Re:Skip Silicon Valley: Why Smart Startups Start In Europe
by _delirium on Friday June 28, 2013 @12:57PM
(#5959004)
There's no cap on the foreign tax credit; you can deduct millions.
What you're thinking of is the Foreign Earned Income Exclusion, which allows you to exclude the first $95,100 of foreign earned income from your taxes, if you live outside the U.S. more than 330 days a year. In my case there's no real reason to do that, because the foreign tax credit I get for my Danish taxes zeroes out my US tax liability. The main people who benefit from the $95k exclusion are those working in low-tax jurisdictions, e.g. American expats in Saudi Arabia. In their case it allows them not to avoid double-taxation (which is what the tax credit prevents), but any taxation at all.
What you're thinking of is the Foreign Earned Income Exclusion, which allows you to exclude the first $95,100 of foreign earned income from your taxes, if you live outside the U.S. more than 330 days a year. In my case there's no real reason to do that, because the foreign tax credit I get for my Danish taxes zeroes out my US tax liability. The main people who benefit from the $95k exclusion are those working in low-tax jurisdictions, e.g. American expats in Saudi Arabia. In their case it allows them not to avoid double-taxation (which is what the tax credit prevents), but any taxation at all.