Understanding Deductions for US Expats and Nonresidents

Don’t count on itemizing deductions on your US tax return if you are an expat or living outside the US. Most expats take the standard deduction, and that’s something you get just by filing. It provides more value than itemized deductions, and remember, this is an either-or analysis; if you take the standard deduction, you cannot itemize, and vice versa. There are functionally only about four types of deductions left for itemizing on Schedule A; medical, state and local tax, mortgage interest, and charitable. Each of these comes with limitations, even for people living in the US, but these are particularly skewed against US persons living abroad. You also lose the standard deduction in the year you become a nonresident. The take home here is: Just because you itemized deductions or took the standard deduction before, it doesn’t mean that you are going to do the same thing every year.

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