Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credit. Please refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for additional information.
You have to file a U.S. income tax return while working and living abroad unless you abandon your green card holder status by filing Form I-407, with the U.S. Citizen & Immigration Service, or you renounce your U.S. citizenship under certain circumstances described in the expatriation tax provisions. See Publication 519, U.S. Tax Guide for Aliens, for more details.
The due date for filing a federal individual income tax return generally is April 15 of each year if your tax year ends December 31st. Your return is considered filed timely if the envelope is properly addressed and postmarked no later than April 15, Publication 17, Part 1 – When do I have to file?
If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. If you cannot file by the due date of your return, you can request an extension of time to file. To receive an automatic 6-month extension of time to file your return, you should file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF), by the due date of your return. For more information, refer to the Form 4868 instructions.
However, if you are a U.S. citizen or resident alien, who is either: (1) living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico; or (2) in military or naval services on duty outside the United States and Puerto Rico on the due date of your return, you are allowed an automatic 2-month extension until June 15 to file your return and pay any tax due. For additional information refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
If you use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations qualify you for the extension.
You can check the status of any refund you expect as soon as 24 hours after you e-file a return or 4 weeks after you file a paper return. There are several ways to check the status of a refund.
There are various options for paying your U.S. taxes.
• EFTPS (Electronic Federal Tax Payment System).
This is only available if you have a U.S. bank account.
• Federal Tax Application (same-day wire transfer).
If you do not have a U.S. bank account, ask if your financial institution has a U.S. affiliate that can help you make same-day wire transfers. For more information on this option, refer to the Foreign Electronic Payments website.
• Check or money order.
To pay by check or money order, make your check or money order payable to the United
States Treasury” for the full amount due. Do not send cash. Do not attach the payment to your return.
• Credit or debit card.
This option is useful if you do not have a U.S. bank account. Refer to the Pay Your Taxes by Debit or Credit Card website with details regarding this process and fees.
You can order either a transcript of your tax return information or a copy of your tax return. If you order a transcript of your return, you will get the information from your tax return. If you order a copy of your return, you will get a copy of the actual return you filed.
• Transcript: A transcript of your tax return information is free. Use Form 4506-T, Request
for Transcript of Tax Return (PDF), or Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript (PDF), to order a transcript of most information on your tax return for the current tax year and the prior 3 processing years. You also can order a transcript of data from certain information returns such as Forms W-2 and 1099. You can designate (on line 5
of either form) a third party to receive the transcript. To order a transcript, mail the order form to the appropriate address listed in the form instructions, visit IRS.gov and click on “Order a Tax Return or Account Transcript,” or call 1-800-908-9946 (toll-free in the United
• Copy: You can request a copy of your tax return, but in most cases you must pay a fee to do so (currently $50). Use Form 4506, Request for Copy of Tax Return (PDF), to request a copy of your tax return. Copies of Forms 1040, 1040A, and 1040EZ are generally available for 7 years from the date you filed the return. You can designate (on line 5) a third party to receive the tax return. Mail the order form and your check for the fee to the appropriate address listed in the form instructions.
IRS employees are not permitted to recommend tax practitioners who prepare income tax returns. However, some Embassies provide this information on the Citizen Services section of their website. Another good source of information is plain word-of-mouth. Speak to other Americans and contact various American organizations present abroad that serve the ex-pat community.
If you are filing Form 1040NR or Form 1040NR-EZ, use one of these addresses to file your paper return:
• If you are NOT enclosing a check or money order:
Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 U.S.A.
• If you are enclosing a check or money order:
Internal Revenue Service P.O. Box 1303
Charlotte, NC 28201-1303 U.S.A.
2) Estates and trusts
• If you are NOT enclosing a check or money order:
Department of the Treasury Internal Revenue Service Cincinnati, OH 45999-0048 U.S.A.
• If you are enclosing a check or money order:
Internal Revenue Service P.O. Box 1303 Charlotte, NC 28201-1303 U.S.A. Private Delivery Services You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services
include only the following.
• DHL Express (DHL): DHL Same Day Service.
• Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
• United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day
Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express. The private delivery service can tell you how to get written proof of the mailing date.
