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

Items Related to

Exemptions

Excluded Income

You can claim an exemption for your nonresi-

dent alien spouse on your separate return, pro-

U.S. citizens and resident aliens living outside

vided your spouse has no gross income for U.S.

the United States generally are allowed the

Exemptions,

tax purposes and is not the dependent of an-

same deductions as citizens and residents living

other U.S. taxpayer.

in the United States.

You can also claim exemptions for individu-

Deductions, and

If you choose to exclude foreign earned in-

als who qualify as your dependents. To be your

come or housing amounts, you cannot deduct,

dependent, the individual must be a U.S. citizen,

exclude, or claim a credit for any item that can

U.S. national, U.S. resident alien, or a resident

Credits

be allocated to or charged against the excluded

of Canada or Mexico for some part of the calen-

amounts. This includes any expenses, losses,

dar year in which your tax year begins.

and other normally deductible items that are

allocable to the excluded income. You can de-

Children. Children usually are citizens or re-

Topics

duct only those expenses connected with earn-

sidents of the same country as their parents. If

ing includible income.

you were a U.S. citizen when your child was

This chapter discusses:

These rules apply only to items definitely

born, your child generally is a U.S. citizen. This

•

related to the excluded earned income and they

is true even if the child’s other parent is a non-

The rules concerning items related to ex-

do not apply to other items that are not definitely

resident alien, the child was born in a foreign

cluded income,

related to any particular type of gross income.

country, and the child lives abroad with the other

•

Exemptions,

These rules do not apply to items such as:

parent.

•

If you have a legally adopted child who is not

Contributions to foreign charitable organi-

•

Personal exemptions,

a U.S. citizen, U.S. resident, or U.S. national, the

zations,

•

Qualified retirement contributions,

child meets the citizen requirement if you are a

•

Moving expenses,

U.S. citizen or U.S. national and the child lived

•

Alimony payments,

•

Contributions to individual retirement ar-

with you as a member of your household all

•

Charitable contributions,

rangements (IRAs),

year.

•

Medical expenses,

Taxes of foreign countries and U.S. pos-

Social security number. You must include on

sessions, and

•

Mortgage interest, or

your return the social security number (SSN) of

•

each dependent for whom you claim an exemp-

How to report deductions.

•

Real estate taxes on your personal resi-

tion. To get a social security number for a de-

dence.

pendent, apply at a Social Security office or U.S.

Useful Items

consulate. You must provide original or certified

For purposes of these rules, your housing

You may want to see:

copies of documents to verify the dependent’s

deduction is not treated as allocable to your

age, identity, and citizenship, and complete

excluded income, but the deduction for self-

Publication

Form SS-5.

employment tax is.

You do not need an SSN for a child who was

If you receive foreign earned income in a tax

501

Exemptions, Standard Deduction,

born in 2008 and died in 2008. Attach a copy of

year after the year in which you earned it, you

and Filing Information

the child’s birth certificate to your tax return.

may have to file an amended return for the

Print “Died” in column (2) of line 6c of your Form

514

Foreign Tax Credit for Individuals

earlier year to properly adjust the amounts of

1040 or Form 1040A.

deductions, credits, or exclusions allocable to

521

Moving Expenses

If your dependent is a nonresident alien who

your foreign earned income and housing exclu-

is not eligible to get a social security number,

523

Selling Your Home

sions.

you must list the dependent’s individual tax-

590

Individual Retirement Arrangements

payer identification number (ITIN) instead of an

Example. In 2007, you had $80,000 of for-

(IRAs)

SSN. To apply for an ITIN, file Form W-7 with the

eign earned income and $7,500 of deductions

IRS. It usually takes 4 to 6 weeks to get an ITIN.

597

Information on the United

allocable to your foreign earned income. You did

Enter your dependent’s ITIN wherever an SSN

States-Canada Income Tax Treaty

not have a housing exclusion. If you excluded all

is requested on your tax return.

of your foreign earned income, you would not

Form (and Instructions)

have been able to claim any of the deductions

More information. For more information

on your 2007 return. If you received a $12,000

1116 Foreign Tax Credit

about exemptions, see Publication 501.

bonus in 2008 for work you did abroad in 2007,

2106 Employee Business Expenses

you can exclude $5,700 of the bonus because

the limit on the foreign earned income exclusion

2555 Foreign Earned Income

for 2007 was $85,700 and you have already

Contributions to

2555-EZ Foreign Earned Income

excluded $80,000. Since you must include

$6,300 of the bonus ($12,000 − $5,700) for work

Foreign Charitable

Exclusion

you did in 2007 in income, you can file an

3903 Moving Expenses

Organizations

amended return for 2007 to claim $514 of the

Schedule A (Form 1040) Itemized

deductions. This is the deductions allocable to

the foreign earned income ($7,500) multiplied by

Deductions

If you make contributions directly to a foreign

the includible portion of the foreign earned in-

Schedule C (Form 1040) Profit or Loss

church or other foreign charitable organization,

come ($6,300) and divided by the total foreign

you generally cannot deduct them. Exceptions

From Business

earned income for 2007 ($92,000).

are explained under Canadian, Israeli, and Mex-

SS-5 Application for a Social Security

ican organizations, later.

Card

You can deduct contributions to a U.S. or-

W-7 Application for IRS Individual

ganization that transfers funds to a charitable

foreign organization if the U.S. organization con-

Taxpayer Identification Number

trols the use of the funds by the foreign organi-

See chapter 7 for information about getting

zation, or if the foreign organization is just an

these publications and forms.

administrative arm of the U.S. organization.

Chapter 5 Exemptions, Deductions, and Credits

Page 30

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 30

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