An expat is someone who has left their native country and is residing at a different location. However, expats are still citizens of their native country and intend to return home sooner or later. Many countries have a taxation system based on citizenship, and you need to pay expatriate tax on income earned in the visiting country. Expats that are in another country due to work requirements look for ways to save on expatriate tax. Read on to know seven ways to save huge on expatriate tax.
Look for a consultancy firm
You can partner with a third-party advisory firm to help you with expatriate taxation. A reliable tax advisory firm will have subject experts that are aware of the global taxation landscape. You can focus on your core business responsibilities while a third party can provide expatriate tax services.
Keep an eye on foreign exchange rates
When you file tax for income earned in a foreign country, you have to convert the income into the currency of your native country. You can choose a date when foreign exchange rates are better than other days. If the average foreign exchange rate (for the whole year/month) helps lower your expatriate tax, you can use that too.
Choose your tax filing status appropriately
Are you married or taking care of several dependants? If you are married, consider filing expatriate taxes jointly. Choosing your filing status appropriately can help you save huge on expatriate tax. You can opt for expatriate tax services offered by a third party to know about your filing status.
Keep an eye on tax schemes and subsidies
Various schemes and subsidies launched by the taxation authorities can help you lower the expatriate tax amount. For example, US expats can apply for FEIE (Foreign Earned Income Exclusion) to lower their tax amount.
Claim tax credits
Besides tax schemes, tax credits are also offered to expats for lowering their tax amount. For example, some countries provide tax credits if you have children that are still minors. You can take the aid of a tax advisor to know about the foreign tax credits.
Choose a tax-friendly state/country
If you want to send expats to a foreign country for business purposes, choose a region with lower tax rates. Also, the tax rates for different states within a country can differ. Proper research before sending expats can help you save huge in the long run.
File tax returns accurately
Expats should avoid making any mistakes while filing expatriate taxes. You may get into legal hassles for providing incorrect information and end up paying more expatriate tax. It is better to hire a tax advisor who can fill expatriate tax accurately.
In a nutshell
Filing expatriate tax may also require disclosing your foreign assets and liabilities. You can partner with a reliable advisory firm to help you with the expatriate taxation processes. Start saving on expatriate tax by choosing expatriate tax services!