Yes. The loss should be reported as a short-term capital loss on Schedule D (Form 1040). You have the burden of proving the validity of the loan, the subsequent bankruptcy, and the recovery or non-recovery from the loan.
If you reside in a country that has an income tax treaty with the United States, the treaty will generally contain provisions to eliminate double taxation. Many treaties will provide reduced rates for various types of income. Treaties often provide reciprocal credits in one country for the tax paid to the other country. Non-treaty countries, depending on their laws, may give the same
type of credit.
If double taxation with a treaty country exists and you cannot resolve the problem with the tax authorities of the foreign country, you can contact the U.S. competent authority for assistance.
As long as your employer is not the U.S. Government, all income from sources within Puerto Rico is exempt from U.S. tax if you are a bona fide resident of Puerto Rico during the entire tax
year. The in-come you received from Puerto Rican sources the year you moved to Puerto Rico is not exempt. The tax paid to Puerto Rico in the year you moved to Puerto Rico can be claimed as a foreign tax credit on Form 1116.
No. You have the choice of one of the following two methods of filing your return:
a) You can file your return when due under the regular filing rules, report all your income without excluding your foreign earned in-come, and pay the tax due. After you have qualified for the exclusion, you can file an amended re-turn, Form 1040X, accompanied by Form 2555 (or 2555-EZ), for a re-fund of any excess tax paid.
b) You can postpone the filing of your tax return by applying on Form 2350 for an extension of
time to file to a date 30 days beyond the date you expect to qualify under either the bona fide residence test or the physical presence test, and then file your return reflecting the exclusion of foreign earned income. This al-lows you to file only once and saves you from paying the tax and
waiting for a refund. However, interest is charged on any tax due on the postponed tax return, but interest is not paid on refunds paid within 45 days after the return is filed. If you have moving expenses that are for services performed in two years, you can be granted an extension until after the end of the second year.
No. Uninterrupted refers to the bona fide residence proper and not to the physical presence of the individual. During the period of bona fide residence in a foreign country, even during the first full year, you can leave the country for brief and temporary trips back to the United States or elsewhere for vacation, or even for business. To preserve your status as a bona fide resident of a foreign country, you must have a clear intention of returning from those trips, without unreasonable delay, to your foreign residence.
No. You are not entitled to any exclusion of foreign earned income since you did not complete your qualifying period under either the bona fide residence test or physical presence test. If you paid foreign tax on the income earned abroad, you may be able to claim that tax as a deduction or as a credit against your U.S. tax.
To be eligible, you must have a tax home in a foreign country and be a U.S. citizen or resident alien. You must be either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or you must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. U.S. citizens may qualify under either test.
Your tax home must be in the foreign country or countries throughout your period of residence or presence. For this purpose, your period of physical presence in the 330 full days during which you are present in a foreign country, not the 12 consecutive months during which those days occur.
You figure your foreign earned income exclusion separately since you both have foreign earned income. The amount of the exclusion for each of you cannot exceed your separate foreign earned incomes. You must figure your housing exclusion jointly
Yes. Form 673 is a sample statement that can be used by individuals who expect to qualify for the foreign earned income exclusion under the bona fide residence test or the physical presence test.
No. Customs duties, like federal excise taxes, are not deductible.
Generally, real estate and foreign income taxes are deductible as itemized deductions. Foreign income taxes are deductible only if you do not claim the foreign tax credit. Foreign income taxes paid on excluded income are not deductible as an itemized deduction.
Note. Foreign income taxes are usually claimed under the credit provisions, if they apply, because this is more advantageous in most.
If you violate U.S. travel restrictions, you will not be treated as being a bona-fide resident of, or physically present in, a foreign country for any day during which you are present in a country in violation of the restrictions. (These restrictions generally prohibit U.S. citizens and residents from engaging in transactions related to travel to, from, or within certain countries.) Also, income that you earn from sources within such a country for services performed during a period of travel restrictions does not qualify as foreign earned income, and housing expenses that you incur within that country (or outside that country for housing your spouse or dependents), while you are present in that country in violation of travel restrictions, cannot be included in figuring your foreign housing amount.
Yes, if you cannot deduct all of your housing amount in a tax year because of the limit, you can carry over the unused part to the next year. You can deduct this carry over to the extent the limit for that year (your foreign earned income minus the foreign earned income and housing amount you exclude) is more than your housing deduction for that year. You cannot carry over any remaining amount to any future tax year.
