Korean Job Discussion Forums

[xCustomx]

I've sent in a 1040 with a 2555EZ for the last three years. I didn't file my 2007 taxes, so I mailed a 2007 1040, 2555EZ and my 2008 1040 and 2555EZ in February.

I got a letter today from the IRS stating that I need to file a 2555 for my 2008 returns. I'm going to call the IRS later tonight and ask them, but isn't it a bit strange that they would request a 2555 for 2008, yet there were no problems with my 2555EZ for 2005, 2006 and 2007?

[machellebelle]

can't answer your question, sorry, but what exchange rate do you use to convert to dollars? The rate at the end of the fiscal year? I'm trying to find the answer on the IRS website but can't. Thanks

[Rteacher]

I'm too tired to remember if I used 2555 EZ or just 2555, but the instructions seem pretty clear ...

Form 2555-EZ is a form that has fewer lines than Form 2555. You can use this form if all seven of the following apply:

You are a U.S. citizen or a resident alien
Your total foreign earned income for the year is $87,600 or less
You have earned wages/salaries in a foreign country
You are filing a calendar year return that covers a 12-month period
You did not have any self-employment income for the year
You did not have any business or moving expenses for the year
You are not claiming the foreign housing exclusion or deduction

http://www.irs.gov/businesses/small/international/article/0,,id=97131,00.html

Regarding what exchange rate to use, I think that I just estimated what the average was over the tax year. Here's the way they describe it ...

Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.[/color]

http://www.irs.gov/businesses/small/article/0,,id=130524,00.html

[i]

Might sound stupid to some, but I've always used an accountant in the US for my income taxes while in Korea. I tell them the exchange rates from the internet and there's never a problem. Last time, I gave them the rates I looked up on-line for each month. They put them in the computer and I got my return.
Somehow, I just think it would all be rejected if I tried myself. I always do the paperwork when I'm working in the states, but don't want to mess with them if I am home for a few weeks and returning. Get it done right and get back to Korea.

[PRagic]

The instructions drive me bonkers. They state that your foreign spouse needs to apply for and receive a 'tax payers ID' or SSN regardless of how you file, 'married filing jointly (who would do this?) or 'married filing separately'. What gives?

Any US posters out there married to a Korean citizen? How you you file?

[Geckoman]

Here's an earlier thread about filing your taxes while abroad:

ATT AMERICANS!: FILE YOUR FEDERAL INCOME TAXES BY JUNE 15TH!
http://forums.eslcafe.com/korea/viewtopic.php?t=154390

[PRagic]

Already checked prior threads and none of them address my two questions:

1) I am a US citizen and married to a Korean citizen. Can I file 'married filing separately' even though I do not have a 'Tax ID Number' or SSN for my spouse? We have always lived in Korea. How should I file? If I do file 'married but filing separately', do I just not provide her name and an I.D. number?

2) After I fill out my 2555EZ and move the income to the 1040, is the 'TOTAL INCOME' (Line 22) and therefore the 'ADJUSTED GROSS INCOME' (Line 37), [b]a negative amount [/b]because it of the foreign earned income exclusion?

Thanks to anyone out there who has completed their taxes.

[Keepongoing]

I always use Turbo Tax. Yes, it costs money, but I know it is being done right. On it they had me use 2555-T.

[T-J]

To file a joint return your spouse must have either a SSN or an ITIN. If your spouse has never lived in the States then they probably don't have a SSN. Apply for the ITIN here. IRS FORM W-7

Yes, the adjusted income can be a negative number.

Hope this helps.

[PRagic]

Thanks. Just followed my own advice: When in doubt, go to the source.

Just got off the phone (SKYPE rocks) with the IRS in Philly. Turns out that:

1) Your income from the 2555(EZ) is carried over first to Line 7 on the 1040, and then AGAIN (as your foreign earned income deduction) on Line 21. For most people with overseas income and no other income in the US, this will bring your TOTAL INCOME (Line 22) to 0 (zero). This was confusing as it says to 'attach form(s) W2' on Line 7. Well, if we work overseas, we don't GET the W2, and on the 2555EZ, it only says to carry the overseas income over to Line 21 on the 1040! Freakin IRS.

If you have other income in the (interest, dividends, capital gains...), then these get added to your income from Line 7. Even with other income earned in the US, eventually your TAXABLE INCOME will be reduced to 0 (zero).

2) If you're a US citizen and married to a Korean citizen, and your spouse is not and has not resided in the US for earnings purposes, then you do NOT have to have a Tax ID Number or a SSN for your spouse.

Right from the horses mouth: The IRS told me to simply print 'Married to a Non-resident Alien' or 'Married to NRA' in the blank next to the arrow on Line 3 (married filing separately). That's it. Done.

The directions provided to overseas filers by the IRS are confusing and overly intimidating, if you ask me.

Look at all the hype over non-filing (see that other thread). Not true according to the IRS. ACCORDING TO THE IRS WEBSITE and DIRECTIONS FOR FILING, if you do not file, THE IRS WILL COMPLETE AND FILE A RETURN ON YOUR BEHALF. They won't add in any deductions, and if you end up owing, they can enforce the bill for 7 years. This is where you can get into some hot water, but for most of us, Wesly Snipes excluded of course, this isn't a grave concern. By contrast, if you didn't file and may get a return if you do backfile, you have only 3 years to do it in.

Anyway, it's a piece of cake once you nail down exactly what numbers go where and what you need to do (or NOT do) to file under certain categories. Unfortunately, that's not as obvious as it should be.

Hope this helps more than it confuses.