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.
References:
I live in a foreign country. Where can I find local tax assistance and forms?
The IRS has a full-time permanent staff in 6 U.S. Embassies. These offices have
tax forms and publications, can help you with account problems, and answer your questions
about notices and bills. For more information about these offices, please refer to www.irs.gov under "Contact My Local Office."
In addition, most U.S. Embassies stock the more commonly used tax forms and publications,
and sponsor speaking tours by IRS employees during filing season.
I am a U.S. citizen and married a nonresident alien last year. At that time,
we filed an application with the Bureau of Citizenship and Immigration Services (BCIS,
formerly INS) for my spouse's adjustment of status. We plan to file married filing
jointly. Will I need to use Form 1040NR?
As a U.S. citizen, you cannot file Form 1040NR (PDF), U.S.
Nonresident Alien Income Tax Return. If you make an election to file a joint
return with your nonresident alien spouse (your spouse must, in turn, elect to be
taxed as U.S. resident), file Form 1040 (PDF), U.S. Individual
Income Tax Return (or Form 1040A (PDF) or Form 1040EZ (PDF) if otherwise applicable), and report both incomes from worldwide sources.
You will need to get an ITIN for your spouse. To apply for an ITIN, file Form W-7 (PDF), Application for IRS Individual Taxpayer Identification
Number.
References:
- Form 1040NR (PDF), U.S. Nonresident
Alien Income Tax Return
- Form 1040 (PDF), U.S. Individual Income
Tax Return
- Form W-7 (PDF), Application for IRS Individual
Taxpayer Identification Number
- Tax Topic 857, Individual Taxpayer Identification Number -
Form W-7
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.
References:
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.
References:
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.
References:
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