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

nada, or Mexico for some part of the calendar

Items Related to

year in which your tax year begins.

Social security number. You must include

Excluded Income

on your return the social security number of

each dependent for whom you claim an exemp-

U.S. citizens and resident aliens living outside

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

the United States generally are allowed the

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

Exemptions,

same deductions as citizens and residents living

consulate outside the United States. You must

in the United States.

provide original or certified copies of documents

If you choose to exclude foreign earned in-

to verify the dependent’s age, identity, and citi-

Deductions, and

come or housing amounts, you cannot deduct,

zenship and complete Form SS – 5, Application

exclude, or claim a credit for any item that can

for Social Security Card.

be allocated to or charged against the excluded

Credits

You do not need an SSN for a child who was

amounts. This includes any expenses, losses,

born in 2001 and died in 2001. Atach a copy of

and other normally deductible items that are

the child’s birth certificate to your tax return.

allocable to the excluded income. You can de-

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

duct only those expenses connected with earn-

Topics

1040 or Form 1040A.

ing includible income.

If your dependent is a nonresident alien who

This chapter discusses:

These rules apply only to items definitely

is not eligible to get a social security number,

related to the excluded earned income and they

you must list the dependent’s individual tax-

•

The rules concerning items related to ex-

do not apply to other items that are not definitely

payer identification number (ITIN) instead of an

cluded income,

related to any particular type of gross income.

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

•

These rules do not apply to items such as:

the IRS. It usually takes 30 days to get an ITIN.

Exemptions,

•

Enter your dependent’s ITIN wherever an SSN

•

Personal exemptions,

Contributions to a foreign charitable or-

is requested on your tax return.

•

ganization,

Qualified retirement contributions,

Children. Children usually are citizens or

•

Moving expenses,

Alimony payments,

residents of the same country as their parents. If

•

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

Contributions to individual retirement ar-

Charitable contributions,

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

rangements (IRAs),

•

Medical expenses,

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

•

Taxes of foreign countries and U.S. pos-

•

resident alien, the child was born in a foreign

Mortgage interest, or

sessions, and

country, and the child lives abroad with the other

•

Real estate taxes on your personal resi-

•

parent.

How to report deductions.

dence.

If you are a U.S. citizen living abroad and

have a legally adopted child who is not a U.S.

Useful Items

For purposes of these rules, your housing

citizen or resident, you can claim an exemption

deduction is not treated as allocable to your

for the child as a dependent if your home is the

You may want to see:

excluded income, but the deduction for self-em-

child’s main home and the child is a member of

ployment tax is.

your household for your entire tax year.

Publication

If you receive foreign earned income in a tax

More information. For more information

year after the year in which you earned it, you

501

Exemptions, Standard Deduction,

about exemptions, see Publication 501.

may have to file an amended return for the

and Filing Information

earlier year to properly adjust the amounts of

514

Foreign Tax Credit for Individuals

deductions, credits, or exclusions allocable to

your foreign earned income and housing exclu-

521

Moving Expenses

Contributions to

sions.

523

Selling Your Home

Foreign Charitable

Example. If you excluded all of your

590

Individual Retirement

$76,000 foreign earned income in 2000, you

Organizations

Arrangements (IRAs)

would not have been able to claim any deduc-

597

Information on the United

tions allocable to that excluded income. If you

If you make contributions directly to a foreign

States – Canada Income Tax

then receive a bonus of $10,000 in 2001 for work

church or other foreign charitable organization,

you did abroad in 2000, you cannot exclude it

Treaty

you generally cannot deduct them. Exceptions

because it exceeds the foreign earned income

are explained under Canadian, Israeli, and Mex-

exclusion limit in effect for 2000. (You have no

Form (and Instructions)

ican organizations, later.

housing exclusion.) But, you can file an

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

1116

Foreign Tax Credit (Individual,

amended return for 2000 to claim the $1,163 of

ganization that transfers funds to a charitable

Estate, Trust, or Nonresident Alien

your allocable deductions that are now allowa-

foreign organization if the U.S. organization con-

Individual)

ble ($10,000 included foreign earned income

trols the use of the funds by the foreign organi-

over $86,000 total foreign earned income).

2106

Employee Business Expenses

zation, or if the foreign organization is just an

administrative arm of the U.S. organization.

2555

Foreign Earned Income

Canadian, Israeli, and Mexican organiza-

2555 – EZ

Foreign Earned Income

Exemptions

tions. Under income tax treaties, you can de-

Exclusion

duct contributions to certain Canadian, Israeli,

3903

Moving Expenses

You can claim an exemption for your nonresi-

and Mexican charitable organizations. These or-

dent alien spouse on your separate return, pro-

ganizations must meet the qualifications that a

Schedule A (Form 1040)

Itemized

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

U.S. charitable organization must meet under

Deductions

tax purposes and is not the dependent of an-

U.S. tax law. The organization can tell you

Schedule C (Form 1040)

Profit or Loss

other U.S. taxpayer.

whether it qualifies. If you are unable to get this

From Business

You can also claim exemptions for depen-

information from the organization itself, contact

dents who qualify under all the dependency

IRS at the address below.

See chapter 7 for information about getting

tests. The dependent must be a U.S. citizen or

You cannot deduct more than the percent-

these publications and forms.

national or a resident of the United States, Ca-

age limit on charitable contributions applied to

Page 28

Chapter 5 Exemptions, Deductions, and Credits

Publication 54 - Tax Guide For U.s. Citizens And U.s. Citizens Abroad - 2001 Page 28

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