When filing your U.S. tax returns from Israel, you or your accountant will likely utilize either the Foreign Tax Credit or Foreign Earned Income Exclusion to ensure that you don’t end up owing any money to Uncle Sam.
But even if you aren’t required to pay any taxes, it is still possible (perhaps even likely) that you are missing out on substantial refunds. Even if your tax return is technically accurate, that does not necessarily mean that it has been prepared in the manner which is most beneficial to your and your bottom line.
Here’s an example.
If you have children under 17 years of age, you can be eligible for a child tax credit of up to $1000 per child each year. However, if you utilize the Foreign Earned Income Exclusion instead of the Foreign Tax Credit, you will not be eligible for this refund!
Many times, I have seen cases where the child tax credit was not factored into the decision-making process, and the Foreign Earned Income Exclusion was chosen instead of the Foreign Tax Credit. Fortunately, I was able to amend past tax returns, which enabled my clients to collect thousands of dollars of refunds.
What’s the moral of the story? Taking a one-size fits all approach to your tax returns can potentially cost you thousands of dollars. This is especially true in the expat arena, where there are many rules & regs which can slip through the cracks.
If you want to make sure your US taxes are filed in a way which leaves you with more money in your pocket, contact me today for a free consultation. I’ll make sure your tax returns are completed in a manner which is most beneficial for you!
