Every country has its own tax preparations or structure when it comes to taxing expats. United also has its own norms and rules of taxing the expats. However, most of the Americans do not owe US taxes.

The government of America has put several vital deductions, exclusions and credits in place to do away with double taxation on the same income source. Understanding the US structure is a daunting task and when you are US expat, the information is even more complex and confusing.

“If you are an US expat, certain vital things should be kept in mind”; quotes the well known service provider.

Expats must file US taxes if they have an income, receive certain credits or other special situations apply: If the world wide income crosses the filing threshold, the expat must file a US Federal Tax return every year. The income includes – Wages or salary from US and non US sources, interests, dividends or rental incomes. Self employed expats have a limit of threshold; which they should adhere to.
Expats receives an automatic tax filing extension until June 15th: US expats receive tax extension until 15th June to file. However, US taxes owed are due by April 17th for avoiding penalties and interest. Expats on returning back to US are eligible to use certain US expat deductions and exclusions that year but will have to file returns by April 17th, as now they are US residents.
Amend previous return on mistake: Mistakes bound to happen and if the expats fails to report certain income on the return; or did not include all the deductions allowed, then they will need to file an amended return for that tax year. It is advisable to file the amendment before IRS catches the mistake to get saved from penalties.
Most of the American expats do not owe US taxes: The US has put many vital deductions, exclusions and credits to ensure that one is not taxed twice on the same income source. Most of the expats are able to offset all of their foreign earned income under foreign tax credit; foreign earned income exclusion and foreign housing exclusion. US tax payers can claim Foreign tax credits against income; that are already been taxed by their host country.
Foreign tax credit is one way to lower US expat taxes: By Filing the form 1116; one can claim and avail foreign tax credit. This credit will help an individual to offset or do away the US tax liability, especially if expats live in high taxed country or their income crosses the FEIE limit.
Excluded income cannot be offset with foreign tax credit: If the expats choose to exclude some of their income with FEIE, they cannot use FTC on that excluded income. They can only offset the taxes, which they pay on the remaining income to prevent double dipping in the eyes of IRS. If full amount of foreign income tax paid was not claimed, then the expat can carry those over for the next 10 years and even carry back to the previous year.
Eliminate US taxes with foreign earned income exclusion: $107,600 of the foreign earned income can be excluded from US taxation with FEIE. This is most common way that expats do reduce their US tax liability.
Tax treaties help in preventing double taxation for US expats: Income tax treaties entered by the US government with several countries help prevention of double taxation. US; has treaties with 68 countries till date. Tax treaties are complex to understand and guidance of professional accountant should be taken to understand the treaty to the core.
Dependent children on tax return help to minimize the taxes: The child tax credit is beneficial for those with dependent US children. For qualifying for this credit facility all the expats dependent children should have US social security number.
Filing of FBAR: FBAR must be filed if foreign account exceeds the reporting threshold. This is part of US initiative to thwart cheating of tax and hiding money abroad. If aggregate balances; of all foreign bank accounts exceeds $10,000; expat must file FBAR. Pensions, investments and accounts that do not have signature authority come into play while filing FBAR.
Filing expat tax in US, one must understand and know magnitude of information; that part and parcel of the tax preparation in the country. Though not a cake walk affair, with good help and guidance one can make accurate tax calculations and avail credits.