I am a US citizen working for a US company living abroad. I plan to qualify for the foreign income exclusion this year and I’m wondering if it would be ok to adjust my taxes now so I have less withheld and get paid more now. I could use an extra $1200 cash a month instead of paying it to taxes and having to wait to get it back next year. Does anyone else do this? Thanks!
You can do this, but if for some reason you don’t qualify for the exclusion you’ll have to pay it all when you file your taxes for the year and it’s likely you’ll have to pay an additional penalty for underpayment of taxes throughout the year.
(Was creating a new thread but saw this one.)
Is that how most people use the foreign earned income exclusion in practice? A U.S. employer pays to your U.S. address and withdraws taxes normally, then you (hopefully) claim back the portion it provides at the end of the year?
And if you’re gone for 330+ days and aren’t using a family member’s or similar address, presumably you’re using a mailbox service?
If not, what are others doing differently?
I changed my withholding to not have taxes taken out. I’ll still get a few grand back from before I changed but I get an extra $xxxx in my bank every month rather than giving an interest free loan to the govt and that works for me!
Oh, and I use my mom as my address.
Thanks. That’s true–we’re in control of withholding…
I suppose mailbox services are the same, but am interested in hearing from anybody going that route how things work (and in general, how all this administrivia works in practice).
I think there is a thread about mail services in here. You probably won’t get much feedback on that in a topic about taxes.
More the tax implications of addresses through services, state and federal taxes, etc., from people who’ve used those and can comment on it, and how all that works in practice…
that’s a pretty specific question. if you want answers i’d start a new thread for it since this topic really doesn’t have much to do with it so it probably won’t get answered here.