Question for the Money Doctors
Question submitted on Sep 29, 2012.
QuestionI will be working in Saudi Arabia for the rest of this school year and next year. I am planning on sending money to my bank account back home. Will the money I send incur taxes even though I will be out of the US for over a year? Also due to the excessive cost of sending money transfers I was wondering how much cash I am allowed to bring with me once I come home.
Generally, as a U.S. citizen, your worldwide income is subject to U.S. income taxation regardless of where you are living and regardless of whether you send the money to a bank account back home.
Please refer to the US Customs website, www.cpb.gov which outlines that there is no limit on the amount of money that can be taken out of or brought into the United States. However, if a person or persons traveling together have $10,000 or more in cash, they must fill out a "Report of International Transportation of and Monetary Instruments".
IRS Publication 54 is always a good reference tool for US citizens working abroad. The publication discusses special tax rules for U.S. citizens who work abroad or who have income earned in foreign countries, including the foreign earned income credit, foreign tax credit, foreign income tax treaty benefits, etc.
That being said, please note that the income tax rules applicable to expatriates are very complex and that you would be well served by contacting a CPA/PFS who will be able to help you analyze the tax rules and whether or not you are eligible for treaty benefits. Please visit www.findacpapfs.com to find a CPA/PFS in your area.
For additional information visit http://www.360financialliteracy.org/