Americans are exempted from most of their US income taxes if they spend at least 330 days of the tax year abroad.
I think the point of the rule is that if you live and work abroad and you are already paying taxes in that country, your US taxes on income up with 91k are exempt.
What's not clear to me is that what happens when you're self-employed and travelling from country to country, and staying out of the US for 330+ days. I assume these people don't any local income tax, but they still get the US tax exception. I think the IRS calls these people "itinerant". For example, you make a living selling books on how to pickup girls abroad, and are constantly moving from one country to the next.
Note that if you are self-employed aboard, you still have to pay US Self-Employment Tax fully (15%) -- there is no exclusion on that part. But you still get a massive tax-cut because you dont pay the normal part of your federal income tax (on the first 91k of income).
Anyone making use of the Foreign Income Exemption here?
More info here:
http://www.irs.gov/businesses/small/inte...50,00.html
This is the form I used (which was inside my computer tax program)
http://www.irs.gov/pub/irs-pdf/f2555.pdf
I think the point of the rule is that if you live and work abroad and you are already paying taxes in that country, your US taxes on income up with 91k are exempt.
What's not clear to me is that what happens when you're self-employed and travelling from country to country, and staying out of the US for 330+ days. I assume these people don't any local income tax, but they still get the US tax exception. I think the IRS calls these people "itinerant". For example, you make a living selling books on how to pickup girls abroad, and are constantly moving from one country to the next.
Note that if you are self-employed aboard, you still have to pay US Self-Employment Tax fully (15%) -- there is no exclusion on that part. But you still get a massive tax-cut because you dont pay the normal part of your federal income tax (on the first 91k of income).
Anyone making use of the Foreign Income Exemption here?
More info here:
http://www.irs.gov/businesses/small/inte...50,00.html
This is the form I used (which was inside my computer tax program)
http://www.irs.gov/pub/irs-pdf/f2555.pdf
Quote: (08-26-2011 10:29 PM)thegmanifesto Wrote:
"Americans are exempted from most income taxes if they spend 11 months of the year abroad."
Can you bust a thread on this?