Awards & Recognition
Unlike most countries, the United States follows a system of citizenship-based taxation (CBT), which means moving overseas does not release you from your federal tax filing duties. No matter where you physically reside, you are generally required to file a U.S. income tax return and pay federal income tax if you are a U.S. citizen or resident alien for tax purposes. This includes dual citizens and “Accidental Americans,” retirees who are living abroad, military members who are stationed or deployed overseas, and other international taxpayers.
The Internal Revenue Service (IRS), the Financial Crimes Enforcement Network (FinCEN), and other government agencies aggressively enforce compliance with international U.S. tax requirements, such as the requirement for certain U.S. persons to file FinCEN Form 114 (FBAR). Our Santa Barbara tax attorneys possess more than 20 years of experience aiding individual taxpayers and business entities with complex international tax issues, ranging from FBAR audit and IRS appeals representation, to the making of voluntary disclosures, to international estate planning, to tax planning and compliance for expats and citizens abroad. Contact the Tax Law Office of David W. Klasing online to arrange a reduced-rate tax consultation, or call our international tax attorneys in Santa Barbara at (805) 200-4053.
What is the Foreign Earned Income Exclusion (FEIE) and How Can it Reduce My Taxes?
Eligible U.S. citizens and resident aliens may exclude foreign earnings from their taxable income, subject to certain limits set by federal law. These limits, which fluctuate from year to year to account for inflation, are as follows:
- For 2018 – Up to $103,900
- For 2019 – Up to $105,900
- For 2020 – Up to $107,600
Known as the Foreign Earned Income Exclusion (FEIE), this tax benefit can translate to substantial savings. If you were paid an hourly wage or annual salary to provide “personal services,” you could qualify to claim the FEIE, though there are various exceptions for military pay, “pay for services conducted in international waters or airspace,” and other exceptions. It is also important to be aware that any attempts to claim the FEIE improperly – for instance, on the basis of foreign residence alone – will likely lead to the imposition of penalties, as discussed in detail here.
In addition to or as an alternative to the FEIE, some taxpayers may be eligible for related tax benefits, such as the foreign housing exclusion, foreign housing deduction, or the Foreign Tax Credit (FTC). To learn more about these benefits for international taxpayers, refer to the following FAQs:
- Are there tax incentives for U.S. citizens living abroad?
- How do you claim the Foreign Tax Credit on property income taxes?
- Is there a limit on availability of the Foreign Tax Credit?
- What are the basics of the Foreign Tax Credit?
- When exactly is an expat subject to self-employment tax on foreign income?
Do U.S. Citizens Have to Report Foreign Bank Accounts to the IRS?
Some taxpayers reside in the United States but have bank accounts or other financial accounts in other countries. Like taxpayers who live abroad, U.S. residents must also report offshore income and accounts to the IRS. If you are a U.S. citizen or resident alien, you may be responsible for filing an FBAR (FinCEN Form 114).
Certain types of accounts and assets are exempt from FBAR disclosure requirements. For purposes of FBAR, examples of reportable foreign assets include:
- Accounts held with foreign branches of U.S. banks
- Foreign checking accounts
- Foreign mutual funds
- Foreign savings accounts
- Foreign-issued life insurance
By comparison, some examples of non-reportable foreign assets include:
- Accounts held with U.S. branches of foreign banks
- Foreign currency (if held directly)
- Foreign government benefits comparable to Social Security benefits
- Foreign partnership interests
- Foreign real estate (if held directly or through a foreign entity)
Santa Barbara International IRS Tax Lawyer for U.S. Expats + Citizens Abroad
If you have unreported offshore income or assets, need help filing an FBAR or tax return, have questions about avoiding double-taxation on worldwide income, or need assistance preparing for a foreign account tax audit, turn to the IRS tax attorneys at the Tax Law Office of David W. Klasing. With offices in Santa Barbara and additional locations, we provide 24-hour tax services for expats, dual citizens, nonresidents, military servicemembers, retirees living abroad, and other taxpayers abroad.
Contact us online today to set up a reduced rate consultation or call the Tax Law Office of David W. Klasing in Santa Barbara at (805) 200-4053.
Please note all meetings at our Santa Barbara office are by appointment only.See our 2011 OVDI Q and A Library
See our FBAR Compliance and Disclosure Q and A Library
See our Foreign Audit Q and A Library
International Taxation FAQs
- Can I abandon my green card for tax purposes?
- Can I avoid the Exit Tax before expatriating from the United States?
- How are nationality and residency determined for federal tax purposes?
- What are the tax consequences if I decide to immigrate to the United States?
- What are the tax consequences of citizenship renunciation?
- What are the U.S. tax implications of receiving gifts from foreign citizens?
- What creates nexus over foreign persons and activities for U.S. tax purposes?
- What is the Exit Tax?
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Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here.