Choosing the exclusion(s) you make separate choices to exclude foreign earned income and/or to exclude or deduct your foreign housing amount. If you choose to take both the foreign housing exclusion and the foreign earned income exclusion, you must figure your foreign housing exclusion first. Your foreign earned income exclusion is then limited to the smallest of (a) your annual exclusion limit or (b) the excess of your foreign earned income over your foreign housing exclusion.
Once you choose to exclude your foreign earned income or housing amount, that choice remains in effect for that year and all future years unless you revoke it. You can revoke your choice for any tax year. However, if you revoke your choice for a tax year, you cannot claim the exclusion again for your next 5 tax years without the approval of the IRS.
Exclusion of employer-provided meals and lodging If as a condition of employment you are required to live in a camp in a foreign country that is provided by or for your employer, you can exclude the value of any meals and lodging furnished to you, your spouse, and your dependents.
For this exclusion, a camp is lodging that is:
1. Provided for your employer’s convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance,
2. Located as close as practicable in the area where you work, and
3. Provided in a common area or enclave that is not available to the public for lodging or accommodations and that normally houses at least 10 employees. Topics for: home leave, children’s education, moving expenses, supplementary medical payment are still under construction.
In general, if you are a U.S. citizen or resident alien married to a nonresident alien, you are
considered “Married Filing Separately” unless you qualify for a different filing status. If you pay more than half the cost of keeping up a home for yourself and a qualifying child or other relative, you may qualify for the head of household filing status.
If you are a U.S. citizen or resident alien married to a nonresident alien, you and your spouse can choose to have your spouse treated as a U.S. resident for all U.S. federal income tax purposes.
This allows you and your spouse to file a joint return, but also subjects your nonresident alien spouse’s worldwide income to U.S. income tax.
For more information on the filing status requirements, see Publication 501, Exemptions, Standard Deduction, and Filing Information.
If you file a joint return, you can claim an exemption for your nonresident alien spouse. If you do not file a joint return, you can claim an exemption for your nonresident alien spouse only if your spouse has no income from sources within the United States and is not the dependent of another U.S. taxpayer.
In general, you can claim exemptions for individuals who qualify as your dependents. To be your dependent, the individual must be a U.S. citizen, U.S. national, U.S. resident alien, or a resident
of Canada or Mexico for some part of the calendar year in which your tax year begins.
Children usually are citizens or residents of the same country as their parents. If you were a U.S. citizen when your child was born, your child generally is a U.S. citizen. This is true even if the child’s other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent. You must include on your return the social security number (SSN) of each dependent for whom
you claim an exemption. If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent’s individual taxpayer identification number (ITIN) instead of an SSN. See Publication 501, Exemptions, Standard Deduction, and Filing Information, for more details.
It depends on whether they are U.S. citizens or U.S residents. If your parents are not U.S. citizens or U.S. residents, you cannot claim exemptions for them even if you provide most of their support. To qualify as a dependent, a person generally must be either a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico for some part of the tax year. The other tests of dependency also must be met.
The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently.
If you have a single transaction, such as the sale of a business that occurred on a single day, use the exchange rate for that day. However, if you receive income evenly throughout the tax year, you may translate the foreign currency to U.S. dollars using the yearly average currency exchange rate for the tax year.
Call the phone number on the letter you received for specific information about your situation.
Examples of reasons why you may have received the letter include the following:
If you take the position that any item of income is exempt from U.S. tax or eligible for a lower tax rate under a U.S. income tax treaty (a treaty-based position), you generally must disclose that position on Form 8833 and attach it to your return. For exceptions to the disclosure requirement, see the Instructions attached to Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) (PDF).
• If you are a tax resident in both the United States and a foreign country based on each country’s laws, you must use the provisions of an income tax treaty to claim tax residence in only one country. If you claim tax residence in a country where you are not eligible to claim residence, or the information on your tax return does not appear to support this position, your treaty-based position may be denied.
If you receive a letter or notice from the IRS, it will explain the reason for the correspondence and provide instructions. Many of these letters and notices can be dealt with simply, without having to call or visit an IRS office.
