David McKeegan, Co-Founder of Greenback Expat Tax Services provides answers to a common question about US taxes and the implications for American expats whose income comes solely from the US. This transcript includes updates on information relevant to the 2013 and 2014 tax years.
Hi everybody, I’m David McKeegan with Greenback Expat Tax Services and our question this week is, “If all of my income is from the US, but I live abroad, how does this impact my US taxes?” The short answer is that as long as you’re living abroad, as long as you meet either IRS exceptions, the Bona Fide Resident Test or the Physical Presence Test, you will qualify for the Foreign Tax Credit and the Foreign Earned Income Exclusion. For 2012, you’ll be able to exclude the $95,100. For the 2013 tax year that goes up to $97,600 from your income (and rises to $99,200 in 2014)
What I will warn people about is that if you are self-employed, if you’re a contractor or if you run your own business that’s based in the US, that sort of thing, you will still need to pay self-employment tax. We have another video on self-employment tax. You should just budget. That’s going to be about 15.3% on the first $113,000 that you earn. Just keep that in mind if you’re self-employed, if you’re a contractor while you’re working overseas. That’s all. If you have any questions, please have a look at our website, GreenbackTaxServices.com, and feel free to get in touch with us about your US taxes. Thank you very much.
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