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

Form (and Instructions)

If you are a nonresident alien married to a

U.S. citizen or resident, and both you and your

Exemption From

1040X

Amended U.S. Individual Income

spouse choose to treat you as a resident, you

Tax Return

are a resident alien for tax purposes. For infor-

Social Security and

mation on making the choice, see the discussion

2555

Foreign Earned Income

Medicare Taxes

in chapter 1 under Nonresident Spouse Treated

2555 – EZ

Foreign Earned Income

as a Resident.

Exclusion

The United States may reach agreements with

Waiver of minimum time requirements. The

foreign countries to eliminate dual coverage and

See chapter 7 for information about getting

minimum time requirements for bona fide resi-

dual contributions (taxes) to social security sys-

these publications and forms.

dence and physical presence can be waived if

tems for the same work. See Binational Social

you must leave a foreign country because of

Security (Totalization) Agreements in chapter 2

war, civil unrest, or similar adverse conditions in

under Social Security and Medicare Taxes. As a

that country. This is fully explained at Waiver of

Who Qualifies for the

general rule, self-employed persons who are

Time Requirements under Exceptions to Tests,

subject to dual taxation will only be covered by

later.

Exclusions and the

the social security system of the country where

they reside. For more information on how any

Tax Home in

Deduction?

specific agreement affects self-employed per-

Foreign Country

sons, contact the United States Social Security

If you meet certain requirements, you may qual-

Administration, as discussed in chapter 2.

To qualify for the foreign earned income exclu-

ify for the foreign earned income and foreign

If your self-employment earnings should be

sion, the foreign housing exclusion, or the for-

housing exclusions and the foreign housing de-

exempt from foreign social security tax and sub-

eign housing deduction, your tax home must be

duction.

ject only to U.S. self-employment tax, you

in a foreign country throughout your period of

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

should request a certificate of coverage from the

bona fide residence or physical presence

the United States and you live abroad, you are

abroad. Bona fide residence and physical pres-

U. S. Social Security Administration, Office of

taxed on your worldwide income. However, you

ence are explained later.

International Programs. The certificate will es-

may qualify to exclude from income up to

tablish your exemption from the foreign social

$78,000 of your foreign earnings. In addition,

security tax.

you can exclude or deduct certain foreign hous-

Tax Home

ing amounts. See Foreign Earned Income Ex-

Your tax home is the general area of your main

clusion and Foreign Housing Exclusion and

place of business, employment, or post of duty,

Deduction, later.

regardless of where you maintain your family

You may also be entitled to exclude from

home. Your tax home is the place where you are

income the value of meals and lodging provided

permanently or indefinitely engaged to work as

to you by your employer. See Exclusion of Meals

an employee or self-employed individual. Hav-

and Lodging, later.

ing a “tax home” in a given location does not

necessarily mean that the given location is your

residence or domicile for tax purposes.

Foreign Earned

Requirements

If you do not have a regular or main place of

business because of the nature of your work,

Income and

your tax home may be the place where you

To claim the foreign earned income exclusion,

regularly live. If you have neither a regular or

the foreign housing exclusion, or the foreign

main place of business nor a place where you

Housing:

housing deduction, you must satisfy all three of

regularly live, you are considered an itinerant

the following requirements.

and your tax home is wherever you work.

Exclusion –

You are not considered to have a tax home in

1) Your tax home must be in a foreign coun-

a foreign country for any period in which your

try.

abode is in the United States. However, your

Deduction

2) You must have foreign earned income.

abode is not necessarily in the United States

while you are temporarily in the United States.

3) You must be either:

Your abode is also not necessarily in the United

•

States merely because you maintain a dwelling

A U.S. citizen who is a bona fide resident

Topics

in the United States, whether or not your spouse

of a foreign country or countries for an

This chapter discusses:

or dependents use the dwelling.

uninterrupted period that includes an en-

tire tax year,

“Abode” has been variously defined as one’s

•

Who qualifies for the foreign earned in-

•

home, habitation, residence, domicile, or place

A U.S resident alien who is a citizen or

come exclusion, the foreign housing exclu-

of dwelling. It does not mean your principal place

national of a country with which the United

sion, and the foreign housing deduction,

of business. “Abode” has a domestic rather than

States has an income tax treaty in effect

•

a vocational meaning and does not mean the

How to figure the foreign earned income

and who is a bona fide resident of a for-

same as “tax home.” The location of your abode

exclusion, and

eign country or countries for an uninter-

often will depend on where you maintain your

•

rupted period that includes an entire tax

How to figure the foreign housing exclu-

economic, family, and personal ties.

year, or

sion and the foreign housing deduction.

•

A U.S. citizen or a U.S. resident alien who

Example 1. You are employed on an off-

is physically present in a foreign country or

shore oil rig in the territorial waters of a foreign

Useful Items

countries for at least 330 full days during

country and work a 28-day on/28-day off sched-

You may want to see:

any period of 12 consecutive months.

ule. You return to your family residence in the

United States during your off periods. You are

Publication

See Publication 519 to find out if you qualify

considered to have an abode in the United

as a U.S. resident alien for tax purposes and

States and do not satisfy the tax home test in the

519

U.S. Tax Guide for Aliens

whether you keep that alien status when you

foreign country. You cannot claim either of the

596

Earned Income Credit

temporarily work abroad.

exclusions or the housing deduction.

Chapter 4 Foreign Earned Income and Housing: Exclusion – Deduction

Page 11

Publication 54 - Tax Guide For U.s. Citizens And U.s. Citizens Abroad - 2001 Page 11

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