With the June deadline just around the corner, you may be in the thick of preparing to file your expat tax return. While most US expats are able to avoid paying US taxes due to credits, deductions and exclusions provided by the IRS, if it looks like you may owe, there are a number of tax for expat write-offs that might help you negate that amount. Read on to learn about the top write-offs that can help you save some money on your expat taxes!
1. Mortgage Interest
Own a home? You’re in luck – you can deduct the interest you’ve paid for the year. With each mortgage payment, you typically pay a mix of mortgage interest and principal. If your mortgage is held by a US bank, you’ll receive a Form 1098 reporting the total interest paid for the year. If your mortgage is held by a foreign bank, though, you may need to ask the bank for a calculation of the total amount you’ve paid – but either way, don’t forget to use your mortgage interest as a tax for expat write-off! You can learn more about buying & selling abroad here.
2. State Taxes
3. Property Taxes
Your property taxes are paid to a city, state or other government agency based on land you own. This includes taxes paid in the US as well as in a foreign country. Is your property tax not due until after the New Year? Consider paying it by the end of December in order to take the deduction this year.
4. Charitable Contributions
Any donation of goods or monetary contributions are deductible on your tax for expat return, if the charity is considered a 501(c)(3) organization (meaning it is registered with the IRS). Non-US charities must be affiliated with a US charity in order for them to be deductible. In any event, you will need a receipt (and a list of items, if you donated non-monetary items). Money or goods donated to individuals are not tax-deductible.
5. Medical Expenses
Any out-of-pocket expenses (meaning not paid for by your insurance) for doctors, hospitals, dentists, prescriptions, insurance premiums, etc. are eligible for deduction on your expat tax return. You must hit a certain threshold of expenses before being able to claim these as deductions on your expat tax return.
6. Child Care Credit
Do you pay someone to care for your dependent child while you work or attend school? If so, the amount you pay may qualify you for a credit on your US expat taxes. In order to take advantage of this credit, you’ll need to keep track of how much you paid the provider, their name and address and the amount paid per child, if you have multiple children.
7. Education Credits
If you have older children who have enrolled in higher education, there are certain credits to help offset tuition and fees, books and specified supplies. In order to claim this credit, the university or college must be a participant in a student aid program run by the US Department of Education. Generally speaking, most accredited US post-secondary schools qualify – and many foreign institutions do as well. Check out this site to see if your child’s school qualifies.
8. Educator Expenses
If you’re a teacher, instructor, counselor, principal or aide that works more than 900 hours during the school year, you may be eligible to deduct up to $250 of expenses paid on your tax for expat return. Qualifying expenses include amounts paid for books, supplies, computer equipment, and other supplemental material used in your classroom. You will want to be sure you have receipts for all items purchased in order to claim this on your expat tax return.
These eight items are just a small list of things that you may be able to deduct from your expat tax return to lower or eliminate your tax for expat liability. Depending on what else you plan to claim on your expat taxes, such as the Foreign Earned Income Exclusion or Foreign Tax Credit, certain rules that may apply that determine your eligibility for claiming these items. It’s always recommended to consult with an expat tax professional to ensure you’re taking advantage of the best savings opportunity for your particular situation. You can download a US expat tax guide for more money-saving tax tips.
Need Help Saving the Most Money on Your Expat Tax Return?
Our team of dedicated CPAs and IRS Enrolled Agents are here to help you find the most ways to save, while ensuring your expat taxes are filed accurately and on time. Get started with us today and cross taxes off your to-do list ahead of the June deadline!