It doesn’t matter whether you work abroad or travel the world for a long timebecause of your Uncle Sam, an American citizen, still wants to hear from you at tax time.
As a citizen, the US government requires that a shift VAT return to be submitted annually. According to the Internal Revenue Service (IRS), it generally determines your incomes whether you need to submit a return. The good news is that the vast majority of people living outside the country will not owe taxes thanks to a variety of taxes IRS regulations which reduce or even eliminate their tax burden. The most important of these is the US Foreign Tax Credit.
You qualify for that Foreign tax credit that allows you to claim tax credits to offset foreign taxes paid. if:
No, you have to pay the tax to be able to claim it on your US forms. Because of this, recoverable taxes, taxes that you could legally have avoided, and taxes paid to governments that have not been recognized by the United States or support acts of terrorism are ineligible.
While the US is only one of a handful of countries to extend tax obligations to those living outside its borders, the foreign income tax credits are intentionally designed to do so mitigate this. Foreign tax credits can be requested on Form 1116.
In lieu of foreign tax credits, some U.S. residents who declare their deductions may choose to have the deduction. This can be completed on the Schedule A form.
Foreign tax procedures can be complicated and confusing. Since you need to weigh the benefits of tax credits against possible deductions in order to determine the best outcome for your specific situation, it is always a good idea to consult a tax professional for advice and legal advice.