Moving abroad offers many people a new lease of life, and with BelizeÂs sunny climate and welcoming people, itÂs no surprise that many individuals in the US head to this destination. Â Filing an annual tax return is something that all Americans need to do, regardless of where they live, so it is important to ensure the IRS gets the right details.Â For those living in Belize, there are two options that could provide profitable tax breaks on that hard earned income.
Even for retirees, moving abroad often comes hand-in-hand with setting up a small business. Â For expats whoÂve moved to Belize and started up a company to make additional income, there are two extremely valuable tax benefits in the form of the Foreign Earned Income Exclusion and the Foreign Housing Exclusion/Deduction regulations. Â Each of these provides a way for people to lessen their tax bill, ensuring there is more money to play with in their new overseas life.
The Foreign Earned Income Exclusion applies to those people who are making a living from money earned outside America. Â Regardless of where individuals are in the world, the US deducts tax from income earned both at home and abroad. Â However, the Foreign Earned Income Exclusion allows people to avoid paying taxes on money earned abroad up to a sum total of $99,200. Â In addition, this applies to each individual in a marriage, ultimately allowing couples to earn almost $200,000 abroad without having to pay any tax.
Meanwhile, the Foreign Housing Exclusion/Deduction law can also be of help to those moving to Belize.Â Although it canÂt be used for those who own their own house, for people paying rental and accommodation costs, savings can be made. Â This exclusion includes workers whoÂve been sent to work in Belize by their company, and expats who have to pay for accommodation. Â In 2014, up to 16% of someoneÂs Foreign Earned Income Exclusion package can also be tax free, equaling around $15,872 in savings.
Moving abroad is a large undertaking, and often people are leaving well-paid jobs for a better life in the sunshine. Â However, to make money stretch a little further, particularly if setting up a new business, using these two tax break methods can help people save a lot of their earnings.