In our previous article Live Abroad: Make $100,000 and Pay Zero Federal Income Taxes, we discussed how you can use the foreign earned income exclusion to pay no U.S. income taxes on foreign-sourced earned income, including self-employment income.
But if you live and work abroad AND pay income taxes to a foreign country, you might actually end up in a better position electing the foreign tax credit to offset your U.S. tax liability.
And if you make well over $100,000 a year in foreign-sourced earned income, you likely want to use both tax reduction strategies in tandem to reduce your U.S. tax bill.
In this article, we put it together and show you how to make sure you pay the lowest possible U.S. taxes based on your situation. ... Log in to view full article.