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Originally Posted by AndyC
A US citizen who pays foreign taxes on income is allowed a tax credit for the amount paid up to the amount that would have been owed to the US. Example: US citizen has $100,000 of income taxed in a foreign country that results in foreign taxes of $15,000. The US citizen files a US tax return on the same income resulting in US tax of $20,000. The US citizen would get a credit against his $20,000 of $15,000 resulting in a net liability to the US of $5,000. If the foreign tax paid was greater than $20,000 the credit would be limited to $20,000.
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Most all foreign income tax is a wash. You are effectively paying the U.S. rate regardless. If you are a full time expat you are allowed 97,600 in income exclusion or tax credits.
The issue in the article seems to be self employment taxes specifically regarding to the ACA. It is my understanding that if you participate in the SS/health care system of your host nation then those dollars are trade outs as well...per negotiated treaty. Canada is one of those participating nations so I question the accuracy of the report.
