Tax planning for US individuals living abroad—2022

Guide for expatriates

US citizens and resident aliens living abroad must file a US tax return, and with several important exceptions, must use the same forms and must compute tax by referring to the same tax rules as their stateside counterparts. The main exception is special rules that allow taxpayers to exclude all or part of their foreign earned income if they meet statutory foreign residence or physical presence abroad tests.

While these provisions may allow significant tax benefits, it is important to remember that income earned abroad is frequently subject to foreign income taxes. In turn, credits or deductions for these foreign taxes may provide an additional measure of US tax relief.

This publication combines a general explanation of the rules with an analysis of the tax issues and decisions to consider in preparing for, and during the course of, a foreign assignment. It is not intended to answer all questions but only to serve as an introduction to the many issues facing US taxpayers living abroad. When specific advice is necessary or appropriate, consultation with a professional adviser who specializes in expatriate taxation is strongly recommended.

Deloitte professionals in member firms throughout the world are prepared to help US taxpayers abroad plan for their specific US and foreign tax issues.

What’s inside?

This publication addresses the following areas for expatriates:

• Chapter 1: Filing requirements
• Chapter 2: Special foreign exclusions
• Chapter 3: Moving and travel expenses
• Chapter 4: Principal residence
• Chapter 5: Alternative minimum tax
• Chapter 6: Foreign tax credit
• Chapter 7: Tax equalization policies
• Chapter 8: Payroll taxes and special situations
• Appendix A: Key figures
• Appendix B: Sample of the Increased Section 911 Housing Exclusions that have been published by the IRS
• Appendix C: US federal tax rates
• Appendix D: Decisions checklist
• Appendix E: Forms and statements location information
• Appendix F: US income tax, estate tax, and social security treaties and agreements