This is a pretty good review of the current state of affairs.
http://blog.newgensoft.com Mon, 28 Oct 2013 07:02:45 GMT
There is nothing to be feared or be skeptical of, if you are a law abiding American without any malicious intention to evade taxes while working abroad. The Foreign Account Tax Compliant Act, better known as FATCA, passed ...
I would also like to point out that, if you have earned income exceeding the Foreign Earned Income Exclusion (FEIE) of $ 97,600 this year AND you have paid Chilean taxes on the excess amount as well, it's possible to use the tax paid on the excess (only) on the Form 1116 and take the foreign tax credit on the US taxes due for the excess amount. The US imposes taxes on the amount exceeding the FEIE at the maximum marginal rate so it stands to reason that the tax paid to Chile, on just the excess (this can be calculated using table available at www.sii.cl or click here) can be used to offset the US tax due, if possible. The proof is to calculate the tax amount on ALL of your earnings (A); then calculate the tax on only the $97,600 (B). Subtract B from A and you have the tax due to the US. Do the same with the Chilean tax tables and see if the Chilean taxes exceed the US taxes. They probably will as Chile's uppermost tax rate is higher than the US uppermost rate. If you need help, drop me a line.