I'm working in Europe and will be paying taxes on my salary to the country that I'm working for. What will my US tax liability be and how can I reduce my US taxes.
2007-08-08 05:01:22 · 3 answers · asked by rj12 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
Your US tax liability is the same as if you were working here in the US. You do get a credit for the foreign income taxes paid and since European taxes are generally higher than US taxes you may not have any US tax liability remaining after the credit. You claim the credit on Form 1116 and attach it to your Form 1040 tax return.
If you're only in Europe for 10 months out of the year you won't be eligible for the Foreign Earned Income Exclusion so I won't go into any detail on that.
Get a copy of IRS Pub 54 from the IRS website. It will tell you most of what you need to know as a US citizen or resident working outside the US.
2007-08-08 09:55:55 · answer #1 · answered by Bostonian In MO 7 · 3⤊ 0⤋
Don't know how much your salary in Europe is, so can't calculate your US tax liability, but I can tell you that you will get a credit on your US taxes for taxes paid to the European country. I have included info on Foreign Income exclusion form 2555 to help you determine US tax.
2007-08-08 12:45:11 · answer #2 · answered by Anonymous · 1⤊ 0⤋
If you work outside of the US for more than 6 months, then your income earned overseas is not taxable to the US.
2007-08-08 12:05:21 · answer #3 · answered by sortaclarksville 5 · 0⤊ 4⤋