# Taxes when repatriating to the US



## ephain (Jan 23, 2012)

I have a question on tax liability when moving BACK to the US. 

The situation: I am a US citizen living abroad, and have been away for about 7 years. I have met the bona fide residency test each year and have filed as such. I am paid in EUR and am localized in Germany, so I also claim the Foreign Tax Credit.

My family and I are planning to move back to the US this year. For simplicity, lets say July 1 (50% of the tax year). 

Will I be able to claim a proportional Foreign Earned Income Credit on that first 1/2 of the year, or do I not meet the criteria because I will not meet the bona fide residency test for the 2012 tax year?


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## RødGrød (Oct 8, 2011)

Hi Ephain

I am not sure if you can take the Foreign Earned income _Exclusion_ (for which you need to meet the bona fide residency test) but you will definitely be able to use _foreign tax credits_, which require no test. See IRS form 1116.


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## Bevdeforges (Nov 16, 2007)

Check the instructions in Publication 54, but your income earned while resident in Germany should be eligible for the FEIE. The "catch" is that, if you move back on July 1st (your example), your FEIE will be limited to 182/366 (2012 is a leap year) of the max amount ($92,500 I think - but check that) - or $45,997.

You can still take the foreign tax credit on any "excess." 
Cheers,
Bev


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## SteveOdem (Jan 23, 2012)

ephain said:


> I have a question on tax liability when moving BACK to the US.
> 
> The situation: I am a US citizen living abroad, and have been away for about 7 years. I have met the bona fide residency test each year and have filed as such. I am paid in EUR and am localized in Germany, so I also claim the Foreign Tax Credit.
> 
> ...



Note you may have residual pension rights in Germany. Those rights and related benefits may be totalized with US Social Security, pursuant to a totalization agreement between the countries. 

Depending on the details, this may or may not benefit you at retirement, but keep it in mind.


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