Yes, as long as your 2018 income was over $12,000 ($13,600 65 or older) for single tax payers and $24,000 ($25,300 one spouse >65; $26,600 both spouses >65) for married filing jointly. If your tax filing status is married filing separately the income threshold is $5. If your tax filing status is head of household the income threshold is $18,000 ($19,600 65 or older) and $24,000 if you are a qualifying widow(er) with dependent child ($25,300 65 or older). If you are a US citizen or resident alien, the rules for filing income, estate and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad.
Your worldwide income is subject to US income tax, regardless of where you reside. However, there are special benefits (foreign earned income exclusion, foreign tax credit) that US citizens and resident aliens abroad can take advantage of as long as certain requirements are met.
June 15 – If you are a US citizen or resident alien residing overseas on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. However, please note that you will be charged interest on payments made after April 15 but will not receive a failure to file or failure to pay penalty. It is best to make all payments by April 15.
To use the automatic extension, you must attach a statement to your return explaining why you qualified (living and working abroad or in military or naval service) for the extension.
October 15 – If you are unable to file your return by June 15 (or don’t meet certain requirements for the foreign earned income exclusion), you can request an additional extension by filing form 4868 before June 15.
Please note that any tax payments due made after June 15 will be subject to both interest charges and failure to pay penalties.
Yes, these items are considered to be included in gross income as long as they are NOT for the convenience of the employer.
Lodging – The fair market value should be included unless the employee is required to accept such lodging on the business premises of his employer as a condition of employment Meals – The fair market value should be included unless the meals are furnished on the business premises and for the convenience of the employer.
Automobiles – The fair market value (based on one of the 3 automobile valuation rules as published by the IRS) should be included unless the vehicle is used exclusively for business use and substantiation requirements are met.
If an employer-provided vehicle is used for both business and personal purposes, substantiated business use is not taxable to the employee. Personal use is taxable to the employee as wages.
Personal use includes commuting between residence and work station, vacation use, weekend use and use by spouse or dependents.
Tax year 2018:
The Tax Cuts and Jobs Act that was passed in December 2017 eliminated this deduction. If there's any silver lining, it's that many of the provisions of the TCJA are not permanent. The moving expense deduction disappears from tax year 2018 through tax year 2025, but it's scheduled to come back at that time unless Congress intervenes to eliminate it permanently.
Tax year 2017 and before:
If you moved to a new home because of your job or business, you may be able to deduct the expenses of your move. To be deductible, the moving expenses must have been paid or incurred in connection with starting work at a new job location. When your new place of work is in a foreign country, your moving expenses are directly connected with the income earned in that foreign country.
If all or part of the income that you earn at the new location is excluded under the foreign earned income exclusion or the housing exclusion, the part of your moving expense that is allocable to the excluded income is not deductible.
If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Taken as a deduction, foreign income taxes reduce your U.S. taxable income. Taken as a credit, foreign income taxes reduce your U.S. tax liability.
In most cases, it is to your advantage to take foreign income taxes as a tax credit. Once you choose to exclude either foreign earned income or foreign housing costs, you cannot take a foreign tax credit for taxes on income you can exclude. If you do take the credit, one or both of the choices may be considered revoked.
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation ($91,500 for 2010, $92,900 for 2011, $95,100 for 2012, $97,600 for 2013, $99,200 for 2014, $100,800 for 2015, $101,300 for 2016, $102,100 for 2017, $104,100 for 2018). In addition, you can exclude or deduct certain foreign housing amounts.
If you are a self-employed U.S. citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad. The self-employment tax is a social security and Medicare tax on net earnings from self-employment. You must pay self-employment tax if your net earnings from self-employment are at least $400.
Nonresident aliens are not subject to self-employment tax. However, self-employment income you receive while you are a resident alien is subject to self-employment tax even if it was paid for services you performed as a nonresident alien. You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that is exempt from income tax because of the foreign earned income exclusion.
Form 1116, Foreign Tax Credit
Form 2555, Foreign Earned Income Exclusion
Form 6251, Alternative Minimum Tax – Individuals
Form 4868, Application of Automatic Extension of Time to File
FinCEN form 114 (formerly TDF 90-22.1), Report of Foreign Bank and Financial Accounts
Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts
Form 5471, Information Return of US Persons with Respect to Certain Foreign Corporations
Form 8938, Statement of Specified Foreign Financial Assets
Tax year 2018:
Starting in the 2018 tax year, personal and tax exemptions are suspended until 2025.
Tax year 2017 and before:
You are allowed one exemption for each person you can claim as a dependent. You can claim an exemption for a dependent even if your dependent files a return. The term “dependent” mean a qualifying child or qualifying relative as indicated by the IRS guidelines. Please note that you cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
Yes, depending on the tax payer’s situation they can choose to use the standard or itemized deduction. However, please note that taxpayers cannot deduct foreign sales taxes or value-added-taxes. Also, non-resident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods are not eligible for the standard deduction.
Meeting these tests allows the taxpayer to take the Foreign Earned Income Exclusion, which could tremendously help lower the taxpayer’s yearend tax liability.
Physical Presence Test - You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. The 330 qualifying days do not have to be consecutive. The physical presence test applies to both U.S. citizens and resident aliens.
Bona fide Resident Test - You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. You can use the bona fide residence test to qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction only if you are either a US citizen, or a US resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect.
You must make estimated tax payments for the current tax year if both of the following apply:
● You expect to owe at least $1,000 in tax for the current tax year
● You expect your withholding and credits to be less than the smaller of:
◊ 90% of the tax to be shown on your current year’s tax return, or
◊ 100% of the tax shown on your prior year’s tax return
Individuals aren’t required to file their tax returns electronically but most tax return preparers are required to use the IRS e-file system. Individual’s choosing to file a paper return must file the return themselves (the preparer can not mail the return for them). Also, they need to provide a written notice to the preparer stating their decision and also stating they were not influenced by the tax preparer to not e-file. The preparer is obligated to explain the law and the benefits of e-filing and also file form 8948 (Preparer explanation for not filing electronically) and attach to the tax return.
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly by filing the FBAR (Foreign Bank Account Report FinCEN 114) with the BSA E-file System.
US citizens and residents with specified foreign financial assets with an aggregate value exceeding a certain threshold ($50,000 for unmarried taxpayers living in the United States, $200,000 for unmarried taxpayers living outside the United States) must report them to the IRS on Form 8938 (Statement of Specified Foreign Financial Assets), attached to their federal income tax return. The Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file the FBAR (Foreign Bank Account Report FinCEN 114).