The notice you receive covers a very specific issue about your account or tax return. Generally, the IRS will send a notice if it believes you owe additional tax, are due a larger refund if there is a question about your tax return or a need for additional information. For more information, go to Understanding Your IRS Notice or Letter.
Generally, interest is charged on any unpaid tax from the due date of the return (without extensions) until the date of payment. Please refer to Topic 653, IRS Notices and Bills, Penalties and Interest Charges, for more details.
There are different types of penalties and different methods to compute them. Please refer to Publication 17, Your Federal Income Tax, for more details.
As a green card holder, you generally are required to file a U.S. income tax return and report worldwide income no matter where you live.
However, if you surrender your green card or the U.S. Citizen & Immigration Service determines that you have abandoned your green card and takes it away from you, you will need to follow the nonresident alien requirements for filing a Form 1040NR, U.S. Nonresident Alien Income Tax Return (PDF). See Publication 519, U.S. Tax Guide for Aliens, for more details
You are a long-term resident for U.S. federal income tax purposes if you were a lawful permanent resident of the United States (green card holder) in at least 8 of the last 15 tax years ending with the year your residency ends. In determining if you meet the 8-year requirement, do not count any year that you are treated as a resident of a foreign country under a tax treaty and do not waive treaty benefits.
If you are a long-term resident who has surrendered your green card, you may be subject to the expatriation tax. Please refer to the expatriation tax provisions in Publication 519, U.S. Tax Guide for Aliens, and in later questions. In general, the expatriation tax provisions apply to U.S.
citizens who have renounced their citizenship and long-term residents who have ended their residency. The rules that apply are based on the dates of expatriation.
You may also be a dual status alien if you have been both a resident alien and a nonresident alien in the same tax year. Dual status does not refer to your citizenship, only to your resident status for tax purposes in the United States.
• For The Part of the Year that You are a Resident Alien, you are taxed on income from all sources: inside and outside the United States.
• For The Part from the time that You Abandon Your Green Card, you are taxed on income from U.S. source only.
As a green card holder,
you are a U.S. tax resident.
However, the definition of residency under U.S. tax laws does not override tax treaty definitions of residency. If you are a dual-resident taxpayer (a resident of both the United States and another country under each country’s tax laws), you can still claim the benefits under an income tax treaty.
The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). If you would be treated as a resident of the other country under the tie-breaker rule and you claim treaty benefits as a resident of that country, you are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you will be treated as a U.S. resident. For example, the
rules discussed here do not affect your residency time periods as discussed in FAQ 17 above. If you are a dual-resident taxpayer and you claim treaty benefits as a resident of the other country, you must file a return by the due date (including extensions) using Form 1040NR or Form 1040NR-EZ, and compute your tax as a nonresident alien. You must also attach a fully completed Form 8833 if you determine your residency under a tax treaty and receive payments or income items totaling more than $100,000. You may also have to attach Form 8938 (as discussed in Other Forms You May Have to File under Chapter 7 of Publication 519). For more information on reporting treaty benefits, see Reporting Treaty Benefits Claimed in Chapter 9 of Publication 519.
If you are a long-term resident and you claim treaty benefits as a resident of another country pursuant to a tax treaty, you may be subject to the expatriation tax. Please refer to the expatriation tax provisions in Publication 519, U.S. Tax Guide for Aliens, and in later questions.
U.S. citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States. If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a foreign tax credit on foreign income taxes or an itemized deduction for eligible foreign taxes. However, if you take the foreign earned income exclusion your foreign tax credit or deduction will be reduced. If eligible, you can claim a foreign tax credit on foreign income taxes owed and paid by filing Form 1116 with your U.S. income tax return. See Publication 514, Foreign Tax Credit for Individuals for more details. You may also be eligible for the foreign earned income exclusion. See the “Foreign Earned Income and Housing: Exclusion – Deduction” section of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for more details. Please note that for purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. This includes amounts paid from both appropriated and no appropriated funds.
Yes, since the foreign earned income exclusion is voluntary, you must file a tax return to claim the foreign earned income exclusion. It does not matter if your foreign earnings are below the foreign earned income exclusion threshold.
There are specific requirements that you must satisfy to be eligible to claim the foreign earned income exclusion. See the “Foreign Earned Income and Housing: Exclusion – Deduction” section in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for more details.
