Working outside the USA? Don’t forget about these IRS requirements!

[alert style=”warning”]This is the fifth of our Year-End Tips for Tax Planning series. Every two weeks until the end of the year, we’ll give you ways to keep more of what you’ve earned. Use them as building blocks in your financial planning[/alert]

Out of sight – out of mind. It’s an old cliche, but nonetheless true.

You may still have to file a tax return if you live outside the United States and maintain your US citizenship.
The rules for determining if you need to file a tax return are the same as if you still lived in the United States.
The bad news is that you must report all of your worldwide income on your US tax return.
However, the good news is that you may be able to exclude some of your “foreign earned income” on your tax return. The income is still entered on the tax return and then subtracted (provided you meet certain tests) under specific exclusions in the tax code.
Even if you can exclude all your “foreign earned income” on your tax return, if you have self-employed income you may still have to pay the Self Employment Tax on that income.

Here are some other relevant items to remember:

• If you have over $10,000 in foreign bank or financial accounts at anytime during the year, you may have to report them to the IRS.
• You may still have to file state income tax returns even if you no longer live in the U.S. depending on the state and your facts and circumstances.
• You may be able to take a dollar-for-dollar credit for foreign taxes paid.
• You cannot take both the Foreign Earned Income Exclusion and the Foreign Tax Credit or the deduction for taxes on Sch A.
• You may still be subject to the Obamacare penalty if you do not have health insurance.

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