Posted by Abundant Wealth Planning LLC

Essential Tips to Know About International Tax Planning

Essential Tips to Know About International Tax Planning

Every individual working and earning money offshores will always have to think about international taxes. This is reasonable as market globalization gave birth to a pretty complex tax system in the international tax world. 

Almost everything about the tax system is complex, and everyone can use an expert opinion and guidance. Besides, tax evasion, even if it is perceived, is a pretty severe offence everywhere, and the fact that you have had a business offshore or successfully filed your tax while working with a foreign country does not mean you know the ins and outs.  

There are constant changes with international tax regulations, and they will still change in the future. Keeping up with the change by working with a tax professional such as ABUNDANT WEALTH PLANNING, LLC. is key to staying away from audits, penalties, and other tax issues. 

This article will shed light on some general tips concerning international tax laws and planning to understand how to go about it.


  1. Be Sure You Understand your obligations.

Every US citizen living and working in another country needs to understand the tax implications of that country. The tax law differs from country to country, so you need to understand what is required of you by consulting with a local tax lawyer or accountant to know your tax obligations. 

Some countries, for instance, might tax non-residents differently from residents, and in some cases, you might get access to tax benefits that are not available to citizens.

  1. Be Aware of Your Tax Obligation to your Country. 

The fact that you live and work in another country does not remove your tax obligation to your home country, primarily US citizens. For instance, Americans living and working in another country must report and pay taxes to the IRS. The US tax system is so strong that all citizens and resident aliens are taxed on their income, regardless of the source – income from a foreign country. It does not matter the length of years they have lived outside the country. As a result, an American citizen living in Germany will pay tax to both the German and American government. 

Americans living and working abroad are better off working with an international tax lawyer to understand their tax obligations and how to file their US taxes. An accountant with experience in international taxation will come in handy to make sure everything goes smoothly. Also, they will help you take advantage of various credits like Foreign Tax Credit and Foreign Earned Income Exclusion.


Consider International Tax Laws and Treaties

It is essential to account for tax treaties between both countries when planning your international tax. The United States has tax treaties with many countries, making it necessary to check if there is a tax treaty with your country of residence. These treaties come with many benefits and, overall, can help shield you from double taxation. 

Besides the treaties, there are several international tax laws that should guide how you plan and make your tax decisions. You are better off working with an international tax lawyer.


Record all Foreign Income and Taxes Paid 

Filing taxes is a serious business that you should take seriously, primarily if you work in a foreign country or earn foreign income. It is essential to document all information concerning your taxes adequately. These documents will come in handy should you want to take a tax credit or deduction or you need to prove some claims in a tax audit.

Work with an Expert in International Tax Planning 

When you are having a business venture or having a series of transactions with foreign bodies, your tax strategy needs to be solid with the support of an international tax law expert. Make sure to work with the correct tax lawyer to provide the proper guidance and direction.



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