Hello all, I have a quick question that I looked into and think I have this correct but wanted to make sure. So I will be paid an American salary, in the USA, from an American company, with money going to US banks, with typical IRS withholding, etc. Except I will actually work the majority of the year in Taiwan. I do not know how many days, but probably between 290 and 340. So I for sure will legally be on the hook for Taiwan taxes because I will exceed 90 days there. Now obviously I could just not report it and they would never know, but I want to do this on the up and up. So my question is how this works on the US side. Now if I manage to stay over 330 then I can claim foreign tax exclusion, but my salary is actually quite a bit above the 100k threshold and I would rather have a bit more flexibility in coming back to the states.
So I think I can use the foreign tax credit. So how this would work would be, after the year, first pay whatever I own Taiwan, which will be a mess to calculate, and get that settled (Taiwan doesn’t have any clue about my salary, so I would have to go to the tax office with my w2 I’m guessing and write a massive check to them). Then when I file my US taxes, use however much I paid as a full 1 to 1 credit against my federal income tax burden, which will lower that amount significantly. The result is that my total tax hit will be exactly as if I just lived and worked in the US the entire year, except with Taiwan taking a chunk, and the rest going to federal income, with my state and SS/Medicare no different. Being the case that my federal hit should be a lot lower, I should probably be able to toss a ton of exceptions so less gets withheld, right?
Okay so that’s what I think should happen - is there anything I am missing? Did I get this correct? I will see a tax professional for the fine details, but I want to make sure I’m on the right track first, rather than get floored if my entire plan is wrong. Thanks for any help!