Did you live or work abroad or receive income from foreign sources during the year? If you are a U.S. citizen or resident, you must report income from all sources within and outside of the U.S. The rules for filing income tax returns are generally the same whether you’re living in the U.S. or abroad.
Here are seven tips from the IRS that U.S. taxpayers with foreign income should know:
- Report Worldwide Income. By law, U.S. citizens and resident aliens must report their worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.
- File Required Tax Forms. You may need to file Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file Fin CEN Form 114, Report of Foreign Bank and Financial Accounts. See IRS.gov for more information.
- Consider the Automatic Extension. If you’re living abroad and can’t file your return by the April 15 deadline, you may qualify for an automatic extension. You’ll then have additional time to file your U.S. income tax return.
- Review the Foreign Earned Income Exclusion. If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on wages earned outside the US and other foreign earned income. Each year the Foreign Income Exclusion amount changes. See your tax advisor for the current exclusion amount. For even more information, see instructions on Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion.
- Don’t Overlook Credits and Deductions. You may be able to take a tax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce the amount of taxes you must pay if both countries tax the same income.
- Get Tax Help Outside the U.S. The IRS has offices in Frankfurt, London, Paris, and Beijing. IRS staff at these offices can help you with tax filing issues and answer your tax questions.
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