How can you avoid US tax on foreign income as a US expat?
As an American living abroad, how do I avoid US tax on foreign income?
Watch: How can you avoid US tax on foreign income as a US expat?
A short video explaining how to avoid attracting US tax on foreign earned income
One way to avoid US tax on foreign income as a US expat is the Foreign Earned Income Exclusion (FEIE) and the second is Foreign Tax Credits (FTC). Additional ways might include the Foreign Housing Exclusion Deduction (which is part of the Foreign Earned Exclusion), or potentially if there is a tax treaty between the US and the country you are living and working in.
FEIE allows you to exclude a certain amount of income if you meet certain requirements. Alternatively, FTCs are a dollar-to-dollar credit for any taxes you pay to a foreign country – so, if you live in a foreign country and pay taxes there, you could possibly use that as a credit against the taxes you would owe in the US. Usually, you have to choose between Foreign Earned Income Exclusion and Foreign Tax Credits, so you would want to speak to an expert in order to determine which one is more beneficial for you, depending on your situation.