I am filing my U.S. tax return from the U.K. and am eligible for the automatic 2-month extension. Do my forms need to be in Philadelphia by June 15th, or do they just need to be postmarked by June 15th?

Your return must be postmarked by June 15.

References:

• Publication 17 (PDF), Your Federal Income Tax

I will be vacationing overseas on April 15. Since I will be out of the country, do I qualify for the automatic 2-month extension?

No. You are allowed an automatic 2-month extension (until June 15, if you use a calendar year) to file your return and pay any federal income tax that is due if you are a U.S. citizen or resident, only if:

• You are living outside of the United States and Puerto Rico, and your main place of business or post of duty is outside the United States and Puerto Rico, or
• You are in the military or naval service on duty outside the United States and Puerto Rico

Vacationing is a temporary status that does not meet the criteria for the automatic 2-month extension.

For an American citizen residing in Canada using Form 1040A, should the taxable amount of U. S. social security benefits shown on line 14b be $0.00 due to the Canada-U.S. tax treaty?

Under the 1997 protocol the Canada - U.S. tax treaty, the Canadian and US governments agreed to return to a residence-based system under which social security benefits are taxable exclusively in the country where the recipient resides. As a result, the entry for line 14b would be $0.00.

References:

• Publication 597 (PDF), Information on the United States-Canada Income Tax Treaty
• Publication 915 (PDF), Social Security and Equivalent Railroad Retirement Benefits
• Tax Topic 423, Social security and equivalent railroad retirement benefits

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?

United States citizens living abroad are required to file annual U.S. income tax returns and report their worldwide income if they meet the minimum filing requirements for their filing status and age. You must contact the Canadian Government to determine whether you must file a Canadian tax return and pay Canadian taxes. For the United States income tax return, you will have several options available to you regarding claiming a foreign tax credit or excluding some or all of your foreign earned income.

References:

• Publication 54 (PDF), Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 (PDF), Foreign Tax Credit for Individuals
• Publication 597 (PDF), Information on the United States-Canada Income Tax Treaty
• Publication 901 (PDF) , U.S. Tax Treaties

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.

Benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident are taxable, if at all, only in the United States. According to the U.S. - Canada income tax treaty, taxation of these benefits is a residency-based issue. U.S. citizens or green card holders who reside in Canada are not subject to U.S. tax on this income.

These Canadian benefits are treated as U.S. social security benefits for U.S. tax purposes. Thus, under section 86 of the Internal Revenue Code, the portion of the benefits that is taxable will depend on your income level. If your total income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax. Any benefit under the social security legislation of Canada that would not be subject to Canadian tax if paid to a resident of Canada is not subject to U.S. tax.

Canadian benefits that are treated as U.S. social security benefits are reported on line 20a and 20b of Form 1040, U. S. Individual Income Tax Return or line 14a and 14b of Form 1040A.

References:

• Publication 519 (PDF), U.S. Tax Guide for Aliens
• Publication 597 (PDF), Information on the United States-Canada Income Tax Treaty
• Publication 915 (PDF), Social Security and Equivalent Railroad Retirement Benefits
• Tax Topic 423, Social security and equivalent railroad retirement benefits

I am a U.S. citizen who lived in Canada and invested in Registered Retirement Savings Plans (RRSPs) which are similar to IRAs. Under the Canada - U.S. Tax Treaty, I am not sure how to treat the income on these investments. Is the income tax deferred or must it be claimed as earned?

Although Canadian registered retirement savings plans are similar to individual retirement accounts (IRAs), they do not meet the requirements for qualification as IRAs under section 408(a) of the Internal Revenue Code. As a result, the earnings of such a plan are includable currently in the gross income of the beneficiary of the plan for United States income tax purposes. However, a beneficiary of certain Canadian retirement plans may elect for a tax year (the current year) to defer United States income tax on certain current-year earnings of the plan that are not distributed to the beneficiary. An election to defer is made by the beneficiary attaching to the beneficiary's United States federal income tax return, a statement that contains for each plan the information specified in Rev. Proc. 2002-23, 2002-15 I.R. B. 744, or in any future Revenue Procedure that supersedes Rev. Proc. 2002-23.

Copies of Internal Revenue Bulletins can be obtained by writing to:

Superintendent of Documents, U.S. Government Printing Office
P.O. Box 371954,
Pittsburgh, PA, 15250-7954

or by calling 202-512-1800 (There is a charge for copies of bulletins), by web site atSuperintendent of Documents or by modem (the Federal Bulletin Board) at 202-512-1387. You can also download the most recent Internal Revenue Bulletins by visiting our Tax Info For Business section.

References:

• Publication 597 (PDF), Information on the United States - Canada Income Tax Treaty
• Revenue Procedure 2002-23, 2002-15 I.R.B. 744 (April 15, 2002)

What is foreign earned income? Is it income from a foreign source or income paid by a U.S. company while living abroad?