Yes. To be eligible for the foreign earned income exclusion, you must have a tax home in a foreign country and be a U.S. citizen or resident alien. You must also be either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or you must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. U.S. citizens may qualify for the foreign income exclusion under either test. U.S. resident aliens must qualify under the physical presence test, unless they are citizens or nationals of a country with which the United States has an income tax
treaty in effect. In that case, U.S. resident aliens also may qualify for the foreign earned income exclusion under the bona fide residence test. Your tax home must be in the foreign country or countries throughout your period of bona fide residence or physical presence. For this purpose, your period of physical presence is the 330 full days during which you are present in a foreign country or countries, not the 12 consecutive months during which those days occur. See the “Foreign Earned Income and Housing: Exclusion – Deduction” section in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for more details.
To be eligible for the foreign earned income exclusion, you must have a tax home in a foreign country and be a U.S. citizen or resident alien. You must also be either a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year (Bona Fide Residence Test), or you must be physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months (Physical Presence Test). U.S. citizens may qualify under either test. But, there are specific definitions for U.S. resident
aliens under each test.
Physical Presence Test
To meet this test, you must be a U.S. citizen or resident alien who is physically present in a foreign country or countries, for at least 330 full days during any period of 12 consecutive months. A full day means the 24-hour period that starts at midnight.
Bona Fide Residence Test To meet this test, you must be one of the following:
• A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an
uninterrupted period that includes an entire tax year (January 1-December 31, if you file a calendar year return), or
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1-December 31, if you file a calendar year return).
Whether you are a bona fide resident of a foreign country depends on your intention about the length and nature of your stay. Evidence of your intention may be your words and acts. If these conflict, your acts carry more weight than your words. Generally, if you go to a foreign country
for a definite temporary purpose and return to the United States after you accomplish it, you are not a bona fide resident of the foreign country.
The two tests differ in that one is based exclusively on physical presence, while the other is based on a taxpayer’s intentions.
Foreign pensions cannot be excluded on Form 2555. Foreign earned income for purposes of the foreign earned income exclusion does not include pensions and annuity income (including social security benefits and railroad retirement benefits treated as social security). See “Foreign Earned Income” in the “Foreign Earned Income and Housing: Exclusion – Deduction” section of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for more details.
The foreign earned income exclusion, housing exclusion, or housing deductions are claimed using either a Form 2555 or 2555-EZ. The Form 2555-EZ is a simplified version of the regular Form 2555 and can be used by most individuals assuming:
• You did not have any self-employment income for the year,
• Your total foreign earned income did not exceed the maximum foreign earned income exclusion threshold for the corresponding tax year,
• You did not have any business or moving expenses, and
• You do not claim the housing exclusion or deduction.
See “Form 2555 and Form 2555-EZ” in the “Foreign Earned Income and Housing: Exclusion – Deduction” section of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for more details.
No. The foreign earned income exclusion applies to your foreign earned income. Amounts paid by the United States or its agencies to their employees are not treated, for this purpose, as foreign earned income.
No. The only income that is foreign earned income is income from the performance of personal services abroad. Investment income is not earned income. However, you must include it in gross income re-ported on your Form 1040.
Yes. The amount is compensation for services performed. The tax paid by your company should be reported on Form 1040, line 7, and on Form 2555, Part IV, line 22(f) (or on Form 2555-EZ, Part IV, line 17).
You must include in income the fair market value (FMV) of the facility provided, where it is provided. This will usually be the rent your employer pays.
If you performed the services to earn this salary outside the United States, your salary is considered earned abroad. It does not matter that you are paid by a U.S. employer or that your salary is deposited in a U.S. bank account in the United States. The source of salary, wages, commissions, and other personal service income is the place where you perform the services
File Form W-9 (indicating that you are a U.S. citizen) with the with-holding agents who are paying you the dividends and interest. This is their authority to stop withholding the 30% income tax at the source on payments due you.
You must report the gross amount of the income received and take a tax credit for the tax withheld. This is to your advantage since the tax withheld is deducted in full from the tax due. It is also advisable to attach a statement to your return explaining this tax credit so there will be no
question as to the amount of credit allowable.
