Most of the content available on the Internet regarding “tax-saving while working abroad” is meant for US and UK residents working overseas. Well, in Indian context, we mean the tax management by NRIs (non-resident Indians) when they find work in the US, Europe, gulf and Australia. While hiring a tax attorney and paying him his fee is worth it as you save thousands of dollars through their advice, here are some tips to legally save taxes in many parts of the world.
Saving Tax in the US:
In the USA, the IRS is the tax authority, which is known to be very harsh and aggressive in taxation. In the US, the heavily taxed country, tax is considered to be the single largest expense of your life, which is bigger than the biggest investment of your life, such as acquiring a home or getting higher education for your children. Yet, you can save a huge amount to be paid as taxes, if you plan it well in advance. Now, IRS allows you to amend the return filed within three years of filing the actual return. You can amend it, and claim a refund within this period.
You can deduct the following expenses in the US:
A. You can deduct your job related transport expenses, when your employer fails to reimburse it. It’s around $0.55 per mile.
B. You can deduct the expenses incurred in getting professional education that is aimed to either sharpen your skills to survive in the present job or to grow further in your chosen profession or sector.
C. You can deduct the applicable rent, if you are using your residential property or home for office purposes, when your company doesn’t have any office in that area or city. However, itâ€™s applicable only in case your home office is used to attend or serve the customers and vendors of your company.
D. Visit the tax attorney in your vicinity and get to know how to convert your capital gains into capital losses and claim a tax refund on it.
E. Investments in retirement planning qualify for tax deduction, so make full use of it.
F. Professional and self-employed entrepreneurs can save a lot in taxes if they invest in Simplified Employee Pension plan or Keogh Plan. You can make a potential saving of $30K per year in both these plans.
G. You can gift your large and extra assets/properties to your children and grand-children and save taxes on it. You and your spouse can gift a total of $26K and save taxes on this amount. This investment in properties and real estate can prove to be a blessing for your kids when they grow up and need financial assistance for their higher education.
H. Hire a tax preparer who is well versed with the latest developments in tax-policies and he/she can save you hundreds of thousands of dollars. He would also guide you about new tax laws, which can save you a huge amount in your present tax situation.
Apart from the US, in the gulf there is no apparent tax, but all the tax laws are skewed in favor of the local citizens. So, avoid overspending, invest in your home country (and not the gulf country, learn from the property market fall of 2008,) and buy local investment products.