My friend told me that she got exempt from U.S. taxes while working abroad because she earned less than $100,000 that tax year. Does this mean that if you earn more than this amount, you have to pay taxes to the U.S. in addition to the taxes you pay to that country abroad?

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Posted by Alix Ryu (MONEY FORUMS: 4, Answers: 2)
Asked on March 16, 2016 9:31 am
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There are lots of factors that go into this income tax exclusion. You need to be abroad for a certain amount of time per calendar year and be paying taxes in the country in which you are residing. It also depends on if you are married, and that raises the income you can earn outside the US. Keep in mind if you are outside the US and have a foreign bank account, you are asked to fill out an FBAR, which is form the IRS requires to state the amount of money you have abroad. If you’re in this situation, I’d suggest consulting an accountant that specializes in international tax laws to look into your specific situation.

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Posted by Sarah Li Cain (MONEY FORUMS: 1, Answers: 3)
Answered: April 11, 2016 7:53 am
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Your friend is talking about something called the earned income tax exclusion. This is the best explanation I’ve found: http://premieroffshore.com/foreign-earned-income-exclusion-basics/

You basically get protection from getting dually taxed but only as long as your new country charges the same tax rate or higher. This means that moving abroad will save you ZERO in taxes. With the additional paperwork, it will likely cost you more. Do not move abroad on the basis of tax savings. Some people say it’s possible but IT IS NOT. I promise you.

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Posted by Will Lipovsky (MONEY FORUMS: 0, Answers: 37)
Answered: March 16, 2016 12:34 pm
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