5 tax breaks you can't get anywhere but the US

The United States has an undeniably complicated tax system.

Despite President Trump's passage of the Tax Cuts and Jobs Act, the most significant overhaul of the US tax code in decades, the Tax Foundation ranked the US 24th on its 2018 International Tax Competitiveness ranking— only five spots ahead of its 2017 rank.

The Tax Foundation considers dozens of metrics, from corporate and individual tax rates to how taxes are structured, to determine which countries have the most competitive and neutral tax system.

A bonus just for you: Click here to claim 30 days of access to Business Insider PRIME 

With this international comparison in mind, we enlisted the help of Ryan Losi, executive vice president of accounting firm PIASCIK, to highlight some of the tax breaks that are unique to businesses and individuals in the US. Losi leads the firm's international tax practice and has worked with clients in nearly 60 countries.

Below are five tax breaks you can only get in the US and a brief explanation of each.

Foreign Earned Income Exclusion

With the Foreign Earned Income Exclusion, Americans who live and work abroad don't have to pay US taxes on their earned income — salaries and wages, professional fees, tips, bonuses, and commissions — up to $104,100 in tax year 2018. The income must be earned in the country of residence to qualify.

Interest Charge Domestic International Sales Corporation (IC-DISC)

The Interest Charge Domestic International Sales Corporation (IC-DISC) reduces an income tax liability for business owners who export their products abroad.

"You're converting business income, which is taxed at the owners' tax rate, and transmitting it to qualified dividend income, which is a preferential tax rate," Losi said. "It's not well known, but it has a significant benefit. It's a magical deduction you can use." 

RELATED: Take a look at the states where Americans pay the highest income tax:

42 PHOTOS
States where Americans pay the highest in state income taxes
See Gallery
States where Americans pay the highest in state income taxes

California

State income tax: 1% to 13.3% 

Maine

State income tax: 5.8% to 10.15%

Oregon

State income tax: 5% to 9.9%

Minnesota

State income tax: 5.35% to 9.85%

Iowa

State income tax: 0.36% to 8.98%

New Jersey

State income tax: 1.4% to 8.97%

Vermont

State income tax: 3.55% to 8.95%

Washington, DC

State income tax: 4% to 8.95%

New York

State income tax: 4% to 8.82%

Hawaii

State income tax: 1.4% to 8.25%

Wisconsin

State income tax: 4% to 7.65%

Idaho

State income tax: 1.6% to 7.4%

South Carolina

State income tax: 0% to 7%

Connecticut

State income tax: 3% to 6.99%

Arkansas

State income tax: 0.9% to 6.9%

Montana

State income tax: 1% to 6.9%

Nebraska

State income tax: 2.46% to 6.84%

Delaware

State income tax: 2.2% to 6.6%

West Virginia

State income tax: 3% to 6.5%

Georgia

State income tax: 1% to 6%

Kentucky

State income tax: 2% to 6%

Louisiana

State income tax: 2% to 6%

Missouri

State income tax: 1.5% to 6%

Rhode Island

State income tax: 3.75% to 5.99%

Maryland

State income tax: 2% to 5.75%

North Carolina

State income tax: 5.75%

Virginia

State income tax: 2% to 5.75%

Oklahoma

State income tax: 0.5% to 5.25%

Massachusetts

State income tax: 5.1%

Alabama

State income tax: 2% to 5%

Mississippi

State income tax: 3% to 5%

Utah

State income tax: 5%

Ohio

State income tax: 0.495% to 4.997%

New Mexico

State income tax: 1.7% to 4.9%

Colorado

State income tax: 4.63%

Kansas

State income tax: 2.7% to 4.6%

Arizona

State income tax: 2.59% to 4.54%

Michigan

State income tax: 4.25%

Illinois

State income tax: 3.75%

Indiana

State income tax: 3.3%

Pennsylvania

State income tax: 3.07%

North Dakota

State income tax: 1.1% to 2.9%

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

 

Foreign-Derived Intangible Income (FDII)

New under the Tax Cuts and Jobs Act (TCJA), the Foreign-Derived Intangible Income deduction reduces the tax rate on qualifying income for corporations that earn income from customers outside the US. 

"Whatever income you have coming in from customers outside the US, your corporate tax rate is 13.125%," Losi said. Qualifying income includes income from the sale of property or products, as well as services.

Qualified Business Income Deduction

Also new under the TCJA, the Qualified Business Incomededuction allows small business owners to deduct up to 20% of qualified business income, or 20% of their taxable income minus any capital gain, whichever is lower.

"The complexity is determining what is QBI," Losi said, though generally it refers to the business' profits. Business owners can claim the deduction if their taxable income is lower than $157,500 for single filers and $315,000 for joint filers — any higher and the benefits begin to phase out. Business owners are still required to pay self-employment taxes.

100% Bonus Depreciation

"Any business in America for the next four years can deduct 100% of capital expenditures as long as it's not real property," Losi said. That means businesses can deduct the entire cost of new machinery, equipment, furniture, and most interior building improvements up to $1 million under the TCJA, double the previous amount, if it was placed in service after September 27, 2017.

"I don't know of any other countries that allow this," Losi said. "Other countries have capital allowances, but not 100%, and this applies to both new and used properties."

SEE ALSO: You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year

5 Things You Should Know about Capital Gains Tax

A capital gain occurs when you sell something for more than you spent to acquire it. This happens a lot with investments, but it also applies to personal property, such as a car. Every taxpayer should understand these basic facts about capital gains taxes.

Read More

Brought to you by TurboTax.com

The Tax Benefits of Your 401(k) Plan

Your contributions to a qualified 401(k) may lower your tax bill and help you build financial security.

Read More

Brought to you by TurboTax.com

How Do I File Back Tax Returns?

It's never too late to file your taxes. Here's how to file your back tax returns in five simple steps.

Read More

Brought to you by TurboTax.com

Charitable Contributions You Think You Can Claim but Can't

Knowing what you can and can't claim as charitable contributions helps you maximize the potential tax savings that the charitable tax deduction offers.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.