Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of personal finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax.
If you are an American citizen living overseas, you are still required to file an income tax return with the Internal Revenue Service of the United States of America. The process is not difficult.
When living abroad, there are two options for filing an income tax return with the Internal Revenue Service. You can use the Foreign Earned Income form 2555 or use the IRS form EZ-2555.
Most of the same rules apply as if you were living and working at home. The tax deadline is still April 15th. As a United States citizen living abroad you can take advantage of a two-month extension on filing your income tax, but you must provide an official statement indicating that you qualify for the extension.
One of the most common problems with citizens living overseas is getting your W-2 forms from your last U.S. employer. Unfortunately, the Internal Revenue Service offers no slack here, and it is your obligation to come up with this documentation by hook or by crook. You can temporarily obtain electronic copies from your employer while the actual physical documents are being mailed over to you. This should satisfy the Internal Revenue Service at least temporarily.
If you are an American citizen living overseas but your husband or wife is not an American citizen, there are a number of options available to you. You may file as “Married Filing Separately”, if you so choose. This means that you declare only your income during that year. If you have children for whom you pay more than 50% of their support, you may want to file as “Head of Household.” Also, you can choose to declare your spouse a resident alien. This is strictly a tax term and you would truly be filing as “Married Filing Jointly.”
The best thing to do is to hire someone to prepare your taxes who is knowledgeable about all the pitfalls and practicalities of filing as a United States citizen living abroad. This way you will not be missing out on any tax credits or deductions to which you are entitled or filing in some improper way that might get you audited.
That’s right; you are not immune to an Internal Revenue Service audit simply because you are living abroad. Remember, the Internal Revenue Service is the best collections agency in the world and they don’t allow little things like oceans or thousands of miles to come between them and their money.
If you are wondering where you might find a U.S. tax expert abroad, I am sure such a person could be found through your United States Embassy.
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