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kah5217
Joined: 29 Sep 2012
Posts: 270
Location: Ibaraki
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 Posted: Sat May 25, 2013 3:46 am Post subject: US tax question |
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I'm having a little bit of trouble understanding the exemption test for US taxes. Right now I'm leaning toward going home after I finish this contract. I know it's a little early to start thinking about this, but I like to plan ahead.  330 days would hit in February, the month before my contract ends. But I have US income from the start of 2013 that I will also need to declare, so I definitely have to file a tax return.
Am I allowed to count the days in 2014 as part of the exemption for a 2013 tax return? My visa would expire in March, so I would be back in the US in time to file without an extension. Without the exemption, I'll owe the US about a grand, so I'd like to figure this out. |
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rtm
Joined: 13 Apr 2007
Posts: 1003
Location: US
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| Posted: Sat May 25, 2013 6:30 am Post subject: Re: US tax question |
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| kah5217 wrote: |
| 330 days would hit in February, the month before my contract ends. |
330 days from when? For the physical presence test, I believe you can count any 12 month period that begins or ends in the tax period, even if it ends in another tax year. That is, the 12-month period you use for the physical presence test does not have to be January to December. Also, the 12-month period you use for the physical presence test one year can overlap with the period you use in another year.
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| But I have US income from the start of 2013 that I will also need to declare, so I definitely have to file a tax return. |
You always need to file a tax return no matter what. Even if you have no income in the US, and are filing the forms for the foreign earned income exemption and a 1040 that lists your taxable income as $0, you still need to file a tax return.
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| Am I allowed to count the days in 2014 as part of the exemption for a 2013 tax return? |
Yes, you can (as described above).
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| My visa would expire in March, so I would be back in the US in time to file without an extension. |
If you are outside of the US for 330 days within the 12-month period of April 15, 2013 to April 14, 2014, then you don't need to file an extension. However, filing an extension would let you count a different 12-month period (e.g., June 1, 2013 to May 31, 2014).
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| Without the exemption, I'll owe the US about a grand, so I'd like to figure this out. |
You will owe money on your income earned in the US no matter what. The foreign-earned income exclusion does not affect income earned in the US, it only applies to your income earned outside of the US. |
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kah5217
Joined: 29 Sep 2012
Posts: 270
Location: Ibaraki
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| Posted: Sat May 25, 2013 7:48 am Post subject: |
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The US income has already had the taxes deducted and accounted for. I put the "definitely have to file" line in there to shrug off the spammy "just don't file" answers.
I arrived 3/24, so not counting that or the last day the contract is for 364 days. |
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qwertyu2
Joined: 13 Mar 2012
Posts: 93
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| Posted: Sat May 25, 2013 7:38 pm Post subject: Re: US tax question |
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| rtm wrote: |
| 330 days from when? For the physical presence test, I believe you can count any 12 month period that begins or ends in the tax period, even if it ends in another tax year. That is, the 12-month period you use for the physical presence test does not have to be January to December. Also, the 12-month period you use for the physical presence test one year can overlap with the period you use in another year. |
That is my understanding as well. I believe one can use any 12 month period that begins or ends in the tax year to qualify for the exclusion. However, under the physical presence test, I'm fairly certain only the number of days in the particular tax year spent overseas apply toward the exclusion. In other words, one might live in Japan all of 2011 and the first 10 days in 2012. When calculating 2012 taxes, one will qualify for the exclusion based on the overlap between 2011 and 2012, but only 10/365 of 2012 income will be excluded. |
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rtm
Joined: 13 Apr 2007
Posts: 1003
Location: US
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| Posted: Sat May 25, 2013 11:14 pm Post subject: Re: US tax question |
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| qwertyu2 wrote: |
| However, under the physical presence test, I'm fairly certain only the number of days in the particular tax year spent overseas apply toward the exclusion. In other words, one might live in Japan all of 2011 and the first 10 days in 2012. When calculating 2012 taxes, one will qualify for the exclusion based on the overlap between 2011 and 2012, but only 10/365 of 2012 income will be excluded. |
Correct -- the income during that 10 days would be exempt (because it is part of a 12-month period in which the person was outside of the US for >329 days). Any amount made in the US (e.g., after the person returns to the US on Jan. 11) would be taxed as normal. |
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