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.

References:

• Publication 17, Your Federal Income Tax

I will be vacationing overseas on April 15. Since I will be out of the country, do I qualify for the automatic 2-month extension?

No. You are allowed an automatic 2-month extension (until June 15, if you use a calendar year) to file your return and pay any federal income tax that is due if you are a U.S. citizen or resident, only if:

You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or

you are in the military or naval service on duty outside the United States and Puerto Rico

Vacationing is a temporary status that does not meet the criteria for the automatic 2-month extension.

References:

• Form 4868 (PDF) , Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

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.

References:

• Publication 519, U.S. Tax Guide for Aliens
• Publication 575, Pension and Annuity Income

Are Social Security benefits received from Austria or Germany treated like U.S. Social Security benefits? If not, how are they reported?

Austrian social security benefits paid to a U.S. resident or a citizen of the US are taxable only by Austria and not by the United States. These benefits should not be reported . German social security benefits paid to a U.S. resident are taxable, if at all, only by the United States. These German benefits are treated like U.S. social security benefits. Thus, under section 86 of the Internal Revenue Code, the portion of the benefits that is taxable will depend on your income level. If your total income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax.

References:

• Publication 915, Social Security and Equivalent Railroad Retirement Benefits

Where can I find the per diem rates for foreign countries?

The federal per diem rates for foreign locations (outside the continental United States, abbreviated as OCONUS, and including the per diem rates for Alaska, Hawaii, Puerto Rica, the Northern Mariana Islands, U. S. possessions, and all foreign locates) are published monthly in the Maximum Travel Per Diem Allowances for Foreign Areas. Your employer may have these rates available, or you can purchase the publication from the:

You can also access the federal per diem rates for CONUS localities on the Internet at http://www.policyworks.gov/perdiem . This website also provides a link to rates for localities OCONUS..

References:

• Revenue Procedure 2002-63 SEC 3.02
• Publication 1542, Per Diem Rates

I need to convert Canadian currency to U.S. dollars. How does the foreign currency exchange rate work?

Foreign currency needs to be translated into U.S. dollars to determine the amount of income (such as income from the sale of goods or services, dividends or interest) to report on a taxpayer's U.S. return and to determine gain or loss when foreign currency is disposed of. The proper translation rate depends on the item of income and whether the taxpayer is a cash or accrual method taxpayer.

. Dividends . Dividends are translated at the spot rate on the date received.

. Interest . Interest income that is not required to be accrued (because, for example, the taxpayer is an individual holding a debt instrument that does not have original issue discount) is translated at the spot rate on the date received. Interest income that is required to be accrued is translated at the average rate for each accrual period. When such interest is received the taxpayer will realize foreign currency gain or loss based on the difference in exchange rates used to accrue the interest and the spot rate on the date such interest is received. (A taxpayer may also realize foreign currency gain or loss on the principal when the instrument is sold or matures.)

. Payable and receivables . An accrual basis taxpayer may also realize foreign currency gain or loss with respect to a foreign currency denominated payable or receivable. Generally, foreign currency gain or loss is computed by reference to the change in exchange rates between the time the payable or receivable arises and when it is paid or received. For example, if an accrual basis taxpayer sells a product for L100 when L1= $1 with payment to occur in 90 days and receives payment of L100 when L1 = $1.20, the taxpayer will realize $20 ($120 - $100) of foreign currency gain. It should be noted that in certain circumstances, taxpayers may use spot rate conventions if consistent with the taxpayer method of financial accounting.

You can generally get the exchange rates from banks and U.S. Embassies. Other possible sources of exchange rate would be publications, such as the Wall Street Journal. If there is more than one exchange rate, use the one that most properly reflects your income.

References:

• Department of Commerce
• Federal Reserve Board

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.

References:

• Federal Reserve Board

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.

References:

• Publication 54, Tax guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514, Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 853, Foreign earned income exclusion - general

I have a bank account in a foreign country. Do I have to report the interest?

If you are a U.S. citizen or resident alien with investment income from sources outside the United States (foreign income), you must report all that income on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 or similar statement from the foreign payer.

You will report the income on Form 1040, Schedule B (PDF), Interest & Dividend Income. You may be required to Check the box "yes" on the bottom of Schedule B if you have a foreign bank account.

References:

• Tax Topic 403, Interest received
• Form 1040, Schedule A&B (PDF), (Schedule B) Interest and Dividend

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.

References:

• Publication 54, Tax guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514, Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 853, Foreign earned income exclusion - general

I am a foreign national and came to this country on June 30th of last year. I have a H-1 visa. What is my tax status regarding residency nonresident alien, or resident alien?

You were a dual status alien last year. As an H-1 visa holder in the U.S. for 183 days or more, you likely became a resident, for tax purposes, as of June 30th. For the part of the year you are a resident alien, you are taxed on income from all sources.

For the part of the year that you are not a resident alien, you are not taxed on income from sources outside the United States, unless the income is effectively connected with a trade or business in the United States.

Income from U.S. sources is taxable whether you receive it while a nonresident alien or a resident alien unless specifically exempt under the Internal Revenue Code or a tax treaty provision. Generally, tax treaty provisions apply only to the part of the year you were a nonresident and only if you are a resident for treaty purposes of a country that has a treaty with the United States.

