US Taxes While Living Abroad FAQ
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Do I need to file a US tax return? What forms do I use? Can I deduct foreign taxes?... The following FAQ about filing your US taxes even though you live outside the USA was adapted from a contribution by I.J. Zemelman, EA , founder of Taxes for Expats .
I am an American living and working abroad. Do I need to file a US tax return?
Regardless of where you live now, being a United States citizen requires that you file a yearly tax return with the IRS. Green card holders and all US citizens are required to file a US return, no matter where they live, as long as their income (earned in-US and abroad) is just over $9,000. Many people wrongly assume that because they have never owed money to the IRS, they simply dont have to file. Earning anything over $9,350.00 does require you to file, however. The US has treaties with many foreign countries that will reduce or even eliminate actual owed tax. You cannot, however, take advantage of these benefits if you don't file.
Do I need to file a State Tax Return?
As is the case with many legal matters, each US state sets its own rules regarding state taxes and expats. Some states do demand that you file a state return, while others release you when you move away. The rules can be complicated, so be sure to ask your tax preparer before making assumptions as to the requirements of your former home. The most stubborn states are New Mexico, California, Virginia and South Carolina. If you moved abroad from one of those states, it is unlikely that you have been released from the obligation of filing. To read more about this issue see: State Taxes and the American Expats - Can You Ever Set Yourself Free?
What forms do expats need to complete for their Federal Income Tax Return?
Just as you did when living in the US, you need to fill out a 1040 form. The forms specifically applicable to your life as an expat are 2555 and 1116. These are the forms by which you declare your foreign earned income and qualify for the Foreign Tax Credit. The Schedules differ depending on your situation. The most common ones can be found here: en.wikipedia.org . If you have a foreign bank account you would also need to complete informational forms TDF 90-221 (FBAR) and, new in 2011, form 8938. More about these below.
How do I know if I qualify for the Foreign Earned Income Exclusion?
The IRS qualifies you as eligible for the Foreign Earned Income Exclusion (FEIE) if you fall into one of three categories:
1. You are citizen of the US who qualifies as a bona fide resident of another country for a period of time containing one entire tax year.
2. You are a resident alien of the US whose home country has an income tax treaty with the US. Additionally, you must be a bona fide resident of another country for a period of time containing one entire tax year.
3. You are a citizen or resident alien of the US whose physical absence from the US constitutes a minimum of 330 days out of any 365.
US Taxes While Living Abroad FAQ
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Do I need to file a US tax return? What forms do I use? Can I deduct foreign taxes?... The following FAQ about filing your US taxes even though you live outside the USA was adapted from a contribution by I.J. Zemelman, EA , founder of Taxes for Expats .
I am an American living and working abroad. Do I need to file a US tax return?
Regardless of where you live now, being a United States citizen requires that you file a yearly tax return with the IRS. Green card holders and all US citizens are required to file a US return, no matter where they live, as long as their income (earned in-US and abroad) is just over $9,000. Many people wrongly assume that because they have never owed money to the IRS, they simply dont have to file. Earning anything over $9,350.00 does require you to file, however. The US has treaties with many foreign countries that will reduce or even eliminate actual owed tax. You cannot, however, take advantage of these benefits if you don't file.
Do I need to file a State Tax Return?
As is the case with many legal matters, each US state sets its own rules regarding state taxes and expats. Some states do demand that you file a state return, while others release you when you move away. The rules can be complicated, so be sure to ask your tax preparer before making assumptions as to the requirements of your former home. The most stubborn states are New Mexico, California, Virginia and South Carolina. If you moved abroad from one of those states, it is unlikely that you have been released from the obligation of filing. To read more about this issue see: State Taxes and the American Expats - Can You Ever Set Yourself Free?
What forms do expats need to complete for their Federal Income Tax Return?
Just as you did when living in the US, you need to fill out a 1040 form. The forms specifically applicable to your life as an expat are 2555 and 1116. These are the forms by which you declare your foreign earned income and qualify for the Foreign Tax Credit. The Schedules differ depending on your situation. The most common ones can be found here: en.wikipedia.org . If you have a foreign bank account you would also need to complete informational forms TDF 90-221 (FBAR) and, new in 2011, form 8938. More about these below.
How do I know if I qualify for the Foreign Earned Income Exclusion?
The IRS qualifies you as eligible for the Foreign Earned Income Exclusion (FEIE) if you fall into one of three categories:
1. You are citizen of the US who qualifies as a bona fide resident of another country for a period of time containing one entire tax year.
2. You are a resident alien of the US whose home country has an income tax treaty with the US. Additionally, you must be a bona fide resident of another country for a period of time containing one entire tax year.
3. You are a citizen or resident alien of the US whose physical absence from the US constitutes a minimum of 330 days out of any 365.
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