# Tax deductions for an American expat in Dubai



## misterno (Jul 24, 2015)

I am an American living in USA and there is a possibility that my company will be sending me to Dubai.

I am trying to understand the tax implications here.

1) I checked IRS website, it seems like the first 100K is tax free, is this correct?

2) If my wife finds a job in Dubai also not as an expat, then this exclusion doubles to $200K?

3) Does anyone deduct their rent or mortgage in Dubai from US taxes? How does that work?

4) Internet is full of articles talking about expats leaving US citizenship due to complicated tax returns but then aren't they losing the 100K income deduction? What am I missing here?

Please chime in if you know anything.

Thanks


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## rahzaa (May 2, 2012)

misterno said:


> I am an American living in USA and there is a possibility that my company will be sending me to Dubai.
> 
> I am trying to understand the tax implications here.
> 
> ...


See answers above


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## Bevdeforges (Nov 16, 2007)

You may want to drop by the Expat Tax section here on the forum, where there is quite a bit of detail about expat taxes (particularly for US citizens): Expat Tax - Expat Forum For People Moving Overseas And Living Abroad

But to answer your questions briefly: 

Yes, there is an exclusion (not a deduction - there's a big difference) of up to about $100,000 for earned income made while resident overseas. This exclusion must be claimed on form 2555 and on a joint return, if both spouses have earned income, then each can claim this (up to the amount of their earned income only).

Housing expenses are also excludable to a certain extent. For all the gory details, take a look at IRS publication 54: Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

As far as your last question, you probably should refer to the Expat Tax section. Moving to a place with no income tax is kind of a unique situation. Most US expats are chafing from the fact that they must file income tax returns in both the US and their country of residence. And, negotiate the tax and social security treaties that exist between the US and their country of residence to try to avoid double taxation.

Because the $100,000 exclusion applies only to "earned" income (i.e. salary), there can be complications if the expat is married to a foreign national, has any sort of investment income from outside the US (particularly investment-style retirement funds) or (in some cases) has set up a business in their country of residence or elsewhere. But check out the Expat Tax forum here on Expat Forum for more than you probably want to know on the matter. 
Cheers,
Bev


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## GloballyRelaxed (Nov 5, 2014)

Number 3 on your list...

Yep up to 57k USD p.a 

Do yourself a massive favor and call a specialized US expat tax specialist, it wont cost you a cent on the initial call and you will be able to get all these Q's and anything else you have out of the way.

There are also certain 'state' issues depending on your registered home address so you will also need to get these out of the way.

Would your company be providing you with an accountant ahead of the posting so you can ask all these Q's ?


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## roastednut2015 (May 17, 2015)

*reply*

response below here



misterno said:


> I am an American living in USA and there is a possibility that my company will be sending me to Dubai.
> 
> I am trying to understand the tax implications here.
> 
> ...


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## misterno (Jul 24, 2015)

GloballyRelaxed said:


> Number 3 on your list...
> 
> Yep up to 57k USD p.a
> 
> ...


Where I am gonna go and under which condition I will go is all up in the air. I will ask about accountant to HR.

Thanks


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## DavidMcKeegan (Aug 27, 2012)

The above posters are correct. Although there are no taxes in UAE, the US will still require you to report your worldwide income. As such, in order to avoid excess taxation, you will have to take advantage of things like the Foreign Earned Income Exclusion and the Foreign Housing Allowance.

The easiest way to qualify for the FEIE is via the Physical Presence Test. In order to qualify under that test, you and your spouse (if they are also claiming the FEIE) must have over 330 days outside the US in any 365 day period.

If you qualify for the FEIE, you can also claim the Housing Allowance and deduct things like rent, etc.

Once you have firmed up your offer, and decided to move abroad, I would strongly recommend speaking with an expat accountant so that they can help estimate what you will owe to the US after you move. This will ensure that you are making estimated payments that are large enough to cover your liability (if there is one).

I hope this helps and good luck!


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