If you're a U.S. citizen or resident alien, any income you make, regardless of where you made it or where you're living, is subject to federal income tax. In fact, the same filing regulations apply to income, gift, and estate taxes and for estimated taxes for citizens and aliens living in the U.S. or abroad. An automatic two-month extension for filing and paying your taxes may be granted if you meet certain conditions. To qualify for an extension, you must be either living and working or be serving in the military outside the United States and Puerto Rico. Vacationing taxpayers don't qualify for the extension. Even if you've renounced your U.S. citizenship, you're still subjected to the tax laws of the United States for 10 years. If you don't pay the taxes you owe and are living abroad, it may be more difficult for the IRS to take action to recover unpaid taxes. However, tax agencies in other countries will often work with the IRS to collect unpaid taxes from Americans abroad. When filing your return from outside the U.S., you are not allowed to deduct any taxes withheld by a foreign employer who didn't pay these taxes to the U.S. Treasury. In contrast, you may be entitled to certain benefits, like being able to deduct housing expenses from your taxable income under the 'foreign housing deduction.' In addition, the 'foreign earned income exclusion' may allow you to claim up to $74,000 (seventy-four thousand dollars) as nontaxable. If you're filing your tax return from outside the United States, a tax professional can advise you in tax matters specific to your situation.
©2006 Crossroads Mobile. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
