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

Questions and Answers

the physical presence test. How-

Overseas taxpayers can deduct

30 days beyond the date you ex-

This section answers tax-

ever, if my company recalls me

pect to qualify as a bona fide resi-

their estimated housing deduction

related questions commonly asked

to the United States before the

dent.

in figuring their estimated tax.

by taxpayers living abroad.

end of the qualifying period and I

The first installment of esti-

find I will not qualify for the ex-

12) I am a U.S. citizen who

mated tax is due on April 15 of the

Filing Requirements —

clusion, how and when should I

worked in the United States for 6

year for which the income is

Where, When, and How

file my return?

months last year. I accepted em-

earned.

ployment overseas in July of last

1) When are U.S. income tax re-

If your regular filing date has

year and expect to qualify for the

8) Will a check payable in foreign

turns due?

foreign earned income exclu-

passed, you should file a return,

currency be acceptable in pay-

sion. Should I file a return and

Form 1040, as soon as possible for

ment of my U.S. tax?

pay tax on the income earned in

Generally, for calendar year tax-

last year. Include a statement with

the United States during the first

payers, U.S. income tax returns are

this return noting that you have re-

Generally, only U.S. currency is ac-

6 months and then, when I qual-

due on April 15. If you are a U.S.

turned to the United States and will

ceptable for payment of income

ify, file another return covering

citizen or resident and both your tax

not qualify for the foreign earned

tax. However, if you are a Fulbright

the last 6 months of the year?

home and your abode are outside

income exclusion. You must report

grantee, see Fulbright Grant in

the United States and Puerto Rico

your worldwide income on the re-

chapter 1.

No. You have the choice of one of

on the regular due date, an auto-

turn. If you paid a foreign tax on the

the following two methods of filing

matic extension is granted to June

income earned abroad, you may be

9) I have met the test for physical

your return:

15 for filing the return. Interest will

able to either deduct this tax as an

presence in a foreign country

a) You can file your return when

be charged on any tax due, as

itemized deduction or claim it as a

and am filing returns for 2 years.

due under the regular filing rules,

shown on the return, from April 15.

credit against your U.S. income

Must I file a separate Form 2555

report all your income without ex-

tax.

(or Form 2555-EZ) with each re-

cluding your foreign earned in-

2) I am going abroad this year

However, if you pay the tax due

turn?

come, and pay the tax due. After

and expect to qualify for the for-

after the regular due date, interest

you have qualified for the exclu-

eign earned income exclusion.

will be charged from the regular

Yes. A Form 2555 (or Form

sion, you can file an amended re-

How can I secure an extension of

due date until the date the tax is

2555-EZ) must be filed with each

time to file my return, when

turn, Form 1040X, accompanied by

paid.

Form 1040 tax return on which the

should I file my return, and what

Form 2555 (or 2555-EZ), for a re-

benefits of income earned abroad

forms are required?

fund of any excess tax paid.

5) I am a U.S. citizen and have no

are claimed.

b) You can postpone the filing of

taxable income from the United

a) You should file Form 2350 by

your tax return by applying on Form

States, but I have substantial in-

10) Does a Form 2555 (or

the due date of your return to re-

2350 for an extension of time to file

come from a foreign source. Am

2555-EZ) with a Schedule C or

quest an extension of time to file.

to a date 30 days beyond the date

I required to file a U.S. income

Form W-2 attached constitute a

Form 2350 is a special form for

tax return?

you expect to qualify under either

return?

those U.S. citizens or residents

the bona fide residence test or the

abroad who expect to qualify for the

physical presence test, then file

Yes. All U.S. citizens and resident

No. The Form 2555 (or 2555-EZ),

foreign earned income exclusion or

your return reflecting the exclusion

aliens are subject to U.S. tax on

Schedule C, and Form W-2 are

the housing exclusion or deduction

of foreign earned income. This al-

their worldwide income. If you paid

merely attachments and do not re-

under either the bona fide resi-

lows you to file only once and

taxes to a foreign government on

lieve you of the requirement to file a

dence test or physical presence

saves you from paying the tax and

income from sources outside the

Form 1040 to show the sources of

test and would like to have an ex-

waiting for a refund. However, in-

United States, you may be able to

income reported and the exclu-

tension of time to delay filing until

terest is charged on any tax due on

claim a foreign tax credit against

sions or deductions claimed.

after they have qualified.

the postponed tax return, but inter-

your U.S. income tax liability for the

est is not paid on refunds paid

b) If the extension is granted,

foreign taxes paid. Form 1116 is

11) On Form 2350, Application

within 45 days after the return is

you should file your return after you

used to figure the allowable credit.

for Extension of Time To File

filed. (If you have moving expenses

qualify, but by the approved exten-

U.S. Income Tax Return, I stated

6) I am a U.S. citizen who has

that are for services performed in

sion date.

that I would qualify for the for-

retired, and I expect to remain in

two years, you can be granted an

c) You must file your Form 1040

eign earned income exclusion

a foreign country. Do I have any

extension to 90 days beyond the

with Form 2555 (or Form 2555-EZ).

under the physical presence

further U.S. tax obligations?

close of the year following the year

test. If I qualify under the bona

of first arrival in the foreign coun-

3) My entire income qualifies for

fide residence test, can I file my

Your U.S. tax obligation on your

the foreign earned income exclu-

try.)

return on that basis?

income is the same as that of a

sion. Must I file a tax return?

retired person living in the United

13) I am a U.S. citizen. I have

Yes. You can claim the foreign

States. (See the discussion on fil-

lived abroad for a number of

Generally, yes. Every U.S. citizen

earned income exclusion and the

ing requirements in chapter 1 of

years and recently realized that I

or resident who receives income

foreign housing exclusion or de-

should have been filing U.S. in-

this publication.)

must file a U.S. income tax return

duction under either test as long as

come tax returns. How do I cor-

unless total income without regard

you meet the requirements. You

rect this oversight in not having

7) I have been a bona fide resi-

to the foreign earned income exclu-

are not bound by the test indicated

dent of a foreign country for over

filed returns for these years?

sion is below an amount based on

in the application for extension of

5 years. Is it necessary for me to

filing status. The income levels for

time. You must be sure, however,

pay estimated tax?

File the late returns as soon as pos-

filing purposes are discussed

that you file the Form 1040 by the

sible, stating your reason for filing

under Filing Requirements in chap-

date approved on Form 2350,

U.S. taxpayers overseas have the

late. For advice on filing the re-

ter 1.

since a return filed after that date

same requirements for paying esti-

turns, you should contact either an

may be subject to a failure to file

mated tax as those in the United

Internal Revenue Service repre-

4) I was sent abroad by my com-

penalty.

States. See the discussion under

sentative in one of the three over-

pany in November of last year. I

Estimated Tax in chapter 1.

If you will not qualify under the

seas offices listed on page 37, or

plan to secure an extension of

Overseas taxpayers should not

bona fide residence test until a date

an Internal Revenue official who

time on Form 2350 to file my tax

include in their estimated income

later than the extension granted

travels through your area (details

return for last year because I ex-

any income they receive that is, or

under the physical presence rule,

can be obtained from your nearest

pect to qualify for the foreign

earned income exclusion under

will be, exempt from U.S. taxation.

apply for a new extension to a date

U.S. consulate or Embassy). You

Publication 54 (2008)

Page 39

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 39

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