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U.S. EXPAT TAX GUIDE – SAUDI ARABIA

What is the filing threshold for US expats in Saudi Arabia?

If you’re an American expat in Saudi Arabia earning between $50,000 and $70,000, your US tax situation depends on various factors such as your residency status and the type of income you receive.

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What income is taxable when living abroad?

Your taxable income when living abroad depends on two main factors:

  • Income Source: Income earned from work performed outside the US is significant.
  • Time Spent Abroad: Spending at least 330 days out of 12 months in Saudi Arabia is crucial for tax purposes.

Meeting these criteria can make you eligible for the foreign-earned income exclusion, allowing you to exclude up to $126,500 of your income from US taxes in 2024. For example, if you earn $60,000 and spend over 330 days in Saudi Arabia, you may not owe US taxes on that income.

Does the Foreign-Earned Income Exclusion limit increase?

Yes, the amount you can exclude under the foreign-earned income exclusion increases annually to account for inflation, potentially allowing you to exclude a higher amount of income each year.

Is there a limit on housing deductions?

For example, in Riyadh, you can deduct up to $40,000 for housing expenses. The IRS periodically adjusts these limits to account for inflation and changes in living costs. 

Housing deductions can include more than just rent, such as utilities (excluding phone bills), personal insurance, leasing fees, renting furniture, and some repairs.

Can you use the standard deduction?

Yes, you can use the standard deduction in addition to other exclusions. For 2024, the standard deduction is $13,850 for single filers, which can further reduce your taxable income.

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.

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