The expatriation tax provisions apply to U.S. citizens who have relinquished their citizenship and to long-term permanent residents (green card holders) who have ended their U.S. residency. The Form 8854 is used by individuals who have expatriated to inform the IRS of their expatriation and certify they have complied with all federal tax obligations for the 5 tax years preceding the date of their expatriation. For more details regarding the expatriation tax provisions, see “Expatriation Tax” in the “How Income of Aliens is Taxed” section of Publication 519, U.S. Tax Guide for Aliens. Form 8854, Initial and Annual Expatriation Information Statement (PDF) and the Instructions to Form 8854 (PDF) can be retrieved from the Forms and Publications IRS website.
If you are a U.S. resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. If you are a nonresident alien, you are usually subject to U.S. income tax only on U.S. source income. Under limited circumstances, certain foreign source income is subject to U.S. tax. Please refer to Publication 519, U.S. Tax Guide for Aliens. For income tax requirements and procedures related to the termination of your U.S. resident status, see “Expatriation Tax” in the “How Income of Aliens is Taxed” section of Publication 519, U.S. Tax Guide for Aliens, and the Instructions to Form 8854, Initial and Annual Expatriation Information Statement for more details.
You need an ITIN if you are not eligible to get a social security number but must provide a taxpayer identification number on a U.S. tax return or information return. Examples include the following: • A nonresident alien individual eligible to get the benefit of reduced withholding under an income tax treaty (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities). • A nonresident alien individual not eligible for an SSN who is required to file a U.S. tax return or who is filing a U.S. tax return only to claim a refund. • A nonresident alien individual not eligible for an SSN who elects to file a joint U.S. tax return with a spouse who is a U.S. citizen or resident alien. • A U.S. resident alien (based on the substantial presence test) who files a U.S. tax return but who is not eligible for an SSN. For information about the substantial presence test, see Publication 519, U.S. Tax Guide for Aliens. • An alien spouse who is claimed as an exemption on a U.S. tax return but who is not eligible to get an SSN. • An alien individual who is eligible to be claimed as a dependent on a U.S. tax return but who is not eligible to get an SSN. To determine if an alien individual is eligible to be claimed as a dependent on a U.S. tax return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, and Publication 519. • A nonresident alien student, professor, or researcher who is required to file a U.S. tax return but who is not eligible for an SSN, or who is claiming an exception to the tax return filing requirement. • A dependent/spouse of a nonresident alien U.S. visa holder, who is not eligible for an SSN. ITINs are for federal tax reporting only and are not intended to serve any other purpose. The IRS issues ITINs to help individuals comply with the U.S. tax laws and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs). An ITIN does not provide authorization to work in the United States or provide eligibility for Social Security benefits or the Earned Income Tax Credit.
You need an ITIN as soon as you are ready to file your federal income tax return, since you need to attach the return to your application. To apply for an ITIN, complete Form W-7, Application for IRS Individual Taxpayer Identification Number. See the related Instructions for Form W-7 (PDF) for documents needed and where the application is to be submitted. Refer to the website Individual Taxpayer Identification Number (ITIN) for specific information. There are exceptions to the requirement to include a U.S. tax return with the Form W-7. For example, if you are a nonresident alien individual eligible to get the benefit of reduced withholding under an income tax treaty, you can apply for an ITIN without having to attach a federal income tax return. For a complete list of exceptions to the requirement to attach an income tax return, refer to the Exceptions Tables in the Instructions for Form W-7 (PDF).
U.S. source royalty income paid to a nonresident alien generally is subject to a 30% U.S. federal income tax. If you are claiming a reduced rate of U.S. federal income tax on U.S. source royalty income under a tax treaty, you should obtain an ITIN and provide it to the withholding agent on a Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (PDF). The Form W-8BEN is not filed with the IRS. Also, per the Exceptions Tables in the Instructions for Form W-7 (PDF), specifically Exception 1(d), Third Party Withholding on Passive Income, individuals who are receiving royalty distributions during the current tax year and are required to provide an ITIN to the withholding agent for the purposes of tax withholding and/or reporting requirements, must submit a signed letter or document from the withholding agent verifying that an ITIN is required to make distributions during the current tax year that are subject to IRS information reporting or federal tax withholding. For a sample signed letter, see Sample Letter from Withholding Agent in Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number (ITIN)(PDF).
