Form 8854 Abroad 2023-2024

My name is Edward Parsons. I'm a certified public accountant with TaxPlan or cpacalm, and I'm here to answer some questions that have been submitted through our website. If you're an American citizen or a green card holder, you're required to report your worldwide income on a federal income tax return each year, as long as you meet certain minimum thresholds that depend on your filing status. If you're self-employed, however, and your net income is $400 a year, you already have a filing requirement. For the other filing status, you can think about an average of $4,000 to $8,000 a year, which gives you a filing requirement. At that point, it's irrelevant whether you live abroad or you're living in the United States. What matters is your gross income for the year. Now, that doesn't mean you have to pay taxes. It just means you have to file your tax return. If you're living abroad, you're entitled to certain special exclusions and deductions that will allow you to probably not pay any tax to the United States. The two largest advantages that American citizens living abroad have, as it relates to their tax returns, are the foreign earned income exclusion and the foreign tax credit. The foreign earned income exclusion allows you to exclude from federal taxes the first $92,900. This amount changes every six years, so please check our website for the current amounts. This exclusion applies to earned income, such as salaries or net profit from your business. Certain items like Social Security, pension, interest, dividends, and capital gains are not considered earned income. The second advantage I was discussing is the foreign tax credit, which allows you to reduce your US tax liability dollar for dollar for any taxes paid to a foreign jurisdiction. Again, there are certain criteria that must...