U.S. Tax Preparation Worldwide   James Maertin CPA

 
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Tax Guide 

IRS Tax Law Changes

Americans Abroad

Capital Gains, Interest and Dividends

Deductions

Dependents

Education Credits, Scholarships

Foreign Bank Reporting

Foreign Nationals

Social Security, Medicare, Self Employment Tax

State Taxes

Tax Deadlines, Extensions, Late Payments, Estimated Tax

Tax Resident, Nonresident, Dual Status

Other Topics

U.S. Citizens and Resident Aliens Abroad


To get started, please fill out a tax questionnaire.  

 

If you are a U.S. citizen or resident alien, your worldwide income is generally subject to U.S. income tax, regardless of where you live, however you are generally allowed the same deductions as citizens and residents living in the United States.  One notable exception is that you can no longer deduct foreign property tax as an itemized deduction. You must file a U.S. income tax return each year, unless you don't meet the minimum filing requirements You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31). 

 

Your U.S. tax can generally be reduced or eliminated by the: 

The foreign earned income exclusion may be available if your tax home was in a foreign country, you have foreign earned income, and you meet either the:

Note:  In general, you cannot claim a foreign tax credit or foreign earned income exclusion on the portion of your wages generated during business trips to the U.S.  Any income earned while working in the U.S. is subject to U.S. tax. 

 

Meeting the physical presence test and determining your maximum foreign earned income exclusion  

Bona fide foreign residency  

If you don't meet the physical presence test or the bona fide resident test

Tax Treaties

 

Regular U.S. tax law generally eliminates double taxation by way of the foreign earned income exclusion and the foreign tax credit.  All tax treaties contain a saving clause which preserves the right of the US to tax its citizens and residents as if no tax treaty were in effect. However, the saving clause usually provides exceptions and it is only those exceptions that you can get a treaty benefit from.  For more information, please see Tax Treaties for Americans Abroad

 

Report of Foreign Bank and Financial Accounts (FBAR)

 

If you are a U.S. citizen, resident, or entity, and the aggregate value of all your foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported, you are required to file an FBAR (Form 114).  Please complete the tax questionnaire where you can enter your foreign accounts.    Effective July 1, 2013, the FBAR must be filed electronically through FinCENís BSA E-Filing System or through authorized tax software. The FBAR is not filed with a federal tax return.  It is due on April 15 of each tax year, but an automatic extension may be granted to October 15. 

 

For detailed information on FBAR filing requirements, please see Foreign account and foreign asset reporting

 

Statement of Specified Foreign Financial Assets (Form 8938)

 

As of tax year 2011, you may be required to file Form 8938 as part of your individual tax return if you meet foreign financial asset threshold requirements.  There is some overlap between the FBAR and Form 8938 as they may cover the same foreign financial accounts.  See Foreign account and foreign asset reporting

 

Self-Employed Workers


Generally, you will still be subject to self-employment tax (social security and Medicare taxes) even if you can exclude all of your earned income for income tax purposes.  However, if there is a social security (totalization) agreement between the U.S. and the country in which you work, and you are covered by social security there on your self-employment income, you might be exempt from U.S. self-employment tax.  Click here for social security agreements.  See also Social Security, Medicare and Self Employment Tax.

 

Can I contribute to a U.S. IRA Retirement Plan?

 

In order to contribute to an IRA, you must have earned income which is equal to or greater than your contribution.  If you exclude your entire income in a tax year, and also make an IRA contribution, you have to pay an excise tax on that contribution, and the tax will be assessed again in each future tax year until the IRA contribution has been withdrawn.  A way around this is to choose a 12-month period under the physical presence test that will not give you a full exclusion of your income, and therefore leave you with enough earned income to meet the requirements to contribute to an IRA.  Also, any days worked in the U.S. on your foreign assignment are not excludable, and so the income generated on those days may be enough to allow you to contribute to the IRA.  This is something I can figure out for you when I prepare your return.

 

Should I file jointly with my foreign spouse?

 

If you are married to a nonresident spouse, you can either file as (1) married filing separately, (2) head of household (if you qualify), or (3) married filing jointly.  To file as married filing jointly, you must elect to treat your spouse as a U.S. resident.  Keep in mind that he or she will have the same filing requirements of a U.S. resident alien (reporting worldwide income, foreign bank accounts, etc.).  He or she will need either a SSN or an ITIN.  In subsequent tax years, you and your spouse will have to continue to file a married filing joint tax return, or two married filing separately tax returns, until the election is ended or suspended.  I will let you know if I think this election will benefit you. 

 

Reporting Foreign Unearned Income
 

As a U.S. citizen or resident alien, you are taxed on worldwide income.  In addition to reporting earned income (such as from wages), you are also taxed on U.S. and foreign unearned income.  A foreign tax credit can offset some or all of the foreign taxes you paid on the income.

 

Green Card Holders

 

If you are a green card holder, these links may be helpful:
Maintaining permanent residence
International travel as a permanent resident

I-407, Record of Abandonment of Lawful Permanent Resident Status

IRS, Expatriation Tax

 

Expatriate Tax Deadlines

Federal Tax Withholding
If you are a U.S. citizen and your employer is withholding federal tax while you are working abroad, you can submit Form 673 to your employer if you expect to meet the bona fide residence test or physical presence test.

 

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