Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad

percent of the exclusion amount (computed on a

b. A total of 183 days during the current

Reminders

daily basis), multiplied by the number of days in

year and the 2 preceding years, count-

your qualifying period that fall within your 2008

ing all the days of physical presence in

tax year. For 2008, this amount is $38.30 per

the current year, but only

the number

Change of address. If you change your mail-

day ($14,016 per year). See Housing Amount

of days of presence in the first preced-

ing address, be sure to notify the Internal Reve-

under Foreign Housing Exclusion and Deduc-

ing year, and only

the number of

nue Service using Form 8822, Change of

tion in chapter 4.

days in the second preceding year.

Address. If you are changing both your home

Housing expenses — maximum amount.

and business addresses, you need to complete

The amount of qualified housing expenses eligi-

two forms.

Example. You were physically present in

ble for the housing exclusion and housing de-

the United States on 120 days in each of the

Figuring tax on income not excluded. If you

duction has changed for some locations. See

years 2006, 2007, and 2008. To determine if you

claim the foreign earned income exclusion, the

Limit on housing expenses under Foreign Hous-

meet the substantial presence test for 2008,

housing exclusion, or both, you must figure the

ing Exclusion and Deduction in chapter 4.

count the full 120 days of presence in 2008, 40

tax on your nonexcluded income using the tax

days in 2007 (

of 120), and 20 days in 2006 (

Exemption amount. The amount you can de-

rates that would have applied had you not

of 120). Because the total for the 3-year period is

duct for each exemption (based on your filing

claimed the exclusions. See the instructions for

180 days, you are not considered a resident

status and adjusted gross income) is at least

Form 1040 and complete the Foreign Earned

under the substantial presence test for 2008.

$2,333 but not more than $3,500.

Income Tax Worksheet to figure the amount of

For more information on resident and non-

tax to enter on Form 1040, line 44. If you must

resident status, the tests for residence, and the

Exemption phaseout. You lose part of the

attach Form 6251 to your return, use the Foreign

exceptions to them, see Publication 519, U.S.

benefit of your exemptions if your adjusted gross

Earned Income Tax Worksheet provided in the

Tax Guide for Aliens.

income is above a certain amount. The amount

instructions for Form 6251.

at which the phaseout begins depends on your

Filing information. Chapter 1 contains gen-

filing status. For 2008, the phaseout begins at:

Photographs of missing children. The Inter-

eral filing information, such as:

•

nal Revenue Service is a proud partner with the

$119,975 for married persons filing sepa-

•

Whether you must file a U.S. tax return,

National Center for Missing and Exploited Chil-

rately,

•

dren. Photographs of missing children selected

When and where to file your return,

•

$159,950 for single individuals,

by the Center may appear in this publication on

•

How to report your income if it is paid in

•

pages that would otherwise be blank. You can

$199,950 for heads of household, and

foreign currency,

help bring these children home by looking at the

•

$239,950 for married persons filing jointly

•

How to treat a nonresident alien spouse

photographs and calling 1-800-THE-LOST

or qualifying widow(er)s.

as a U.S. resident, and

(1-800-843-5678) if you recognize a child.

However, you can lose no more than

of the

•

Whether you must pay estimated tax.

amount of your exemptions. In other words,

each exemption cannot be reduced to less than

Introduction

Withholding tax. Chapter 2 discusses the

$2,333.

withholding of income, social security, and Medi-

Standard deduction. The standard deduction

This publication discusses special tax rules for

care taxes from the pay of U.S. citizens and

for people who do not itemize deductions on

U.S. citizens and resident aliens who work

resident aliens.

Schedule A (Form 1040) is, in most cases,

abroad or who have income earned in foreign

Self-employment tax. Chapter 3 discusses

higher for 2008. The amount depends on your

countries.

who must pay self-employment tax.

filing status, whether you are 65 or older or blind,

If you are a U.S. citizen or resident alien,

and whether an exemption can be claimed for

Foreign earned income exclusion and hous-

your worldwide income generally is subject to

you by another person. The amounts for the

ing exclusion and deduction. Chapter 4 dis-

U.S. income tax, regardless of where you are

standard deduction for 2008 are shown in the

cusses income tax benefits that apply if you

living. Also, you are subject to the same income

instructions for your tax return.

meet certain requirements while living abroad.

tax filing requirements that apply to U.S. citizens

You may qualify to treat up to $87,600 of your

or resident aliens living in the United States.

Itemized deductions phaseout. If your ad-

income as not taxable by the United States. You

Expatriation tax provisions apply to U.S. citizens

justed gross income is above a certain amount,

may also be able to either deduct part of your

who have renounced their citizenship and

you may lose part of your itemized deductions.

housing expenses from your income or treat a

long-term residents who have ended their resi-

In 2008, this amount has increased to $159,950

limited amount of income used for housing ex-

dency. These provisions are discussed in chap-

($79,975 if married filing separately). However,

penses as not taxable by the United States.

ter 4 of Publication 519.

you can lose no more than

of the amount of

These benefits are called the foreign earned

your itemized deductions that otherwise would

income exclusion and the foreign housing de-

Resident alien. A resident alien is an individ-

have applied.

duction and exclusion.

ual who is not a citizen or national of the United

To qualify for either of the exclusions or the

Filing requirements. Generally, the amount

States and who meets either the green card test

deduction, you must have a tax home in a for-

of income you can receive before you must file

or the substantial presence test for the calendar

eign country and earn income from personal

an income tax return has increased. These

year.

services performed in a foreign country. These

amounts are shown in chapter 1 under Filing

rules are explained in chapter 4.

1. Green card test. You are a U.S. resident

Requirements.

If you are going to exclude or deduct your

if you were a lawful permanent resident of

income as discussed above, you must file Form

Maximum self-employment tax. For 2008,

the United States at any time during the

2555, Foreign Earned Income, or Form

the maximum amount of net earnings from

calendar year. This is known as the green

2555-EZ, Foreign Earned Income Exclusion.

self-employment that is subject to the social

card test because resident aliens hold im-

You will find an example with filled-in Forms

security part of the self-employment tax has

migrant visas (also known as green cards).

2555 and 2555-EZ in chapter 4.

increased to $102,000. All net earnings are sub-

2. Substantial presence test. You are con-

ject to the Medicare part of the tax. For more

Exemptions, deductions, and credits.

sidered a U.S. resident if you meet the

information, see chapter 3.

Chapter 5 discusses exemptions, deductions,

substantial presence test for the calendar

and credits you may be able to claim on your

year. To meet this test, you must be physi-

return. These are generally the same as if you

cally present in the United States on at

were living in the United States. However, if you

least:

choose to exclude foreign earned income or

a. 31 days during the current calendar

housing amounts, you cannot deduct or exclude

year, and

any item or take a credit for any item that is

Publication 54 (2008)

Page 2

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 2

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