Did you know the special tax rules for U.S. citizens and residents living abroad? Here are the most frequently asked questions and answers:
Question 1:
Do I have to file a U.S. income tax return when I am living in China?
Answer 1:
Yes, if your gross income from worldwide sources is over a certain amount. The filing requirements are generally the same whether you are in the U.S. or abroad. For 2011, you must generally file a U.S. income tax return if your gross income was at least the amount show below:
Filing Status Gross Income
Single $9,500
MFJ 19,000
MFS 3,700
HOH 12,200
Q.W.with child 15,300
* taxpayers are 65 and older, dependants,self-employment persons, alien taxpayers and other special individuals are not covered here.
Question 2:
When is my tax 2011 return due while I am in China?
Answer 2:
- April 17: Regular due date.
- June 15: Automatic 2-month extension is allowed for taxpayers living and
working outside of the U.S. and Puerto Rico.
- October 15: Extension of time to file the U.S. tax return until October 15th by
filing form 4868 before due date.
- December 15: Extension may be allowed for taxpayers abroad who have
special reasons and can not file their returns by Oct.15 by sending IRS a
letter in regards to specific reasons for additional time required.
- Jan.30th following the year of the regular due date: Extension of the time to
file until this date will be granted for taxpayers claiming benefits under IRS
Code Sec.911. An extension Form 2350 must be filed by the due date of the
return.
Please note that extension of time to file does not extend time to pay taxes. Interest will be charged from April 17 if you owe any taxes and have not fully paid by April 17. Late payment penalty will be assessed from June 15.
Question 3:
I have paid Chinese taxes on my salary income, will this help on my U.S. taxes?
Answer 3:
Yes. If your China earned income is not fully exclued from the U.S.tax, you can take either a credit or a deduction for Chinese tax you paid to reduce your U.S. tax. In most cases, it is to your advantage to take foreign tax payments as tax credits.
Question 4:
What tax benefits can I get from living and working abroad?
Answer 4:
You may claim Foreign Earned Income Exclusion (FEIE) and Foreign Housing Exclusion (FHE).
You will be able to exclude up to $92,900 from your foreign earned income for 2011, and you may exclude your foreign housing expense (except base amount and varied based on the city you live) in addition to your foreign earned income exclusion. You have to meet Bona Fide Resident (BFR) test or Phisical Present (PPT) test under IRS Code Sec. 911 to qualify for the above exclusions.
Question 5:
My entire income qualifies for the foreign earned income exclusion. Must I file an income tax return?
Answer 5:
Every U.S. citizen or resident must file a U.S. income tax return unless your gross income is below the income threshold required for filing shown above.
Question 6:
Can a resident alien of the United States qualify for an exclusion or deduction under the bona fide residence test or the physical presence test?
Answer 6:
Resident aliens of the United States can qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction if they meet the requirements of the physical presence test. Resident aliens who are citizens or nationals of a country with which the United States has an income tax treaty in effect can also qualify under the bona fide residence test. Statement or tax form to disclose the treaty position has to be attached to the tax return.
Question 7:
My company pays my foreign income tax on my foreign earnings. Is this also my taxable income?
Answer 7:
Yes. The foreign tax reimbursement should be included in your gross foreign earned income. Other non-cash benedits, such as eduction allowances, housing allowances, home leave etc. will all be considered as part of your wage income.
Question 8:
I am a U.S. citizen. I have lived abroad for a number of years and recently realized that I should have been filing U.S. income tax returns. How do I correct this oversight?
Answer 8:
File the late returns as soon as possible, and the result may be not that bad if you qualify for the exclusions or have enough foreign tax credits to offset your US tax liability..
Question 9:
I am a U.S. citizen and married to a Chinese girl who does not have a U.S. Green Card. Can I file U.S tax jointly with my wife?
Answer 9:
Yes. You can make an election and file jointly by attaching a statement to your joint tax return. More issues should be addressed by making the election. Please contact us for details.
More tax guidance for taxpayers living abroad in IRS Publication 54 and IRS website:http://www.irs.gov/faqs/content/0,,id=199953,00.html. |
