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Are you thinking of the Foreign Earned Income Exclusion? That one lets you exclude foreign income up to $100k from even being computed for U.S. income purposes.

Are you thinking of the Foreign Earned Income Exclusion? That one lets you exclude foreign income up to $100k from even being computed for U.S. income purposes. But the Foreign Tax Credit, which lets you take a 1-for-1 credit of foreign taxes actually paid against U.S. taxes owed, has no maximum. The distinction only really matters if you're in a country which has lower taxes than your U.S. federal tax rate. If, like me, you're in a country with higher taxes, the Foreign Tax Credit completely wipes out your U.S. tax liability with no maximum.

davidw 11y ago
Ah, right. See, it's not all that simple, and like you write elsewhere, you need a competent accountant. For instance, part of the US-Italy tax treaty says that as a US person working as an independent contractor in Italy, I needed to pay into Social Security rather than the Italian equivalent. I'm not sure I would have figured that one out on my own.
- dalke 11y ago
  Same here. My US accountant told me about the paperwork I needed to get to tell the IRS that I was covered under the US/Sweden totalization agreement for Social Security. Ha! And https://www.ssa.gov/international/agreements_overview.html#&a0=5 https://www.ssa.gov/international/agreements_overview.html#&... has a special exception just for Italy: > Italian Agreement An Exception > The agreement with Italy represents a departure from other U.S. agreements in that it does not include a detached-worker rule. As in other agreements, its basic coverage criterion is the territoriality rule. Coverage for expatriate workers, however, is based principally on the worker's nationality. If a U.S. citizen who is employed or self-employed in Italy would be covered by U.S. Social Security absent the agreement, he or she will remain covered under the U.S. program and be exempt from Italian coverage and contributions.

davidw 11y ago

Ah, right. See, it's not all that simple, and like you write elsewhere, you need a competent accountant. For instance, part of the US-Italy tax treaty says that as a US person working as an independent contractor in Italy, I needed to pay into Social Security rather than the Italian equivalent. I'm not sure I would have figured that one out on my own.

dalke 11y ago
Same here. My US accountant told me about the paperwork I needed to get to tell the IRS that I was covered under the US/Sweden totalization agreement for Social Security. Ha! And https://www.ssa.gov/international/agreements_overview.html#&a0=5 https://www.ssa.gov/international/agreements_overview.html#&... has a special exception just for Italy: > Italian Agreement An Exception > The agreement with Italy represents a departure from other U.S. agreements in that it does not include a detached-worker rule. As in other agreements, its basic coverage criterion is the territoriality rule. Coverage for expatriate workers, however, is based principally on the worker's nationality. If a U.S. citizen who is employed or self-employed in Italy would be covered by U.S. Social Security absent the agreement, he or she will remain covered under the U.S. program and be exempt from Italian coverage and contributions.