4 ms·

Other commenters have address your questions, but what I will add is that if you stayed the full 12 months (Or really, 330 days) then you apply for FEIE and won

Other commenters have address your questions, but what I will add is that if you stayed the full 12 months (Or really, 330 days) then you apply for FEIE and won't have to pay federal income tax as a US citizen.

BrentOzar 6y ago
> you apply for FEIE and won't have to pay federal income tax as a US citizen. The Foreign Earned Income Exclusion only applies to the first $107,600 you earn in 2020. You still have to pay taxes on the rest.
- cpursley 6y ago
  And you're still liable for social security.
  - seanmcdirmid 6y ago
    No, you only pay SS if you are resident.
    - cpursley 6y ago
      For most situations, you're liable: https://brighttax.com/blog/do-us-expats-pay-medicare-tax/ https://brighttax.com/blog/do-us-expats-pay-medicare-tax/ https://www.irs.gov/individuals/international-taxpayers/social-security-tax-consequences-of-working-abroad https://www.irs.gov/individuals/international-taxpayers/soci...
      - seanmcdirmid 6y ago
        No, not even close: most expats do not pay social security taxes abroad. If you work for the USA embassy, you pay SS tax, but if you work for Microsoft China, you do not (you do, however, pay Chinese SS of course). In particular, see https://www.hrblock.com/expat-tax-preparation/resource-center/income/foreign/social-security-self-employment-taxes-expats/ https://www.hrblock.com/expat-tax-preparation/resource-cente... > If you are working for a foreign employer who has no requirement to withhold U.S. social security, you have no obligation to remit U.S. social security taxes on your earnings and in fact, are prohibited from making such voluntary contributions to the U.S. Social Security System. Almost every US company has it setup that you are going to be working for a foreign employer, not a US one.
- seanmcdirmid 6y ago
  After your foreign earned income exclusion is exhausted, you can deduct your foreign taxes, at least. In low tax but high COL places such as Singapore and HK, you also have the housing deduction to help out.
freddie_mercury 6y ago
This isn't exactly true. You only get the Foreign Earned Income Exclusion if you actually have foreign earned income. Just can't just live abroad and pretend your income is foreign earned. There IRS defines what is and isn't foreign earned income. If you move to Barbados and just keep doing the same job you were doing in the US, then it almost certainly isn't foreign earned income.
- chpmrc 6y ago
  That is what the IRS (and most tax offices in the world, such as the British HMRC or the Italian AdE) defines as "foreign source income" since the work is literally being carried out abroad. It also includes capital gains and interests arising abroad of course.
- maximente 6y ago
  you spoke fairly authoritatively, then hedged at the end ("almost certainly"). have you read IRS form 2555? that's probably a good place to start, as they spend a fairly large amount of time defining terms. for all their faults, the IRS has extremely clear definitions and exceptions when it comes to foreign earned income and sequelae. while detailed and nuanced, there aren't really any gray areas that i have found. https://www.irs.gov/pub/irs-pdf/i2555.pdf https://www.irs.gov/pub/irs-pdf/i2555.pdf
- seanmcdirmid 6y ago
  There is a lot of debate about that, and the best thing is to contact a tax attorney. But a lot of digital nomads in Southeast Asia are working for American clients and getting that income in under the exclusion. I’m not sure if it’s different for full time rather than contracting income.

BrentOzar 6y ago

> you apply for FEIE and won't have to pay federal income tax as a US citizen. The Foreign Earned Income Exclusion only applies to the first $107,600 you earn in 2020. You still have to pay taxes on the rest.

cpursley 6y ago
And you're still liable for social security.
- seanmcdirmid 6y ago
  No, you only pay SS if you are resident.
  - cpursley 6y ago
    For most situations, you're liable: https://brighttax.com/blog/do-us-expats-pay-medicare-tax/ https://brighttax.com/blog/do-us-expats-pay-medicare-tax/ https://www.irs.gov/individuals/international-taxpayers/social-security-tax-consequences-of-working-abroad https://www.irs.gov/individuals/international-taxpayers/soci...
    - seanmcdirmid 6y ago
      No, not even close: most expats do not pay social security taxes abroad. If you work for the USA embassy, you pay SS tax, but if you work for Microsoft China, you do not (you do, however, pay Chinese SS of course). In particular, see https://www.hrblock.com/expat-tax-preparation/resource-center/income/foreign/social-security-self-employment-taxes-expats/ https://www.hrblock.com/expat-tax-preparation/resource-cente... > If you are working for a foreign employer who has no requirement to withhold U.S. social security, you have no obligation to remit U.S. social security taxes on your earnings and in fact, are prohibited from making such voluntary contributions to the U.S. Social Security System. Almost every US company has it setup that you are going to be working for a foreign employer, not a US one.
seanmcdirmid 6y ago
After your foreign earned income exclusion is exhausted, you can deduct your foreign taxes, at least. In low tax but high COL places such as Singapore and HK, you also have the housing deduction to help out.

freddie_mercury 6y ago

This isn't exactly true. You only get the Foreign Earned Income Exclusion if you actually have foreign earned income. Just can't just live abroad and pretend your income is foreign earned. There IRS defines what is and isn't foreign earned income. If you move to Barbados and just keep doing the same job you were doing in the US, then it almost certainly isn't foreign earned income.

chpmrc 6y ago
That is what the IRS (and most tax offices in the world, such as the British HMRC or the Italian AdE) defines as "foreign source income" since the work is literally being carried out abroad. It also includes capital gains and interests arising abroad of course.
maximente 6y ago
you spoke fairly authoritatively, then hedged at the end ("almost certainly"). have you read IRS form 2555? that's probably a good place to start, as they spend a fairly large amount of time defining terms. for all their faults, the IRS has extremely clear definitions and exceptions when it comes to foreign earned income and sequelae. while detailed and nuanced, there aren't really any gray areas that i have found. https://www.irs.gov/pub/irs-pdf/i2555.pdf https://www.irs.gov/pub/irs-pdf/i2555.pdf
seanmcdirmid 6y ago
There is a lot of debate about that, and the best thing is to contact a tax attorney. But a lot of digital nomads in Southeast Asia are working for American clients and getting that income in under the exclusion. I’m not sure if it’s different for full time rather than contracting income.