Earned income is pay for personal services performed, such as wages, salaries, or professional fees. Foreign earned income is income you receive for services you perform in a foreign country during a period when your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test. It does not matter whether earned income is paid by a U.S. employer or a foreign employer. Foreign earned income does not include the following amounts.

• The previously excluded value of meals and lodging furnished for the convenience of your employer.
• Pension or annuity payments including social security benefits.
• Payments by the U.S. Government, or any U.S. government agency or instrumentality, to its employees.
• Amounts included in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualifying annuity contract.
• Recaptured unallowable moving expenses
• Payments received after the end of the tax year following the tax year in which you performed the services that earned the income.

References:

• Publication 54 (PDF), Tax guide for U.S. Citizens and Resident Aliens Abroad Publication
• Publication 514 (PDF), Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 853, Foreign earned income exclusion - general

Do I have to meet the 330-day presence test or have a valid working resident visa to meet the requirement for foreign income exclusion?

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

References:

• Publication 54 (PDF), Tax guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 (PDF), Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 853, Foreign earned income exclusion - general

I live in a foreign country. How do I get a social security number for my nonresident alien dependent who qualifies for a social security card?

Use form SS-5-FS which may be obtained from the Social Security Administration (1-800-772-1213).

References:

• Social Security Administration

My spouse is a nonresident alien. How can I get a nonworking social security number for her?

Since 1997, each foreign person who does not have and cannot obtain a Social Security Number must use an IRS Individual Taxpayer Identification Number (ITIN) on any U.S. tax return or refund claim filed. This would include:

• filing a U.S. tax return to report U.S.-source income;
• filing a U.S. tax return only to claim a refund of tax withheld;
• being the spouse of a U.S. citizen or resident who elects to file a joint tax return;
• being claimed as a spouse for an exemption on a U.S. tax return; or,
• being claimed as a dependent on another person's U.S. tax return.

Use IRS Form W-7 (PDF), Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN by mail or in person at most IRS offices (see the list of offices abroad at the beginning of Publication 1915 (PDF), Understanding your IRS individual taxpayer identification number) in the U.S. and abroad, at certain U.S. consular offices and at http://www.irs.gov. Complete Form W-7 at least 4 to 6 weeks before you need an ITIN. Sign and date the form and be sure to provide all information requested.

Provide original, or certified or notarized copies of identity documents (examples of acceptable documents include an original passport, national identity card, etc.). Original documents will be returned. See instructions for form W-7 for more detailed information.

NOTE: If you have an INS document showing you are allowed to work in the U.S., you are eligible for an SSN and should not file Form W-7.

If you choose the mailing option use the following address:

Internal Revenue Service

Philadelphia Campus

ITIN Unit

P.O. Box 447

Bensalem, PA 19020 USA

If you have not heard from the IRS regarding your ITIN application within 30 days after you filed Form W-7, you may call either 1-215-516-ITIN (1-215-516-4846) (outside the United States) or toll free 1-800-tax-1040 (1-800-829-1040) (in the United States) to find out the status of your application. Be sure to have a copy of your Form W-7 application available when you call. Please allow 30 days from the date you filed Form W-7 before calling the IRS about the status of your application.

For additional information about ITINs, refer to Publication 1915 (PDF), Understanding Your IRS Individual Taxpayer Identification Number.

References:

• Publication 1915 (PDF), Understanding Your IRS Individual Taxpayer Identification Number
• Publication 519 (PDF), U.S. Tax Guide for Aliens
• Form W-7 (PDF), Application for IRS Individual Taxpayer Identification Number

I am a U.S. citizen working abroad. Are my foreign earnings taxable?

If you are a United States citizen or a resident alien who lives and works abroad, you may qualify to exclude all or part of your foreign earned income. For specific information, refer to Tax Topic 853, Foreign Earned Income Exclusion - General.

If you would like more information on who qualifies for the exclusion, refer to Tax Topic 854, Foreign Earned Income Exclusion - who qualifies. For more information on what type of income qualifies for the exclusion, refer to Tax Topic 855, Foreign Earned Income Exclusion - what qualifies. You may also wish to refer to Publication 54 (PDF), Tax Guide for U.S. Citizens and Resident Aliens Abroad.

If the information you need relating to this topic is not addressed in Publication 54, you may call the IRS International Tax Law hotline. The number is (215) 516-2000. This is not a toll-free number.

References:

• Publication 54 (PDF), Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Tax Topic 853, Foreign Earned Income Exclusion - General
• Tax Topic 854, Foreign Earned Income Exclusion - who qualifies
• Tax Topic 855, Foreign Earned Income Exclusion - what qualifies

I live in a foreign country. Where can I find local tax assistance and forms?

The IRS has a full-time permanent staff in 8 U.S. Embassies. These offices have tax forms and publications, can help you with account problems, and answer your questions about notices and bills. For more information about these offices, please refer to http://www.irs.gov under "Contact My Local Office."

