another source of deductions for your US tax returns. When you use paychecks to pay your taxes to a US state this deduction is applicable.
Making certain type of contributions may allow you to use these figures as deductions for your tax bill.
IRA Contributions (Individual Retirement Account) is a type of retirement fund. You may deduct the amount you contribute to this retirement saving from your income as a US expat taxpayer. For 2016, the contribution limit is $5,500. If you are over 50 years old, the contribution limit is higher, up to $6,500.
Charitable Contributions are sure ways to slash off certain amounts from your taxes as a US expat. Contributions include money and goods you donated to charitable institutions or causes. Take note, however, that the institution must be an organized charity. Check with the IRS which organizations are registered with them. If the organization receiving your donation is a foreign charity, it can still qualify if it has affiliations with a US charity. Donations made to unregistered charity is not applicable for tax deductions.
There are certain services you avail during the year which can give you some tax write-offs. If you avail of these services, prepare the related documents to avail of the extra credits you may get.
Educational Credits are another avenue to lessen your tax dues. You and/or your dependent children’s education expenses may qualify for such credit. If the college or university you are studying participates in a US-run student aid program, then you are qualified to claim these expenses. There are many accredited tertiary schools or foreign educational organizations which can qualify. There are sites to search if your school belongs to this group. The expenses you may include for the educational credits are tuition and miscellaneous fees, books, and other school supplies.
Child Care Credit is another means to get extra savings from your US expat taxes. When a person other than your spouse, parent, or another dependent; or an organization is responsible for the care of your child while you work or study abroad, you may avail of this tax credit. The amount you pay can be used to deduct a part from your tax dues.
You may have spent certain amounts during the year but on a positive note, these expenditures may give you some tax write-offs for your next tax filing.
Educator Expenses are for professionals under the education sector. If you are a teacher, professor, principal, teacher aide, or counselor, you may deduct up to $250 on your taxes. You may avail of this tax deduction if you have worked as an educator for more than 900 hours in a year. Your books, gadgets, supplies, and other expenses related to your profession or in your classroom may qualify for the educator expenses. The only requirement is to have all receipts available for these expenses.
Medical Expenses which are considered out of pocket expenses are those not paid by your medical insurance. If you spent your own money to pay doctors, dentists, hospitals, medicines, or medical insurance premiums, the amount you paid may qualify for certain deductions on your US expat taxes. The only exemption is the amount used to buy over-the-counter medicines. There is also a certain amount which you have to exceed on your expat taxes before you can deduct these expenses from your taxes.
These amounts will give you additional sources to get some US expat tax write-offs.
Mortgage Interests is the amount you pay to the bank where your mortgage loan is applied. Mortgages within US bank will require you to accomplish Form 1098. This form reports the interest amount you paid to the bank. For mortgages within foreign banks, you have to ask the specific calculation where the interest you paid is applied.
Being more knowledgeable will get you more advantages when it comes to gaining deductions for your expat taxes. Aside from the above-mentioned tax deductions, there might be other savings you can get depending on your tax situations. For instance, a Foreign Tax Credit or Foreign Earned Income Exclusion will help you qualify for such extra deductions.
Have a trusted tax professional to advise on applicable tax deductions for you. You want to take full advantage of these deductions to avail of the greatest savings on your behalf.