Are you an American? Do you live in a different country other than USA? If yes, it does not mean that you don’t need to pay any kind of income tax. You would need to file your tax return with Internal Revenue System (IRS). If you’re thinking that the process will be full of hassle, think again! You can easily file your tax return even if you’re staying overseas.
While staying away from your country, you can file your income tax return in two ways. You can use IRS form EZ-2555 to file your return else can use “Foreign Earned Income Form 2555.” There is not much of change in tax rules, if you’re filing tax return from overseas. Same tax rules will be applied that were applicable had you been filing from your respective state. Tax deadline will remain same i.e., April 15th. Since you’re staying overseas, you have one benefit that you get two months extension. However, in order to get the extension, you must submit the official statement stating that you’re not living in United States.
There are few issues that US citizens face while filing tax returns from different country. Most of the citizens face issue in getting W-2 forms from their last employers; this is one of the most common issues. Moreover, IRS does not provide any kind of leniency in this regard. So, it becomes totally your responsibility to arrange for this form. You can ask your employer to send soft copies of the required documents as these will work to tax return with IRS and physical documents can be obtained for future records. The soft copy will be accepted by the IRS on temporarily basis.
In some cases, US citizens living overseas have a spouse of different origin. If your wife or husband is not a citizen of America, you can choose from various options to file tax returns. Mainly there are two options. First, you can go for “Marriage filing separately.” In this case, you would be declaring the income of that year only. If a couple have children and husband is responsible for more than 50% of their support, then husband is the “Head of Household.” With filing separately option some disadvantages has also been associated. The most common is that you will not get any kind of tax credits that are related to education, children, and dependant.
Since you’re staying overseas and filing taxes from there, you will get two months extension however, it doesn’t mean that IRS cannot audit your income. They will treat you like any other US citizen. Therefore, experts strongly suggest hiring an expert and qualified tax consultant to prepare tax returns as they will have complete knowledge about tax laws and tax relief options. You can get in touch with US embassy in country you’re living for some of the references. A tax professional is necessary as you’re living abroad and you’re more likely not to have easy access to someone who can give you complete information on how to go about filing taxes from any foreign country.