(Simon Black, SovereignMan) The United States is still one of the only two countries in the world, (the other one is Eritrea) that imposes a worldwide taxes on all of its citizens, no matter where they live.
That makes it particularly difficult for US citizens to lower the amount of taxes they pay.
In spite of this, the good news is that there are several ways that US citizens can still slash their tax rates to virtually zero.
Reducing the amount of taxes that you pay is one of the best decisions you can make.
Rather than continue to finance wars, ballooning debt, body scanners and drone strikes, you can put that money to work in a way that actually benefits yourself, your family, or anyone else you choose.
And these strategies are available to everyone.
One of them is a special provision in the US tax code called the Foreign Earned Income Exclusion (FEIE). It allows Americans who live abroad to earn up to $105,900 tax-free in 2019.
That amount varies and is indexed to inflation. So for example, in 2016, the amount was $101,300. In 2017, it was $102,100. And in 2019, it is $105,900.
Naturally, the IRS has strict rules as to what qualifies as foreign income, and whether or not you can qualify for the Foreign Earned Income Exclusion in the first place.
For example, the exclusion only applies to earned income from wages or salaries.
Investment income (dividends, capital gains, interest, etc.) or variable income (rents, royalties, etc.) will not qualify.
But if you also qualify for the Housing Exclusion or Deduction, you can save even more. That’s because the Housing Exclusion or Deduction allows you to exclude your housing costs from your income tax as well, subject to certain limits depending on where you live.
That’s an unbelievable deal – and not one you come across very often.