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

used by employees requesting

3) What types of foreign taxes

tax I paid on this salary to a for-

No. The IRS representatives are

employers to stop withholding

are deductible?

eign country during the tax

authorized only to answer tax

income tax from wages they ex-

year?

questions on U.S. federal income

pect to be excluded as income

Generally, real estate and foreign

tax. You should write your home

earned abroad?

income taxes are deductible as

No. You cannot take either a tax

state’s tax office for state tax infor-

itemized deductions. Foreign in-

credit or a tax deduction for foreign

mation and contact the tax officials

come taxes are deductible only if

Yes. Form 673 is a sample state-

income taxes paid on income that

of the country where you reside for

you do not claim the foreign tax

ment that can be used by individu-

is exempt from U.S. tax because of

information regarding their taxes.

credit. Foreign income taxes paid

als who expect to qualify for the

the foreign earned income exclu-

on excluded income are not de-

2) Can Internal Revenue Service

foreign earned income exclusion

sion.

ductible as an itemized deduction.

personnel recommend tax prac-

under the bona fide residence test

Note. Foreign income taxes are

titioners who prepare returns?

7) I am a U.S. citizen stationed

or the physical presence test. A

usually claimed under the credit

abroad. I made a personal loan

copy of this form is displayed in

provisions, if they apply, because

No. IRS employees are not permit-

to a nonresident alien who later

chapter 2. You can get this form on

this is more advantageous in most

ted to recommend tax practitioners

went bankrupt. Can I claim a bad

the Internet at

or by

cases.

who prepare income tax returns.

debt loss for this money?

writing to the Internal Revenue

Service, International Section, P.O.

4) I rented an apartment in the

3) I just filed my return. How long

Yes. The loss should be reported

B o x

9 2 0 ,

B e n s a l e m ,

P A

United Kingdom and had to pay

will it take to get my refund?

as a short-term capital loss on

19020-8518.

a local tax called a “general

Schedule D (Form 1040). You have

rates” tax, which is based on oc-

It generally takes about 6 weeks (3

the burden of proving the validity of

3) I am a U.S. citizen residing

cupancy of the apartment. Can I

weeks if you filed electronically) to

the loan, the subsequent bank-

overseas, and I receive dividend

deduct this tax as a foreign real

receive a refund.

ruptcy, and the recovery or

and interest income from U.S.

estate tax?

An error on the return will delay

nonrecovery from the loan.

sources from which tax is being

the refund. Among the most com-

withheld at a rate of 30%. How

No. This tax does not qualify as a

mon causes of delay in receiving

8) With which countries does the

can I have this situation cor-

real estate tax since it is levied on

United States have tax treaties?

refunds are unsigned returns and

rected?

the occupant of the premises rather

incorrect social security numbers.

than on the owner of the property.

Table 6-1, at the end of chapter 6,

File Form W-9 (indicating that you

4) I have not received my refund

lists those countries with which the

Scholarship and

are a U.S. citizen) with the with-

from last year’s return. Can I

United States has income tax trea-

Fellowship Grantees

holding agents who are paying you

claim the credit against this

ties.

the dividends and interest. This is

year’s tax?

1) I am a Fulbright grantee. What

their authority to stop withholding

9) I am a retired U.S. citizen living

documentation must I attach to

the 30% income tax at the source

No. That would cause problems to

in Europe. My only income is

my return?

on payments due you.

both years’ returns. If your last

from U.S. sources on which I pay

year’s refund is overdue, contact

U.S. taxes. I am taxed on the

a) There are no special tax

4) As a U.S. citizen receiving div-

the IRS and ask about the status of

same income in the foreign

forms for Fulbright grantees. File

idend and interest income from

the refund. If you are outside the

country where I reside. How do I

on a regular Form 1040.

the United States from which tax

United States, call or write the

avoid double taxation?

b) If you claim exemption as a

has been withheld, do I report

nearest IRS office. Otherwise, call

scholarship or fellowship grantee,

the net dividend and interest in-

or write your local U.S. IRS office. If

If you reside in a country that has

come on my return, or do I report

submit brochures and correspond-

you write to the IRS, be sure to

an income tax treaty with the

the gross amount and take credit

ence describing the grant and your

include your social security number

United States, the treaty will gener-

for the tax withheld?

duties.

(or individual taxpayer identifica-

ally contain provisions to eliminate

c) If you are located in a foreign

tion number) in the letter.

double taxation. Many treaties will

You must report the gross amount

country and wish to pay tax in for-

provide reduced rates for various

of the income received and take a

eign currency, you should submit a

5) I forgot to include interest in-

types of income. Treaties often pro-

certified statement showing that

tax credit for the tax withheld. This

come when I filed my return last

vide reciprocal credits in one coun-

you were a Fulbright grantee and at

is to your advantage since the tax

week. What should I do?

try for the tax paid to the other

least 70% of the grant was paid in

withheld is deducted in full from the

country. Nontreaty countries, de-

nonconvertible foreign currency.

tax due. It is also advisable to at-

To correct a mistake of this sort,

pending on their laws, may give the

tach a statement to your return ex-

you should prepare Form 1040X.

2) I taught and lectured abroad

same type of credit.

plaining this tax credit so there will

Include the omitted interest in-

under taxable grants. What ex-

If double taxation with a treaty

be no question as to the amount of

come, refigure the tax, and send

penses can I deduct?

country exists and you cannot re-

credit allowable.

the form as soon as possible along

solve the problem with the tax au-

with any additional tax due to the

You may be able to deduct your

Deductions

thorities of the foreign country, you

Internal Revenue Service Center

travel, meals, and lodging ex-

can contact the U.S. competent au-

where you filed your return. Use

penses if you are temporarily ab-

thority for assistance. See chapter

1) Can I claim a foreign tax credit

Form 1040X to correct an individ-

sent from your regular place of

6 for information on requesting

even though I do not itemize de-

ual Form 1040 income tax return

employment. For more information

ductions?

consideration.

filed for any year for which the pe-

about deducting travel, meals, and

riod of limitation has not expired

lodging expenses, get Publication

10) My total income after claim-

Yes. You can claim the foreign tax

(usually 3 years after the due date

463, Travel, Entertainment, Gift,

ing the foreign earned income

credit even though you do not item-

of the return filed, or 2 years after

and Car Expenses.

and housing exclusions con-

ize deductions.

the tax was paid, whichever is

sists of $5,000 taxable wages.

General Tax Questions

later).

Am I entitled to claim the earned

2) I had to pay customs duty on a

income credit?

few things I brought back with

6) I am a U.S. citizen and, be-

1) Will the Internal Revenue

me from Europe last summer.

cause I expect to qualify for the

Service representatives at the

No. If you claim the foreign earned

Can I include customs fees with

foreign earned income exclu-

Embassies answer questions

income exclusion, the foreign

my other deductible taxes?

sion, all my foreign income

about tax laws of our home state

housing exclusion, or the foreign

(which consists solely of salary)

and the laws of the foreign coun-

No. Customs duties, like federal

will be exempt from U.S. tax. Do I

housing deduction, you cannot

try where we reside as well as

excise taxes, are not deductible.

U.S. federal income tax laws?

get any tax benefit from income

claim the earned income credit.

Page 42

Publication 54 (2008)

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 42

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