Publication 54 |
2001 Tax Year |
Introduction
This publication discusses special tax rules for U.S. citizens and
resident aliens who work abroad or who have income earned in foreign
countries. As a U.S. citizen or resident alien, your worldwide income
generally is subject to U.S. income tax, regardless of where you are
living. Also, you are subject to the same income tax filing
requirements that apply to U.S. citizens or residents living in the
United States.
Filing information.
Chapter 1 contains general filing information, such as:
- Whether you must file a U.S. tax return,
- When and where to file your return,
- How to report your income if it is paid in foreign
currency,
- How to determine your filing status if your spouse is a
nonresident alien, and
- Whether you must pay estimated tax.
If you own stock in a foreign corporation or have an interest
in a foreign partnership, you may have to file information returns.
See the instructions under Information Returns and Reports
in chapter 1.
Withholding tax.
Chapter 2 discusses the withholding of income, social security, and
Medicare taxes from the pay of U.S. citizens and resident aliens. It
will help you determine if the correct amounts of taxes are being
withheld and how to adjust your withholding if too much or too little
is being withheld.
Self-employment tax.
Chapter 3 discusses who must pay self-employment tax.
Foreign earned income exclusion and housing exclusion and
deduction.
Chapter 4 discusses income tax benefits that apply if you meet
certain requirements while living abroad. You may qualify to treat up
to $78,000 of your income as not taxable by the United States. You may
also be able to either deduct part of your housing expenses from your
income or treat a limited amount of income used for housing expenses
as not taxable by the United States. These benefits are called the
foreign earned income exclusion and the foreign housing deduction and
exclusion.
To qualify for either of the exclusions or the deduction, you must
have a tax home in a foreign country and earn income from personal
services performed in a foreign country. These rules are explained in
chapter 4.
If you are going to exclude or deduct your income as discussed
above, you must file Form 2555 or Form 2555-EZ. You will find an
example with filled-in Forms 2555 and 2555-EZ in this
publication.
Exemptions, deductions, and credits.
Chapter 5 discusses exemptions, deductions, and credits you may be
able to claim on your return. These are generally the same as if you
were living in the United States. However, if you choose to exclude
foreign earned income or housing amounts, you cannot deduct or exclude
any item or take a credit for any item that is related to the amounts
you exclude. Among the topics discussed in chapter 5 are:
- Exemptions you can claim,
- Contributions you can deduct,
- Moving expenses you can deduct, and
- Foreign taxes you can either deduct or take a credit
for.
Tax treaty benefits.
Chapter 6 discusses some benefits that are common to most tax
treaties and explains how to get help if you think you are not getting
a treaty benefit to which you are entitled. It also explains how to
get copies of tax treaties.
How to get tax help.
Chapter 7 is an explanation of how to get information and
assistance from the IRS.
Questions and answers.
Frequently asked questions and answers to those questions are
presented in the back of the publication.
Comments and suggestions.
We welcome your comments about this publication and your
suggestions for future editions.
You can e-mail us while visiting our web site at
www.irs.gov.
You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be
helpful if you would include your daytime phone number, including the
area code, in your correspondence.
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