# Filing from Italy with a US address



## Aratal (Jul 4, 2012)

I'm in the midst of filing out my 1040, but for all intents and purposes, my resident address is still in the U.S. I'm employed by a company online that uses my U.S. resident address; *all *of my income is U.S.-based and goes into a U.S. bank account, as well. 

I live with my Italian spouse (we married in the U.S. then I moved here) and my father-in-law. I am the breadwinner and pay the bills here. Do I claim them as dependents? Most online tax forms also don't let me write NRA for the space for their SSN or ITIN.

Where does that leave me for calculating my taxes online? Can I file them as if I lived in the states still? I've downloaded the blank forms so I can email them to my sister back home and she can mail them, but I'm still a bit confused on what to do for the dependents and their nonexistent ITINs.

Thanks for your help!


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## Bevdeforges (Nov 16, 2007)

What do you mean that your "resident address is still in the US?"

It doesn't matter where your employer is based, nor what address your employer is using for you. (Well, I'll get back to that....) Nor where you are being paid (in what currency nor into what bank where).

You are working wherever you are located while doing the work. If you are living in Italy, then you are resident there, even if you're being paid in the US, in US$ and with US withholding taken from your pay.

You can't declare your inlaws as dependents unless they are US citizens. And you aren't supposed to take your NRA spouse as a dependent. Either you file as "married, filing separately" (if she has no US filing obligation) or you elect for her to be treated as a US resident, and you file jointly (however in that case, you must get an ITIN for her and declare her worldwide income in addition to your own).

If your employer is using a US address for you, chances are they are also withholding the relevant state income tax, which you probably don't owe. However, getting your state withholding back can be something of a trick.

Take a look at IRS Publication 54 Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad You should be filing as an overseas resident, and taking either the FEIE or the Foreign Tax Credit. (Plus, you need to be enrolled in Italy's social insurance system - otherwise you may very well have problems with the tax authorities over there.)
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Moreover, on the Italian side you're required to file an Italian tax return including Form RW (Italy's financial disclosure form). Italy has both income and wealth taxes. The wealth taxes are levied on most financial and real estate assets held outside Italy, assets you declare each year. As a resident Italy taxes your worldwide income, though you can take a foreign tax credit for U.S. tax paid on your U.S. source income.

Italy gets paid first on Italian-source income, which is probably most of your income. (You're working in Italy, so your income from work, paid by your employer, is now Italian source.) On your U.S. tax return you'd then take both the Foreign Earned Income Exclusion (IRS Form 2555) and the Foreign Tax Credit (IRS Form 1116), or you'd only take the Foreign Tax Credit. Given that Italy has rather high rates of income tax you're probably better off taking only the FTC, but you can use tax preparation software to try both paths.

You have to pay into one of the two countries' social security systems. If your U.S. employer is deducting contributions for U.S. Social Security and Medicare, that's fine, that'll work. (You don't actually have a choice, but that arrangement is better for you as it happens.) The U.S. and Italy have a social security treaty, and you can read more about it here.

Italy and the U.S. have a tax treaty that may offer some benefits. I am assuming you are not working for the U.S. government. I'm assuming that you are not subject to the status of forces agreement between the U.S. and Italy. If my assumptions are incorrect, then you may be subject only to U.S. tax even though you physically reside in Italy.


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