For that part of the year that you are a nonresident, file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return. For that part of the year you are a resident, file Form 1040 (PDF) . Refer to Tax Topic 852 for dual-status information.

References:

• Publication 519, U.S. Tax Guide for Aliens
• Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return
• Instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return
• Tax Topic 852Dual-Staus Alien

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

References:

• 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.

References:

• Publication 1915 (PDF), Understanding Your IRS Individual Taxpayer Identification Number
• Publication 519, U.S. Tax Guide for Aliens
• Form W-7 (PDF), Application for IRS Individual Taxpayer Identification Number
• Tax Topic 851 , Resident and Non-Resident Aliens
• Tax Topic 852 , Dual Status Aliens

I am a foreign citizen and resident from the European Union. I plan to buy U.S. stocks, but what tax will I have to pay if I have earnings on stocks?

U.S. source dividend income is subject to 30% tax rate when paid to nonresident aliens. A lower rate may apply to residents of a member country with which the United States has an income tax treaty. The U.S. does not currently recognize the E.U. as a taxing authority.

References:

• Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• Publication 519, U.S. Tax Guide for Aliens
• Publication 901, U.S. Tax Treaties

I am a nonresident alien. Our broker withholds 30% tax on dividends. Can I get this tax back since I already owe tax in my residence country on overseas income?

Generally, this type of income paid to nonresident aliens is taxable at the 30% or lower treaty rate. If your country has a tax treaty with the U.S., you may have a reduced rate of tax. If that is the case, you should file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return, to claim a refund of federal income taxes withheld. To avoid future excess withholding, provide your broker with a completed Form W-8BEN (PDF) , Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding. You may be entitled to a credit against the tax you owe to your residence country for the U.S. tax that is withhold from your dividends.

References:

• Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• Publication 901, U.S. Tax Treaties
• Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return
• Instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return
• Form 8833 (PDF), Treaty Based Return Position Disclosure Under Section 6114 or 7701 (b)
• Form W-8BEN (PDF) , Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding

I am a foreign national and last year I changed my type of visa from F-1 student to H-1 work visa. Does my visa status change how I file my tax return or what forms I use?

It depends on whether or not you qualify as a resident alien. As a foreign national temporarily in the U.S. and now under an H-1 visa, you must file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return and Form 8843 (PDF), Statement for Exempt Individuals and Individuals with a Medical Condition (if you do not meet the substantial presence test). In order to file a Form 1040, Individual Tax Return, you must meet the substantial presence test. Please refer to Publication 519, U.S. Tax Guide for Aliens , for a detailed discussion of the Substantial Presence Test. You may also qualify to file as a dual status taxpayer for the year of your visa change. Refer toTax Topic 852 , for dual status information.

References:

• Publication 513, Tax Information for Visitors to the United States
• Publication 519, U.S. Tax Guide for Aliens
• Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return
• Instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return
• Form 8843 (PDF), Statement for Exempt Individuals and Individuals with a Medical Condition
• Tax Topic 851, Resident and nonresident aliens
• Tax Topic 852 , Dual Status Alien

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:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Tax Topic 853, Foreign Earned Income Exclusion - General
• Tax Topic 854, Foreign Earned Income Exclusion - who qualifies
• Tax Topic 855, Foreign Earned Income Exclusion - what qualifies

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:

• Publication 54, Tax guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 , Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF) , Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit

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:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514, Foreign Tax Credit for Individuals
• Publication 463, Travel, Entertainment, Gift and Car Expenses
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 514, Employee Business Expenses

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:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514, Foreign Tax Credit for Individuals
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 856, Foreign Tax Credit

How do I know if the U.S. has an income tax treaty with another country?

Publication 901, U.S. Tax Treaties , has information regarding United States tax treaties.

You can also locate the complete text of current treaties at http://www.irs.gov/businesses/corporations/article/0,,id=96739,00.html or use our search engine with keywords "income tax treaties."

References:

• Publication 901, U.S. Tax Treaties

How much money can I bring in to the U.S.?

There is no limit on the total amount of monetary instruments which may be brought into or taken out of the United States, nor is it illegal to do so. However, if you transport or cause to be transported (including by mail or other means) more than $10,000 in monetary instruments on any occasion into or out of the United States, or if you receive more than that amount, you must file Form 4790 (PDF), Report of International Transportation of Currency or Monetary Instruments with U.S. Customs (Currency & Foreign Transactions Reporting Act, 31 U.S.C. 1101, et seq.). Failure to comply can result in civil, criminal and/or forfeiture penalties.

Monetary instruments include U.S. or foreign coin in current circulation, currency, travelers checks in any form, money orders, and negotiable instruments or investment securities in bearer form. A transfer through normal banking procedures which does not involve the physical transportation of monetary instruments is not required to be reported.

References:

• Form 4790 (PDF), Report of International Transportation of Currency or Monetary Instruments with U.S. Customs (Currency & Foreign Transactions Reporting Act, 31 U.S.C. 1101, et seq.)