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Can you take a wild guess about how many Americans work overseas? Over 8 million expats across 160 countries worldwide according to the Association of Americans Resident Overseas.
If you’re wondering why Americans would want to ditch the American dream and work overseas, escaping Uncle Sam might be one reason.
The IRS has a Foreign Earned Income Exclusion that allows you to exclude up to $112,000 of foreign earnings per person. So, if you’re married, and your spouse is also overseas, you could exclude as much as $224,000 based on the 2022 tax laws. In some cases, you can even deduct or exclude foreign housing costs.
Before you pack your bags and get ready to head out, here are a few tests you have to pass with flying colors.
Bona fide residence test – it’s basically a test that proves you’re a resident of a foreign country for an entire tax year, uninterrupted. Some rules that could help you pass are: being citizen or national of a country abroad that has an income tax treaty with the U.S.; earn foreign income (Yes, self employed people gets love, too); have a resident address abroad, and have no intention of coming back the the U.S. soon
Next is the Physical presence test – with this one, you have to prove you were physically present in a foreign country for 330 full days during 12 consecutive months.
If you need more info, everything you need to know is on the IRS website. And before you take your exit share this video with someone who might need it and make sure to click the follow for more of Greenwood Daily!
Rianka R. Dorsainvil, CFP®️ is the Co-Founder and Co-CEO of 2050 Wealth Partners a virtual, fee-only comprehensive financial planning firm dedicated to serving first-generation wealth-builders, entrepreneurs, and thriving professionals. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.
As an award winning successful, millennial Certified Financial Planner professional, Rianka offers a unique perspective not only on the current state of the financial service industry, but on how to stay relevant in an ever-changing world.
Rianka serves as a member of CNBC’s Digital Financial Advisor Council and CFP Board’s Diversity Advisory Group, is a Forbes Personal Finance Contributor, and has been recognized for her accomplishments and leadership within the industry by leading publications and organizations such as Investment News’ inaugural 2017 Women to Watch Rising Star and Wealth Management’s Ten to Watch in 2018. She has been published in PBS NewsHour, Forbes, USA Today, Black Enterprise, CNBC, Women’s Health, and more.