American expats could get tax rebates on overseas earnings

Published:  16 Feb at 6 PM
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Experts in US tax matters believe that, in certain cases, filing a US tax return may result in a rebate on expats’ overseas earnings.

Most Americans living abroad resent having to pay tax to the US government on their overseas earnings, but tax experts are now suggesting that filing a US tax return might be a good idea. The USA is the only country which imposes the filing of a return on monies earned in their new location, with the filing an obligation even if a US citizen is unwaged or retired.

A recent communication from the IRS stated that filing is the best idea even if it’s not a legal requirement in certain cases. Refunds, the communication states, may be allowed if the citizen has had a federal tax overpayment taken from his/her salary or if certain tax credits are an entitlement.

Refunds may also be due if an expat works for a US company overseas and federal taxes were withheld. Other scenarios which may result in refunds are the payment of estimated taxes or overpayment of tax in previous years.

Annual earnings of less than $50,270 in 2012 entitle expat workers to the Earned Tax Credit, unclaimed by 20 per cent of those to whom it’s due and worth around $2,200. Other tax credits which can benefit US expats include the child tax credit, the healthcare tax credit and the student-aimed American Opportunity Credit.
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