Article Date:
August 2023

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Tax Primer for the U.S. Citizen Living and Working Abroad

Let’s say you have an amazing opportunity to live and work in Switzerland, a country you’ve always wanted to visit.


The pay is great, and so are the benefits. You accept, but now you ask: What happens to you tax-wise? Are you opening yourself up to trouble with the IRS?


If you are a U.S. citizen living and working abroad, you face potential tax implications.

The United States has a unique taxation system that requires its citizens to report and potentially pay taxes on their worldwide income. In other words, as a U.S. citizen, you remain subject to U.S. tax obligations, even when living abroad.


The Swiss government also has a tax system. Depending on the canton (the Swiss version of a state) where you live and work, your Swiss income tax could be quite high.


But our focus in this article is on your U.S. income taxes.




As a U.S. citizen living and working in Switzerland (or any other country), you can take advantage of three possible income tax breaks:



The foreign earned income exclusion allows you to exclude up to $120,000 of your foreign income from federal income taxes.


The housing exclusion (or deduction) allows you to exclude or deduct up to a ceiling amount of certain foreign housing costs, including rent, utilities (except telephone), and real and personal property insurance.


The foreign tax credit allows you to reduce your taxes by the taxes you paid in the non-U.S. country where you reside. The foreign tax credit’s purpose is to eliminate double taxation of foreign earned income. You can’t use the foreign tax credit on income you excluded using 1 and 2 above.


You will find in this article a guide to navigating the complexities of U.S. taxation while living and working abroad. ... Log in to view full article.

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