{"id":168,"date":"2022-10-25T18:57:49","date_gmt":"2022-10-25T18:57:49","guid":{"rendered":"https:\/\/hrbcomlnp.hrblock.com\/expat-tax-preparation\/resource-center\/?p=168"},"modified":"2023-01-10T14:06:19","modified_gmt":"2023-01-10T18:06:19","slug":"live-abroad-save-money-on-u-s-taxes-with-these-6-tax-saving-strategies","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/expat-tax-preparation\/resource-center\/filing\/live-abroad-save-money-on-u-s-taxes-with-these-6-tax-saving-strategies\/","title":{"rendered":"Live abroad? Save money on U.S. taxes with these 6 tax saving strategies"},"content":{"rendered":"\n

Picture this: You\u2019re living your best life abroad, exploring new places, absorbing the local culture and customs, and navigating everyday life like a pro. Everything\u2019s going smoothly and you think, \u201cHey \u2014 I think I\u2019ve got this whole expat thing down pat.\u201d<\/p>\n\n\n\n

Then comes your U.S. tax bill, and suddenly you\u2019re not so sure you did everything right.<\/strong><\/p>\n\n\n\n

How to save money on taxes isn\u2019t usually the first thing people think about when they\u2019re planning a life overseas, but it should be at the top of your financial planning list. The experts at H&R Block are here to help, so we\u2019ll guide you through factors that affect how much tax you pay and how to save money on U.S. taxes while living overseas. Ready to file your expat taxes? Get started with H&R Block\u2019s\u00a0online expat tax prep.<\/a><\/p>\n\n\n\n

File on my own<\/a><\/div>
File with an advisor<\/a><\/div><\/div>\n\n\n\n

How U.S. expats can lower their U.S. tax bill<\/h2>\n\n\n\n

The first thing you need to understand is that, unfortunately, you can\u2019t exactly \u201csave money on taxes.\u201d Taxes are what they are, and you owe what you owe based on your taxable income.<\/strong><\/p>\n\n\n\n

You can, however, lower your overall tax bill and save money during tax season by applying available deductions and credits, lowering your taxable income, and by saving money on your tax prep and advising cost.<\/p>\n\n\n\n

We\u2019re going to tell you how to do it, broken down into six tax saving strategies:<\/p>\n\n\n\n

    \n
  1. Understand your tax situation before tax season starts<\/strong><\/li>\n\n\n\n
  2. Avoid common U.S. expat tax penalties<\/strong><\/li>\n\n\n\n
  3. Lower your taxable income with tax credits, exclusions, and deductions<\/strong><\/li>\n\n\n\n
  4. Choose between the Foreign Earned Income Exclusion and the Foreign Tax Credit wisely<\/strong><\/li>\n\n\n\n
  5. Vet your expat tax professional carefully<\/strong><\/li>\n\n\n\n
  6. Choose to DIY your expat taxes with an online expat tax service<\/strong><\/li>\n<\/ol>\n\n\n\n

    Ready to file? Get started now.<\/a><\/p>\n\n\n\n

    1. Understand your tax situation before tax seasons starts<\/h3>\n\n\n\n

    Before you make any financial decisions it\u2019s wise to understand your entire financial landscape \u2014 now and future. The same goes with taxes. We hear story after story from expats who \u2014 for a variety of reasons\u2014didn\u2019t understand their tax situation before tax season starts.<\/p>\n\n\n\n

    For example, some expats get penalized because they don\u2019t know they have to\u00a0pay state taxes<\/a>\u00a0on top of federal ones. Other common scenarios involve not understanding what\u00a0foreign income is taxable for expats<\/a>\u00a0or how the number of days in a country affect their credits and exclusions (more on that later).<\/p>\n\n\n\n

    Secondly, you may also have to\u00a0report money and financial accounts overseas<\/a>\u00a0\u2014 and not doing so when you\u2019re supposed to can lead to heavy fines and penalties. Which brings us to our second tax saving strategy\u2026<\/p>\n\n\n\n

    2. Avoid common expat tax penalties<\/h3>\n\n\n\n

    If you want to lower your U.S. tax bill, compliancy is key. Why? Because the fines, added interest, and penalties for expats are no joke.<\/p>\n\n\n\n

    Expat tax fines range anywhere from $1,000 to $50,000 (or more), and the penalties don\u2019t stop at increased audit scrutiny and monetary fines \u2014\u00a0intentional tax evaders can even\u00a0lose passport privileges<\/a>\u00a0or serve jail time.<\/strong><\/p>\n\n\n\n

    To slim down on the cost of filing and\u00a0avoid U.S. tax penalties<\/a>, make sure you’ve got an experienced tax advisor. There are dozens of forms and schedules specific to expats, and something as small as failing to check a box can cost you thousands of dollars (yes, really!!).<\/p>\n\n\n\n

    3. Lower your taxable income by using expat tax credits, exclusions, and deductions<\/h3>\n\n\n\n

    U.S. tax law has built-in safeguards to lower taxable income and ensure U.S. citizens aren\u2019t over-paying on taxes. The problem is many expats\u2014and even many tax preparers\u2014don\u2019t know these safeguards exists.<\/strong><\/p>\n\n\n\n

    These are the credits, exclusions, and deductions you need to get to know to lower your taxable income and save money on taxes next year:<\/p>\n\n\n\n