# Reducing Your US Tax Payments in Dubai



## MyExpatTaxes (10 mo ago)

There are two main ways US Citizens abroad avoid taxation on their foreign earned income.


The first, The Foreign Tax Credit, reduces your US tax burden by allocating credits for taxes paid abroad (assuming the US has a tax treaty with that nation). For Americans in the UAE, the Foreign Tax Credit may not be beneficial because chances are, you haven’t paid much or anything in foreign income taxes!
The second way to avoid US taxation is to claim the *Foreign Earned Income Exclusion,* known as the FEIE. Using this, you can exclude all, or a portion of your foreign earned income from being subject to income taxes.
To claim the FEIE, you’ll need to pass either the Physical Presence Test or be a *Bona Fide Resident.* To pass the Physical Presence Test, you’ll need to be physically present in a foreign country or countries for at least 330 days per year. You can spend these 330 days any location outside the US or Puerto Rico.

Dubai is one of the few places in the world that does not require Americans to hold a work visa. Meaning any US Citizen can move there and get a job. 

Even though you may not pay tax on your income there, you also have obligations as a US citizen. The good news is that you can exclude a significant portion of the income you’ve earned in any foreign country, including the United Arab Emirates. 

In addition, using the FEIE allows you to exclude from your US income tax any housing amounts that are allocable to this excluded income. As a result, all or part of your income would be excluded under the FEIE, and you would pay nothing on those earnings.


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