Double taxation on Americans working abroad?

United States citizens who live abroad can exempt themselves from paying taxes on the income they earn in other countries if they qualify for the Foreign-Earned Income Exemption, allowing them to avoid double taxation.

Do you get double taxed if you work in a different country?

Believe it or not, the U.S. doesn’t want to subject you to double taxation—that is, to have you end up paying income tax in the country you live in plus U.S. income taxes on the same income. The foreign tax credit is designed to help minimize such double taxation.

Do U.S. citizens pay taxes when working abroad?

Yes, U.S. citizens have to pay taxes on foreign income if they meet the filing thresholds, which are generally equivalent to the standard deduction for your filing status. You may wonder why U.S. citizens pay taxes on income earned abroad. U.S. taxes are based on citizenship, not country of residence.

How can you avoid double taxation abroad?

To avoid double taxation of U.S. sourced income, expats must pay U.S. tax and then claim foreign tax credits in the country they live in.