how can an oversea employee reduce their tax?

Question

how they reduce it in uk.

Answer 1

Get a copy of IRS Pub 54 from the IRS website. There are a number of tax saving strategies for folks who live and work in foreign countries.

The two most significant ones are the Foreign Earned Income Exclusion and the Foreign Income Tax Credit. The exclusion allows you to avoid US tax on up to $82,400 of earned income if you meet certain residency or physical presence requirements. The credit is a dollar-for-dollar offset of your US taxes for any foreign income taxes paid.

You can use either the exclusion or the credit but not both in respect of any earned income. The credit is also used for foreign income taxes paid on unearned income such as rents, royalties, interest, dividends, capital gains, etc. and can be used for unearned income in conjunction with the exclusion for earned income.

The rules are complex but the savings can be significant. It's all discussed in Pub 54, so grab a copy from the IRS website.

Answer 2

Need more info to advise you properly. Do you mean you are a person from overseas working in the UK? Who are you employed by - a foreign company or a UK company, or are you self employed? If employed by an overseas company, does it have a base in the Uk, or are you the only UK employee? How long are you in the Uk for? What is your level of pay and benefits?

Answer 3

Actually all these depend how the pay package is being designed. Convert some salary money into housing or car or personal expenses. Or to leave passage. As long as you bring home less money, normally the tax will be lower. Fringe Benefit always attracted lower tax for the employee.

Answer 4

You can avoid paying taxes altogether buy staying out of the US for a whole year. I'm fuzzy about the correct number of actual days, but it is worth checking into.

Answer 5

Earn less , and that is the only way