TAX US Expat

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That's why I hate the U.S.  They tax you to death.  Not many countries make you pay tax on earnings made abroad.  Would love to renounce my U.S. citizenship and live in Kuwait forever.

From what I understand, you can qualify for foreign earned income exclusion if you are in Kuwait for a full tax year (Jan 1-Dec 31) OR if you spend 330 days in Kuwait within any 12-month period (for example, if I arrive August 1 and do not return to the U.S.--vacation to other countries don't count) until July 1, then anything I make that year will not be taxed by the U.S.?

Can anyone tell me if that is correct? I got this information straight from the U.S. revenue service link below:

[link under review]

Thanks,

Tom

Hi Tom,

You are correct.  I am a CPA so I know a little about this.  In order to take advantage of the tax exclusion for 2012, you will have to file an extension so that you meet the 1 year/330 day requirement as of the date you file.  That way you will be able to take advantage of the 2012 exclusion for the part of the year you were abroad.  It is a straight pro-ration for the number of days you were not in the U.S.  You can file any time after you meet the 1 year/330 day test up until October 15 (with the 6 month extension) and qualify for the pro-rated exclusion.

off topic...if I made less than $95000 abroad do I still need to pay?

MeInQ8,

from what I understand, yes; the $95,000 seems to be the upper limit for the foreign earned income tax exclusion. If you make less than that, you still need to spend 330 days outside the US within a 12-month period to be tax-free.

Tom

Thanks, Nomad12,

I hadn't figured out how to work the 12-month requirement; filing an extension makes sense. I appreciate your help.

Tom

tjp,

I go once every 12 month, but do I still have to do any paper work or contact the IRS? The US embassy in Kuwait don't nothing about IRS stuff

Thanks!!!

tjp wrote:

MeInQ8,

from what I understand, yes; the $95,000 seems to be the upper limit for the foreign earned income tax exclusion. If you make less than that, you still need to spend 330 days outside the US within a 12-month period to be tax-free.

Tom

MeInQ8,

Even if you earn less than the $95,100 exclusion, you still have to file a tax return.  You won't owe any tax, but if you don't file, then you are subject to a penalty for not filing.

For anyone else, the US embassy does not have any tax forms nor do they offer any type of services regarding taxes, so don't waste your time trying to contact the embassy.

The best resource for tax questions for US citizens living abroad is Publication 54 (2012), Tax Guide for U.S. Citizens and Resident Aliens Abroad

This publication is very comprehensive and gives many examples of tax situations and what forms are required.

http://www.irs.gov/publications/p54/index.html

Nomad12,

Great...when I file what is it that I need to proof that I didn't make $95000, there are no W forms in Kuwait here.

Thanks a lot

Nomad12 wrote:

MeInQ8,

Even if you earn less than the $95,100 exclusion, you still have to file a tax return.  You won't owe any tax, but if you don't file, then you are subject to a penalty for not filing.

For anyone else, the US embassy does not have any tax forms nor do they offer any type of services regarding taxes, so don't waste your time trying to contact the embassy.

The best resource for tax questions for US citizens living abroad is Publication 54 (2012), Tax Guide for U.S. Citizens and Resident Aliens Abroad

This publication is very comprehensive and gives many examples of tax situations and what forms are required.

http://www.irs.gov/publications/p54/index.html

MeInQ,

You do not need to provide documentation of your income other than on the tax return forms itself; however, if the Internal Revenue Service (IRS) challenges your return at some point in the future, you may be required to provide documentation at that point.

Acceptable documentation would be your wage statements received from your employer for the tax year.  You should keep these with your copies of your tax returns.

Nomad