I am filing my U.S. tax return from the U.K. and am eligible for
the automatic 2-month extension. Do my forms need to be in Philadelphia by
June 15th, or do they just need to be postmarked by June 15th?
Your return must be postmarked by June 15.
6.2 Social Security Income: Canadian & Foreign Treaties
In addition to U.S. Social Security, I also receive British Social
Security. How should I report the British Social Security income?
Under the U.S. United Kingdom income tax treaty that entered into force
during 2003, social security income is taxable only by the country of residence.
If you are a resident of the U.S. for tax purposes, the income would be reported
and taxed in the U.S. You would not treat the income as U.S. social security
benefits. The entire amount would be taxable as pension and annuity income
on your U.S. tax return. Your "investment in the contract" for purposes of
determining the portion of each payment that is taxable would be $0. Under
the prior treaty with the UK, social security benefits were treated the same
way.
13.2 Aliens and U.S. Citizens Living Abroad: Exchange Rate
Is there an Internet site with the exchange rates to convert foreign
currencies to American dollars?
You can obtain currency exchange rates at the Federal
Reserve Board web sites.
13.3 Aliens and U.S. Citizens Living Abroad: Foreign Income & Foreign Income Exclusion
What is foreign earned income? Is it income from a foreign source
or income paid by a U.S. company while living abroad?
Earned income is pay for personal services performed, such as wages, salaries,
or professional fees. Foreign earned income is income you receive for services
you perform in a foreign country during a period when your tax home is in
a foreign country and during which you meet either the bona fide residence
test or the physical presence test. It does not matter whether earned income
is paid by a U.S. employer or a foreign employer. Foreign earned income does
not include the following amounts.
The previously excluded value of meals and lodging furnished for the convenience
of your employer.
Pension or annuity payments including social security benefits.
Payments by the U.S. Government, or any U.S. government agency or instrumentality,
to its employees.
Amounts included in your income because of your employer's contributions
to a nonexempt employee trust or to a nonqualifying annuity contract.
Recaptured unallowable moving expenses
Payments received after the end of the tax year following the tax year
in which you performed the services that earned the income.
Do I have to meet the 330-day presence test or have a valid working
resident visa to meet the requirement for foreign income exclusion?
To claim the foreign earned income exclusion, the foreign housing exclusion,
or the foreign housing deduction, you must have foreign earned income, your
tax home must be in a foreign country, and you must be one of the following:
A U.S. citizen who is a bona fide resident of a foreign country or countries
for an uninterrupted period that includes an entire tax year,
A U.S. resident alien who is a citizen or national of a country with which
the United States has an income tax treaty with a nondiscrimination article
in effect and who is a bona fide resident of a foreign country or countries
for an uninterrupted period that includes an entire tax year, or
A U.S. citizen or a U.S. resident alien who is physically present in
a foreign country or countries for at least 330 full days during any period
of 12 consecutive months.
U.S. tax law does not specifically require a foreign resident visa or work
visa for this purpose, but you (must/should) comply with the other country's
laws.
13.4 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - General
I live in a foreign country. How do I get a social security number
for my dependent who qualifies for a social security card?
Use Form SS-5-FS which may be obtained from the Social
Security Administration .
My spouse is a nonresident alien. How can I get a nonworking social
security number for her?
Each foreign person who does not have and cannot obtain a social security
number must use an IRS Individual Taxpayer Identification Number (ITIN) on
any U.S. tax return or refund claim filed. For additional information on ITINs
click on Individual
Taxpayer Identification Number.
13.7 Aliens and U.S. Citizens Living Abroad: U.S. Citizens Overseas
I am a U.S. citizen working abroad. Are my foreign earnings taxable?
A U.S. citizen or resident alien is generally subject to U.S. tax on total
worldwide income. However, if you are a United States citizen or a resident
alien who lives and works abroad, you may qualify to exclude all or part
of your foreign earned income. For specific information, refer to Tax Topic 853, Foreign Earned Income Exclusion - General.
If you would like more information on who qualifies for the exclusion,
refer to Tax Topic 854, Foreign Earned Income Exclusion - Who Qualifies.
For more information on what type of income qualifies for the exclusion, refer
to Tax Topic 855, Foreign Earned Income Exclusion - What Qualifies.
You may also wish to refer to Publication 54, Tax Guide for U.S. Citizens
and Resident Aliens Abroad, for a detailed discussion.
If the information you need relating to this topic is not addressed in
Publication 54, you may call the IRS International Tax Law hotline. The number
is (215) 516-2000. This is not a toll-free number.
I worked out of the country for one year. Do I have to pay U.S.
income tax?
As a U.S. citizen, your worldwide income generally is subject to U.S. income
tax, regardless of where you are living. However, you may qualify for the
foreign earned income exclusion, foreign housing exclusion or foreign housing
deduction, or the foreign tax credit. These tax benefits can reduce or eliminate
the U.S. tax you would otherwise have to pay on your foreign income.
I am a U.S. citizen working for a U.S. firm in a foreign country.
Is any part of my wages or expenses tax deductible?
U.S. citizens are taxed on their worldwide income, no matter where they
work. Some taxpayers may qualify for the foreign earned income exclusion,
foreign housing exclusion, or foreign housing deduction, if their tax home
is in a foreign country and they were either a bona fide resident of a foreign
country or countries for an uninterrupted period that includes an entire tax
year, or were physically present in a foreign country or countries for at
least 330 full days during any period of 12 consecutive months. If the taxpayer
is temporarily away from his or her tax home in the United States on business
(less than a year), the taxpayer may qualify to deduct away from home expenses
(for travel, meals, and lodging ) but would not qualify for the foreign earned
income exclusion.
I am a U.S. citizen living and working overseas. Can I have a tax
credit on my U.S. taxes for the taxes I pay to the foreign country?
The foreign tax credit is intended to relieve U.S. taxpayers of the double
tax burden when their foreign source income is taxed by both the United States
and the foreign country from which the income is derived.
Generally, only income taxes paid or accrued to a foreign country or a
U.S. possession qualify for the foreign tax credit. You can choose to take
the amount of any qualified foreign taxes paid or accrued during the year
as a foreign tax credit or as an itemized deduction.
To choose the foreign tax credit you must generally complete Form 1116 (PDF), Foreign Tax Credit and attach
it to your Form 1040. You may claim credit without attaching Form 1116 if
all of your foreign source income is passive income (such as interest and
dividends) reported to you on a payee statement and the total amount of qualifying
foreign taxes you paid or accrued is not more than $300 ($600 in the case
of a joint return) and is also reported to you on a payee statement. To choose
the deduction, you must itemize deductions on Schedule A, Form 1040.
You may not take either a credit or a deduction for taxes paid or accrued
on income you exclude under the foreign earned income exclusion or the foreign
housing exclusion. There is no double taxation in this situation because the
income is not subject to U.S. tax.
13.8 Aliens and U.S. Citizens Living Abroad: Other
