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Yakamo
Joined: 24 Nov 2008
Posts: 27
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 Posted: Sun Jan 18, 2009 11:15 pm Post subject: American Taxes |
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Hello all. Quick question about taxes here.
I checked the FAQ on how taxes work when we are working overseas, and found only a brief description. It states:
Americans are required to file taxes in the U.S. even if their sole income was earned overseas. However, they are exempt from paying taxes on such income up to $78,000 (2003 figure), provided they meet the residency requirements.
I clicked on the link to the American IRS, but unfortunately no information was found. When I used the site's search function in regards to the issue, it came up with very convoluted answers.
I guess my question is,
1) Are we indefinitely exempt from uncle sam up to $78k
2) What are these "Residency requirements" and where can I find more information about it?
If someone could provide some working links or at least point me in the right direction on where I can start looking, I would be very grateful.
Thanks in advance.
Yakamo |
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Brooks
Joined: 16 Jan 2003
Posts: 1369
Location: Sagamihara
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| Posted: Sun Jan 18, 2009 11:50 pm Post subject: |
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look up the US embassy website.
As long as you make less than 78,000 you don't have to pay US taxes, you just have to pay Japanese taxes.
You have to spend less than 40(?) days inside the US for the residency requirement in any given year. |
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Never Ceased To Be Amazed
Joined: 22 Oct 2004
Posts: 3500
Location: Shhh...don't talk to me...I'm playin' dead...
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| Posted: Mon Jan 19, 2009 5:23 am Post subject: Re: American Taxes |
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| Yakamo wrote: |
Hello all. Quick question about taxes here.
I checked the FAQ on how taxes work when we are working overseas, and found only a brief description. It states:
Americans are required to file taxes in the U.S. even if their sole income was earned overseas. However, they are exempt from paying taxes on such income up to $78,000 (2003 figure), provided they meet the residency requirements.
Yakamo, I do believe that it's 85.7k now. The only requirement is that you file your taxes under that amount...and remember, your company-provided accomodations are included that amount. Also, don't forget to file Form 2555 along with your 1040. the 2555 is your actual exemption form.
I clicked on the link to the American IRS, but unfortunately no information was found.
What's new! The US Government tends to be VERY UNhelpful to expats.
When I used the site's search function in regards to the issue, it came up with very convoluted answers.
I guess my question is,
1) Are we indefinitely exempt from uncle sam up to $78k
In short, Yes and No. Of course, nothing is "indefinite", but whilst you reside overseas and receive your funds from a foreign source, then you are not obliged to pay taxes on the figure I quoted above...and remember that was the 2007 number, it tends to go up on a yearly basis.
2) What are these "Residency requirements" and where can I find more information about it?
There are two tests:
One test determines whether or not you've established a foreign residence and the other is if you've been out of the country for at least 330 days out of the year. But, there's no worries as, if your stay spans over two years, the 330 days take in BOTH years, so unless you're a business person who only does short stints abroad for either a few weeks or a few months, you're covered. I'm sorry that I can't be more specific, but I've been exempt since 1990, so I've forgotten the "fine print" that I was sooo worried about when I was a "newbie".
The important things to remember is to ALWAYS file and to ALWAYS file ON TIME. And, while I'm on it, as an expat, you no longer have an April 15th filing deadline. Your get a two-month automatic extension and another two-month extension (always granted, in my case) that you can request. That allows us to return home for the summer break and file then.
If someone could provide some working links or at least point me in the right direction on where I can start looking, I would be very grateful.
Thanks in advance.
Yakamo |
NCTBA |
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Yakamo
Joined: 24 Nov 2008
Posts: 27
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| Posted: Mon Jan 19, 2009 6:56 am Post subject: |
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Excellent information NCTBA!!!
Thank you guys so much for your help. I don't feel so worried anymore  |
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Glenski
Joined: 15 Jan 2003
Posts: 12844
Location: Hokkaido, JAPAN
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JL
Joined: 26 Oct 2008
Posts: 241
Location: Las Vegas, NV USA
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| Posted: Mon Jan 19, 2009 8:24 am Post subject: |
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Excellent, excellent info. from NCTBA.
I'll just re-emphasize one thing, which indeed, he covered. That being, regardless of whether the $87,500 exclusion covers all of your tax liability, YOU MUST FILE AN INCOME TAX RETURN. That is the law for any U.S. citizen, or resident alien permit holder, regardless of their domicile.
Just file the forms, and keep all relevent records for seven years. Or longer, if you're paranoid about the IRS, which any sane person would be.  |
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