• Who must file US Federal tax returns?
   

• When is my tax return due?
   

• What if I work for a foreign company?
   

• What is the foreign earned income exclusion?
   

• Can my housing expenses be deducted or excluded?
   

• Can I deduct foreign taxes paid?

Who must file US Federal tax returns?

All U.S. citizens, as well as resident aliens and Green Card holders, are taxed on their worldwide income regardless of where it is earned or received.  As an expatriate, you receive certain tax benefits that are not available to those living in the U.S.  Any nonresident aliens, individuals without permanent residency in the U.S., are subject to tax only on their U.S. incomes.

  

When is my tax return due?

For all U.S. citizens, the filing date is April 15th, but for those U.S. citizens living abroad or any resident aliens, an extension is automatically given until June 15th.  Regardless of the fact that an extension is automatically given, interest will be charged on any balance that is due to the IRS starting on April 15th.

  


What if I work for a foreign company?

Those working for a foreign company must still report their income, and it must be done in U.S. Dollars.  You must know your total income for the current calendar year, this info can be received from the company you work for.  There are two ways available to you to convert your income to U.S. dollars: you can use the average exchange rate for the year from the US Embassy website, or you can use this website provided by Oanda which converts the currency for you.  If you are reimbursed or receive any allowances for living expenses, these amounts must be included as income as well; such as living allowances, housing reimbursement, education reimbursement for your children, reimbursement of home leave expenses, payment of foreign tax on your behalf, overseas differential, as well as any other expenses paid by your employer. Any housing, vehicles, meals, or benefits provided by your employer must also be included.

  

 

What is the foreign earned income exclusion?

Foreign earned income exclusion is available to you if you live and work outside of the United States.  You are allowed to exclude all or part of your foreign wages from US taxation. To qualify for the foreign earned income exclusion, you must meet either the foreign residence test or the physical presence test.  If you qualify, you will be eligible to exclude up to $91,400 annually in foreign wages. The amount of the foreign earned income exclusion changes each year.  It is important for you to keep track of the dates and times you are in the U.S. while living abroad.  These dates must be listed on the IRS Form 2555 for Foreign Earned Income.  While traveling in the U.S. on business, you are required to report income from the dates you were in the U.S. on that trip.

  

 

Can my housing expenses be deducted or excluded?

All housing expenses must be included in calculating the final foreign housing exclusion or deduction figure.  This includes amounts paid for rent, repairs, utilities, insurance, furniture rentals, parking fees, etc.  Many expenses are not considered deductible such as telephone charges, purchased furniture, property improvements and mortgage payments are just some examples.  In most cases, if your income is below the current maximum exclusion for the year of $91,400, housing expenses are irrelevant as housing exclusions or deductions will not benefit you.

  

 

Can I deduct foreign taxes paid?

You may choose to claim income taxes paid to a foreign country as credits against your U.S. income tax, or you can deduct them as an itemized deduction.  If you choose to take the foreign earned income exclusion, this credit is reduced.

  
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