I am a U.S. citizen and married a nonresident alien last year. At that time, we filed an application with Immigration Naturalization Service (INS) for my spouse's adjustment of status. We plan to file married filing jointly. Will I need to use Form 1040NR?

As a U.S. citizen, you cannot file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return. If you make an election to file a joint return with your nonresident alien spouse (your spouse must, in turn, elect to be taxed as resident), file Form 1040 (PDF), U.S. Individual Income Tax Return, and report both incomes from worldwide sources. You will need to get an ITIN for your spouse. To apply for an ITIN, file Form W-7 (PDF), Application for IRS Individual Taxpayer Identification Number.

References:

• Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return
• Form 1040 (PDF), U.S. Individual Income Tax Return
• Form W-7 (PDF), Application for IRS Individual Taxpayer Identification Number
• Tax Topic 857, Individual Taxpayer Identification Number - Form W-7

I worked out of the country for one year. What tax do I have to pay?

As a U.S. citizen, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. However, you may qualify for the foreign earned income exclusion, foreign housing exclusion or foreign housing deduction, or the foreign tax credit.

References:

• Publication 54 (PDF), Tax guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 (PDF) , Foreign Tax Credit for Individuals
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF) , Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit

I am a U.S. citizen working for a U.S. firm in a foreign country. Is any part of my wages or expenses tax deductible?

U.S. citizens are taxed on their worldwide income, no matter where they work. Some taxpayers may qualify for the foreign earned income exclusion, foreign housing exclusion, or foreign housing deduction, if their tax home is in a foreign country and they were either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or were physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. If the taxpayer is temporarily away from his or her tax home in the United States on business (less than a year), the taxpayer may qualify to deduct away from home expenses (for travel, meals, and lodging ) but would not qualify for the foreign earned income exclusion.

References:

• Publication 54 (PDF), Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 (PDF), Foreign Tax Credit for Individuals
• Publication 463 (PDF), Travel, Entertainment, Gift and Car Expenses
• Form 2555 (PDF), Foreign Earned Income
• Form 2555EZ (PDF), Foreign Earned Income Exclusion
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 514, Employee Business Expenses

I am a U.S. citizen living and working overseas. Can I have a tax credit on my U.S. taxes for the taxes I pay to the foreign country?

The foreign tax credit is intended to relieve U.S. taxpayers of the double tax burden when their foreign source income is taxed by both the United States and the foreign country from which the income is derived.

Generally, only income taxes paid or accrued to a foreign country or a U.S. possession qualify for the foreign tax credit. You can choose to take the amount of any qualified foreign taxes paid or accrued during the year as a foreign tax credit or as an itemized deduction. To choose the foreign tax credit you must complete Form 1116 (PDF), Foreign Tax Credit and attach it to your Form 1040. You may claim credit without attaching Form 1116 if all of your foreign source income is passive income (such as interest and dividends) reported to you on a payee statement and the total amount of qualifying foreign taxes you paid or accrued is not more than $300 ($600 in the case of a joint return) and is also reported to you on a payee statement. To choose the deduction, you must itemize deductions on Schedule A, Form 1040. You may not take either a credit or a deduction for taxes paid or accrued on income you exclude under the foreign earned income exclusion or the foreign housing exclusion. There is no double taxation in this situation because the income is not subject to U.S. tax.

References:

• Publication 54 (PDF), Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514 (PDF), Foreign Tax Credit for Individuals
• Form 1116 (PDF), Foreign Tax Credit
• Tax Topic 856, Foreign Tax Credit

How do I know if the U.S. has an income tax treaty with another country?

Publication 901 (PDF), U.S. Tax Treaties, has information regarding United States tax treaties. The text of some tax treaties can be obtained from:

Department of Treasury, Office of Public Liaison
1500 Pennsylvania Ave. NW-Rm. 4418
Washington DC 20024

You can also obtain the text of many treaties at www.irs.gov/businesses/international/index.html

References:

• Publication 901 (PDF), U.S. Tax Treaties

How much money can I bring in to the U.S.?

There is no limit on the total amount of monetary instruments which may be brought in to or taken out of the United States, nor is it illegal to do so. However, if you transport or cause to be transported (including by mail or other means) more than $10,000 in monetary instruments on any occasion into or out of the United States, or if you receive more than that amount, you must file Form 4790 (PDF), Report of International Transportation of Currency or Monetary Instruments with U.S. Customs (Currency & Foreign Transactions Reporting Act, 31 U.S.C. 1101, et seq.). Failure to comply can result in civil, criminal and/or forfeiture penalties. Monetary instruments include U.S. or foreign coin in current circulation, currency, travelers checks in any form, money orders, and negotiable instruments or investment securities in bearer form.

References:

• Form 4790 (PDF), Report of International Transportation of Currency or Monetary Instruments with U.S. Customs (Currency & Foreign Transactions Reporting Act, 31 U.S.C. 1101, et seq.)

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