When filing your U.S. taxes, you have two main options: the standard deduction or itemized deductions. For U.S. citizens living abroad, itemized deductions can unlock significant savings — especially when your expenses exceed the standard deduction.
Common deductions include mortgage interest, charitable contributions, medical expenses, and state/local taxes (where applicable). But for expats, there are additional considerations, like foreign taxes paid and unreimbursed business expenses. Understanding which deductions you can claim is the first step toward minimizing your U.S. tax liability.
Keep detailed records of charitable donations, medical expenses, and any foreign taxes paid.
Some expenses may interact with the Foreign Earned Income Exclusion or credits, so plan carefully.
Certain unreimbursed moving expenses, home office deductions, or foreign state taxes (if applicable) can make a difference.
Example: An expat paying foreign property taxes can potentially deduct these on Schedule A, lowering overall taxable income.
Even seasoned expats sometimes misstep. Avoid these pitfalls:
Correct documentation is essential — missing receipts can lead to denied deductions and IRS scrutiny.
Track throughout the year to ensure no opportunities are missed.
Use FEIE, foreign tax credits, and itemized deductions together for maximum benefit.
Navigating foreign deductions can be tricky, and the right guidance ensures compliance while minimizing your tax bill.
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