Smith Carmichael Associés
73 rue de Vaugirard
Paris France 75006
Tel: 331 220.127.116.11
QUESTION: WHEN ARE U.S. TAX RETURNS DUE IF I LIVE OVERSEAS?
A: Generally U.S. tax returns are due on April 15th. However, if you are a U.S. citizen or resident and both your tax home and abode are outside the U.S. on April 15th, an automatic extension is granted to June 15th for the filing of the return. Please note if you owe tax, interest will be charged on any tax due starting April 15th.
QUESTION: MY SALARY IS LESS THAN THE $102,100 FOREIGN EARNED INCOME EXCLUSION. DO I STILL NEED TO FILE A RETURN?
A: Probably. Every U.S. citizen or Green Card Holder must file a tax return if certain income levels are reached. These income levels are figured without regard to the foreign earned income exclusion. In addition, the foreign earned income exclusion must be elected on a return which is timely filed.
QUESTION: I AM A RETIRED U.S. CITIZEN AND HAVE DECIDED TO REMAIN IN A FOREIGN COUNTRY. DO I STILL HAVE TO FILE U.S. TAX RETURNS?
Yes. Your filing requirement is the same as that of a retired person living in the US.
QUESTION: I AM A RETIRED US. CITIZEN LIVING IN EUROPE. MY ONLY INCOME IS FROM US. SOURCES, ON WHICH I PAY MY TAXES IN THE USA. I AM TAXED ON THE SAME INCOME IN THE FOREIGN COUNTRY WHERE I RESIDE. HOW DO I AVOID DOUBLE TAXATION?
If you reside in a country that has an income tax treaty with the United States, that country may allow a credit against the tax you pay them for the US tax paid on the US source income. Non-treaty countries, depending on their laws, may give the same type of credit.
QUESTION: HOW DO I QUALIFY FOR THE FOREIGN EARNED INCOME EXCLUSION?
You must have a tax home in a foreign country and you must be a U.S. citizen or resident alien who is a citizen of a country with which the U.S. has an income tax treaty. You must be a bona fide resident of a foreign country or countries for an entire tax year, or you must be physically present in a foreign country or countries for at least 330 days during a consecutive 12 month period.
QUESTION: I QUALIFY UNDER THE BONA FIDE RESIDENCE TEST. DOES MY FOREIGN EARNED INCOME INCLUDE MY US AND FOREIGN DIVIDENDS AND INTEREST?
No. The only income that is foreign earned income qualifying for the $102,100 exclusion is earned income from the performance of personal services abroad. Investment income is not earned income, but must be included on your 1040.
QUESTION: I AM A US CITIZEN MARRIED TO A NONRESIDENT ALIEN WHO HAS NO INCOME FROM US SOURCES. CAN I CLAIM AN EXEMPTION FOR MY SPOUSE ON MY US TAX RETURN?
Yes. You can claim an exemption for your nonresident alien spouse if your spouse has no income from sources within the US.
QUESTION: MY US EMPLOYER PAYS MY SALARY INTO MY US BANK ACCOUNT. IS THIS CONSIDERED US OR FOREIGN INCOME?
If you performed the services (work) outside the US, your salary is considered earned abroad.
QUESTION: HOW CAN I GET MY AMERICAN EMPLOYER TO STOP WITHHOLDING INCOME TAXES FROM MY WAGES WHILE I AM OVERSEAS?
File a Form 673 with your employer stating that Federal withholding taxes should be reduced because you expect to meet the bona fide residence or physical presence test.