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1. Are Green Card holders considered to be resident aliens?
Yes
- if you have been lawfully admitted to the U.S. for permanent
residency you are considered to be a resident alien, even
if you are currently living outside of the U.S. Please see the Green Card page.
2. Who must file US Federal tax returns?
U.S. citizens and resident aliens (e.g. Green Card holders) are taxed on their world-wide income regardless of
where it is earned, paid, or received. But by living abroad you get certain tax benefits that are not available in the U.S.
Nonresident aliens (e.g. an individual without permanent residency in U.S.) are subject to tax only on their US source income.
3. Suppose I work for a foreign company?
If you work
for a foreign company, you still need to report your income, and it has to be in US Dollars. Ask the company you work at for
your total income in the calendar year. To convert it to US Dollars, you can use the average exchange rate for the year, which
you can find at: www.usembassy.org.uk/irs/irsxchng.htm. In addition to salary, if you are reimbursed or receive an allowance for certain living
expenses, you must include these amounts as income. Examples are cost of living allowances, overseas differential, housing
reimbursement or allowance, education reimbursement for your children's schooling, reimbursement of home leave expenses, payment
of foreign tax on your behalf, etc. You also need to report as income the fair market value of housing, a car, meals or other
benefits provided by your employer.
4. What is the foreign earned income exclusion?
You qualify for the foreign earned income exclusion (up to $87,600) if you are
a U.S. citizen or resident alien (e.g. Green Card holder), you have a tax home in a foreign country, and you meet either the
foreign residence test or the physical presence test.
It is important to keep track of the dates you are in the U.S. when you live overseas. These dates will help determine
if you qualify for the foreign income exclusion, and they must be listed on IRS Form 2555, Foreign Earned Income, when you
prepare your tax return. If you are traveling in the U.S. on business, you will be expected to report some amount of income
as earned in the U.S. on that trip.
5. Can housing expenses be excluded or deducted?
You should calculate all your housing expenses, including amounts paid for rent, repairs, utilities,
real and personal property insurance, furniture rental, residential parking fees, etc. These amounts will be used to calculate
the foreign housing exclusion or deduction. Note that some expenses are not considered deductible housing expenses, such as
mortgage interest payments, telephone charges, the cost of domestic help, purchased furniture, deductible taxes, or the cost
of improvements to property. Generally, if your income is below the maximum exclusion for the year (currently $87,600), housing
expenses are irrelevant because the housing exclusion or deduction will not benefit you.
6. What if I have not filed a U.S. tax return in many years?
If you have not filed a U.S. income tax return for one or more years you should
try to get up to date, starting with the last few years. If any income tax is due for any of those years it is a more urgent
matter and you should file returns as soon as you can.
7. Can I deduct foreign taxes paid?
You generally can choose to claim income taxes paid to a foreign country as a
credit against your U.S. income tax, or you can deduct them as an itemized deduction. If you elect to take the foreign earned
income exclusion (discussed above), the credit is reduced.
8. When
is my tax return due?
For most people it is April 15th, but for U.S. citizens living
abroad or resident aliens (e.g. Green Card holders) an automatic extension is given to June 15th. However, interest on any
balance due to the IRS will be charged from April 15th.
9. Where do
I file my US Federal tax return?
Your tax return should be mailed to
Internal
Revenue Service Center,
Austin, TX 73301-0215,
USA
 Click here for Common Issues for Expats making American tax returns.
Click here for International issues for US Citizens and Green Card holders making American tax returns. |