No. The executor is required to include a Schedule K-1 (Form 1041) for each beneficiary when filing Form 1041, U.S. Income Tax Return for Estates and Trusts, for a decedent’s estate. The Schedule K-1 must provide the beneficiary’s tax identification number. Additionally, a nonresident alien heir or beneficiary who wishes to claim applicable reduced rates of U.S. federal income tax on distributions from the estate under a tax treaty should file with the executor of the estate a Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (PDF), which must provide the individual’s tax identification number. Please refer to Income Tax Return of an Estate—Form 1041 in Publication 559, Survivors, Executors, and Administrators. The Form W-8BEN is not filed withthe IRS. If the heir or beneficiary does not have a social security number, he/she must apply for an ITIN from the IRS. Please refer to Form W-7 and Instructions for information on applying for an ITIN.
Effective January 1, 2013, the IRS implemented new procedures for issuing new ITINs. Specifically, the new procedures apply to most applicants submitting Forms W-7 after June 21, 2012. Under these new procedures, Forms W-7 must include original documentation such as passports and birth certificates, or copies of these documents certified by the issuing agency. For more details, refer to IRS Implements Changes to ITIN Application Requirement.
Foreign persons are generally subject to U.S. withholding tax at a 30% rate on the gross amount of certain income they receive from U.S. sources. By providing a completed Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (PDF), to the U.S. payer (also known as the U.S. withholding agent) before or at the time income is paid or credited, you are: • Establishing that you are not a U.S. person, • Claiming that you are the beneficial owner of the income for which Form W-8BEN is being provided, and • If applicable, claiming a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty. In order to claim a reduced rate or exemption from tax under an income tax treaty, the Form W-8BEN must include a valid U.S. taxpayer identification number. The completed Form W-8BEN is provided to the U.S. payer (also known as the U.S. withholding agent) before or at the time income is paid or credited. This form is not filed with the U.S. Internal Revenue Service. For additional information, please refer to the Instructions for Form W-8BEN.
In general, Form W-8BEN only applies to certain payments to foreign persons. Since you are a U.S. citizen, regardless of where you live, you should provide your U.S. bank or payer with a completed Form W-9, Request for Taxpayer Identification Number and Certification (PDF), to:
• Certify that the tax identification number you are giving is correct (or you are waiting for a number to be issued),
• Certify that you are not subject to backup withholding, or
• Claim exemption from backup withholding applicable to payees that do not provide a valid TIN tax identification number or are U.S. exempt payees.
Please refer to Form W-9 Instructions for more details.
In general, the buyer or other transferee of U.S. real property must withhold tax on the sales proceeds when it acquires the U.S. property from a foreign person. This withholding serves to collect U.S. tax that may be owed by the foreign person. By law, the buyer must withhold 10% of the proceeds from the sale of U.S. real property by a nonresident alien. Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests (PDF), is used to report details of the sale, including the amount of U.S. tax withheld, and transmit the information to the seller and the IRS. The 10% withholding tax may be reduced or eliminated by filing Form 8288-B, Application for Withholding Certificate for Dispositions, by Foreign Persons of U.S. Real Property Interests (PDF), with the IRS before the sale of the U.S. real property occurs. The gain on the sale of your U.S. real property must be reported on Form 1040NR, U.S. Nonresident Alien Income Tax Return. The amount of U.S. federal income tax withheld that is listed on your Form 8288-A must be entered in the Payments section on page 2 of Form 1040NR in order for you to receive credit for the tax withheld. If the property you sold was owned by both you and your spouse, two Form 1040NR tax returns will need to be filed. You will need to each separately complete your own individual Form 1040NR. Include a schedule D with your Form 1040NR and divide all amounts equally when completing the various forms. If you incur a loss on the sale of the U.S. real property, you will need to file the Form 1040NR to claim a refund for the taxes withheld and reported on Form 8288-A. For more details, see Reporting and Paying Tax on U.S. Real Property Interests.
