Frequently Asked Questions (FAQs) About International Individual Tax Matters

The IRS has put together a list of the most common questions they receive from US Citizens and Nonresidents living abroad about their US tax returns and rules.  Click on the heads to each section to go to the questions set forth below it.

General FAQs

1. I’m a U.S. citizen living and working outside of the United States for many years.  Do I still need to file a U.S. tax return?
2. I pay income tax in a foreign country.  Do I still have to file a U.S. income tax return even though I do not live in the United States?
3. What is the due date of a U.S. income tax return?
4. I just realized that I must file U.S. income tax returns for prior years.  How many years back do I have to file?
5. What is the status of my refund?
6. I have completed my tax return and I have a balance due. How do I pay the tax liability?
7. How can I get a transcript for current or previous years?
8. Now that I live overseas, how can I find a tax preparer?

Mailing Addresses

1. What is the correct mailing address to file a Form 1040 from overseas?
2. What is the correct mailing address to file a Form 1040NR?

Filing Status and Dependents

1. I am a U.S. citizen married to a nonresident alien. What is my filing status and can I claim an exemption for my foreign spouse?
2. I am a U.S. taxpayer residing abroad and I have a child who was born abroad. Can I claim my child as a dependent on my tax return?

Exchange Rates

1. When converting foreign currency to U.S. currency for purposes of filing a U.S. tax return, what foreign currency exchange rate should I use?

Notices

1. I took a position on my income tax return based on a U.S. income tax treaty. However, I received a letter indicating that my treaty-based position is invalid.  What can I do?
2. What is the meaning of a notice I recently received from the IRS that says I owe a whole lot more money for my 2005 tax return that I already filed?
3. How does the U.S. Internal Revenue Service (IRS) calculate interest and penalties?

Green Card Holders

1. What are my responsibilities as a green card holder if I have been absent from the United States for a long period of time?
2. I was a long-term resident of the United States prior to surrendering my green card. What is my U.S. tax filing obligation?
3. I am a green card holder.  May I claim residence in a foreign country under a tax treaty and obtain benefits under the tax treaty?

Foreign Earned Income Exclusion (Form 2555)

1. What deductions and/or credits am I allowed on my U.S. income tax return as a U.S. citizen living and working in a foreign country?
2. If my foreign earned income is below the foreign earned income exclusion threshold amount, am I still required to file a U.S. individual income tax return?
3. Do I need to have a tax home in a foreign country in order to claim the foreign earned income exclusion?
4. I have been working abroad for many years and claiming the Foreign Earned Income Exclusion using a Form 2555. I claim the Physical Presence test every year. Can you explain the difference between the so-called Physical Presence test and the Bona Fide Residence test?
5. Can foreign pensions be excluded on Form 2555?
6. What is the difference between Forms 2555 and 2555-EZ?
7. When am I required to use of the Foreign Earned Income Tax Worksheet when calculating my U.S. income tax?

Expatriation: Former Citizens and Long-term Permanent Residents

1. What is the purpose of Form 8854, Initial and Annual Expatriation Information Statement, and where can I get the form?
2. I terminated my U.S. resident alien status (gave up my green card) and was told that I may still need to furnish some documents to the IRS. Can you please explain?

Application for IRS Individual Tax Identification Number (ITIN) – Form W-7

1. Who needs to apply for an Individual Taxpayer Identification Number (ITIN)?
2. When and how do I apply for an Individual Taxpayer Identification Number (ITIN)?
3. I am a nonresident alien living in a foreign country and I will receive U.S. source royalty income.  Do I need to obtain an ITIN?
4. I am a nonresident alien in a foreign country. I was notified that I inherited some money in the United States. The executor requests that I provide a tax identification number. Is it sufficient to provide them with a foreign tax identification number?
5. I sent in an ITIN application with a Form W-7 and a notarized copy of my foreign passport. However, my application was not accepted due to the notarized copy. Why was the notarized copy not accepted?

Withholding on Income from U.S. Sources

1. What is the purpose of the Form W-8 BEN?
2. I am a US citizen residing abroad. I file my U.S. federal income tax return every year using my permanent foreign address. I just received a letter from my U.S. bank along with a Form W-8BEN. Does this form apply to me?
3. I’m a nonresident alien and received a Form 8288-A from the settlement title company or attorney who handled the sale of real property located in the United States that I owned for many years. Why did I get it and how does it affect me?
4. As a nonresident alien, do I need to report gambling winnings from the United States? If so, how do I report such winnings?

Reporting of Foreign Financial Accounts

1. I was reading the 1040 booklet in the section that covers Schedule B and I saw something that talks about reporting my Foreign Bank Accounts to the IRS. Is that something that affects me and is there something that I should do?

Top Frequently Asked Questions for U.S. Aliens and Citizens Living Abroad

1. I am a U.S. citizen. If I move to Canada to live and work there as a Canadian permanent resident, do I pay both U.S. and Canadian taxes?
2. Are the Canada Pension Plan and Canadian Old Age Security benefits taxable? If they are, please tell me where they should be entered on Form 1040.
3. What is foreign earned income? Is it income paid by a foreign person for working abroad, or is it income paid by a U.S. company for working abroad?
4. I live in a foreign country. How do I get a social security number for my dependent who qualifies for a social security card?
5. As a nonresident alien, I'm not subject to social security and Medicare withholding. My employer erroneously withheld these taxes from my pay. What should I do to get a refund of my social security and Medicare taxes?
6. Are nonresident alien students with F-1 or J-1 visas and employed by a U.S. company required to have federal income taxes withheld from their paychecks?
7. I am a U.S. citizen working for a U.S. firm in a foreign country. Are any of my wages or expenses tax deductible?
8. How do I know if the U.S. has an income tax treaty in force with another country?
9. Do I have to meet the 330-day physical presence test or have a valid working resident visa to be eligible for the foreign earned income exclusion?
10. Is there an Internet site with the exchange rates to convert foreign currencies to American dollars?

Need further help or explanations?  We have specialized in US Expatriation, International and Nonresident taxation for over 30 years. Email us at ddnelson@gmail.com or visit our websites at www.TaxMeLess.com or www.ExpatAttorneyCPA.com .  Skype: dondnelson