I am an expat trying to complete my tax return, and it looks like I am getting majorly screwed. Here are the facts:
In 2017, I earned a salary of roughly $130,000. Of this, over $10,000 was for a health insurance policy, however, locally the value of the policy is taxed as regular earned income.
Gross income: $130,000
-Private Health Insurance: $10,000
-Social taxes, unemployment insurance: $12,500
-Income tax withheld: $15,500
I hired an accountant to complete my local taxes. After working his magic, he was able to reduce my taxable income down to $105,000. He was able to do this by claiming deductions which wouldn’t be claimable in the US. However, even after all these deductions, my local tax liability is still over $18,000, leaving me with a tax bill of $3,500 to make up the difference.
As if that wasn’t bad enough, here comes Uncle Sam, making things much worse. Here is roughly what my 1040 looks like:
-Foreign Earned Income exclusion: $102,100
Net income: $27,900
-Standard Deduction: $6,350
Taxable Income: $17,500
28% tax: $4,900
-Foreign Tax Credit: $900 (local taxes paid on the $3k income above the Foreign Earned Income Exclusion)
In addition, I will most likely get charged with underpayment penalty.
Am I doing this right? Or am I just completely fucked?