In general, nonresident aliens are subject to a 30% tax on the gross proceeds from gambling winnings in the United States, if that income is not effectively connected with a U.S. trade or business and is not exempted by an income tax treaty. However, no tax is imposed on no business gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. The tax withheld and winnings are reported to the nonresident alien on a Form 1042-S. Nonresident aliens are taxed at graduated rates on net gambling income won in the U.S. that is effectively connected with a U.S. trade or business, such as that of a professional gambler. Also, check any income tax treaties between the U.S. and the applicable foreign countries. For example, gambling income of residents (as defined in the respective income tax treaty) of the following foreign countries is not taxable by the United States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom. To claim any applicable treaty benefits, you must provide the payer a valid Form W-8BEN – with a U.S. taxpayer identification number – if the gambling income is not effectively connected with a U.S. trade or business. The Form W-8BEN is not filed with the IRS. See Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Reporting of Foreign Financial Accounts
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the U.S. Internal Revenue Service (IRS) by filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1). In addition, U.S. citizens and residents with specified foreign financial assets with an aggregate value exceeding $50,000 must report them to the IRS on Form 8938, Statement of Specified Foreign Financial Assets, attached to their federal income tax return. For further information related to this statement of specified foreign financial assets, see Information for U.S. Taxpayers on Form 8938 Requirements. The Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1). For a comparison table of these two foreign account reporting requirements, see the Comparison of Form 8938 and FBAR Requirements. Effective July 1, 2013, filers must electronically file the FBAR through the BSA E-File System. If unable to E-file, filers may contact the FinCEN Regulatory Helpline to request an exemption at 800-949-2732 or (313) 234-6146 (not toll-free, for callers outside the U.S.). Help in completing the FBAR is available Monday – Friday, 8 a.m. to 4:30 p.m. Eastern Time, at (866) 270-0733 (toll-free inside the U.S.) or (313) 234-6146 (not toll-free, for callers outside the U.S.). Questions regarding the FBAR can be sent to FBARquestions@irs.gov. Filers residing abroad may also contact U.S. embassies and consulates for assistance. For E-Filing system questions, call the FinCEN E-Filing Help Desk at (866) 346-9478, option 1 (M-F, 8-6 Eastern time) or email at BSAEFilingHelp@fincen.gov. See Report of Foreign Bank and Financial Accounts (FBAR), Foreign Account Tax Compliance Act (FATCA), and Information for U.S. Taxpayers on Form 8938 Requirements for additional information.
As a U.S. citizen living in Canada you: • Are required to file annual U.S. income tax returns and may be required to file certain information returns if applicable (e.g., Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans; Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90- 22.1) ; Form 8938, Statement of Specified Foreign Financial Assets). • Must report your worldwide income on your U.S. income tax return if you meet the minimum income filing requirements for your filing status and age. • Must contact the Canadian government to determine whether you must file a Canadian tax return and pay Canadian taxes • May be able to elect to exclude on your U.S. income tax return some or all of your foreign earned income, if certain requirements are met, or to claim a foreign tax credit if Canadian income taxes are paid. For more details, please refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 597, Information on the United States-Canada Income Tax Treaty.
The taxation of payments received from Canadian retirement programs that are similar to the U.S. Social Security system receive special tax treatment due to an income tax treaty between the United States and Canadian governments. The way this income is taxed depends on the recipient’s residence. The special tax treatment applies to payments receive from the following Canadian retirement programs: Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) If the recipient is a resident of the United States, the benefits: • are taxable only in the United States, • are treated as U.S. social security benefits for U.S. tax purposes, and • are reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040A) on the line on which U.S. social security benefits would be reported. If the recipient is a U.S. citizen or lawful permanent resident (green card holder) who is a resident of Canada, the benefits are taxable only in Canada. NOTE: Refer to Tax Topic 423, Social Security and Equivalent Railroad Retirement Benefits, for information about determining the taxable amount of your benefits.
You will need to contact the Social Security Administration, as the IRS does not issue SSNs. Use Form SS-5-FS, Application For A Social Security Card, which may be obtained from and filed with the Social Security Administration. For foreign born children, review the article found on the SSA’s website entitled “Obtaining a Social Security number for a foreign born child.”
The IRS makes available the list of countries with which the U.S. currently has income tax treaties in force. Refer to Publication 901, U.S. Tax Treaties, for more information regarding United States tax treaties. You can also locate the complete list and texts of the current treaties at United States Income Tax Treaties – A to Z on IRS.gov.