# US Taxes



## Brouk Pytlik

Hi, please, I would need help summarizing what all forms do I need to fill out to file US taxes if I live abroad. As far as I know I have to file 1040, 2555EZ, FBAR. Anything else? Do I have to file also 1116 and 6251? Do I file 1116 since I am filing 2555EZ? Or any other forms I did not mention? My income is only from my wage and I do meet the 97K limit, I don´t have any investments, no dependents, no pension, no stocks, nothing really to deduct or add. Also I am confused on the form 2555EZ by line 18 (there is nothing about this line in the form instructions).It says: on form 1040 line 21 subtract this amount from your income to arrive at total income on form 1040, line 22. If I do so, I will get 0 on line 22. But on the actual form 1040 on line 22 says the opposit: Combine the amounts for lines 7-21 (that means including the amount from the form 2555EZ) which would actually means double the amount for me.

Can you please someone clarify this for me, what all forms I need and how is it with line 21 on form 1040?

Thank you very much,
Brouk Pytlik


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## BBCWatcher

Brouk Pytlik said:


> Anything else?


That's an awfully tough question to answer definitively since we don't know your full situation. However, to give one possibility, since you're filing FinCEN Form 114 (FBAR) you may also be required to file IRS Form 1040 Schedule B to report interest.

You should also attach the simple overseas residence statement described in Publication 54 to extend your filing due date to June 15.



> Do I have to file also 1116 and 6251? Do I file 1116 since I am filing 2555EZ? Or any other forms I did not mention? My income is only from my wage and I do meet the 97K limit, I don´t have any investments, no dependents, no pension, no stocks, nothing really to deduct or add.


If your income is fully excludable through the Foreign Earned Income Exclusion (Form 2555/2555EZ), then Form 1116 (Foreign Tax Credit) is at least optional. If I may ask, approximately how much were your total earnings? That would be relevant to qualify for the Earned Income Tax Credit (EITC), in which case you'll want to take the Form 1116 path instead of the Form 2555/2555EZ path.

Form 6251 is the Alternative Minimum Tax (AMT). You will have to read and follow those instructions to determine how much AMT paperwork you need to submit, yes.



> Also I am confused on the form 2555EZ by line 18 (there is nothing about this line in the form instructions).It says: on form 1040 line 21 subtract this amount from your income to arrive at total income on form 1040, line 22. If I do so, I will get 0 on line 22. But on the actual form 1040 on line 22 says the opposit: Combine the amounts for lines 7-21 (that means including the amount from the form 2555EZ) which would actually means double the amount for me.


Form 2555EZ says to put the line 18 amount _in parentheses_ on IRS Form 1040 line 21 and to put "2555-EZ" on the line next to that amount on your 1040. (A number in parentheses is a negative number in accounting.) Then you determine Form 1040 line 22 exactly as directed. Line 22 certainly could be zero and often is.


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## Brouk Pytlik

Thank you BBCWatcher for your reply. Well, my income for the whole year was about 31200 USD and all the interests on my accounts were 3,31 USD. Do I really have to fill out another form (Schedule B) for 3 dollars? I did follow your instructions with the parentheses and yes I did get to 0 . Also, my employer does not send any documents to the IRS, but they gave me something like a summary of one amount (total income) and one amount (total tax payed already over here), I probably should attached a copy of this with the 1040, right? It is in Czech language though. Thank you


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## Bevdeforges

Have moved you to the Expat Tax section, where you should be able to find plenty of information about filing your taxes.

Basically, you don't "have to" file much of anything. And what you're supposed to file can be pretty simple - particularly for the scenario you're describing.

Probably the best and easiest explanation is the tax booklet that is put out by the Paris IRS office each year. Follow this link U.S. Taxes (IRS) | Embassy of the United States Paris, France and then click on *Tax Assistance Information for Tax Year 2013. *

Then visit this page http://france.usembassy.gov/irs.html (also the Paris IRS office) and scroll down to the bottom of the page for links to most of what you could possibly need.

Briefly put, your simplest option (based on what you've said so far) is to file a 1040, 2555EZ and a Schedule B. You don't have to file the Schedule B due to your $3 in interest, but you do have to file it to check off the box at the bottom of the form stating whether or not you have overseas (i.e. non-US) bank accounts.

If your salary and that interest are your only income (worldwide income) then that's it. You only need to file an FBAR if your overseas bank accounts have a combined total of $10,000 or more at any time during the tax year. And the FBAR has to be filed online.

You don't need to send in anything from your employer about your salary. They actually (kind of) trust you to report it and convert it to US$ on your own. Hold onto your records and note down how you calculated the figure you reported - but chances are, you'll never be questioned about any of it.
Cheers,
Bev


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## BBCWatcher

I agree with Bev, but let me elaborate on a couple points.



Brouk Pytlik said:


> Well, my income for the whole year was about 31200 USD and all the interests on my accounts were 3,31 USD. Do I really have to fill out another form (Schedule B) for 3 dollars?


As Bev and I said, afraid so, but it's easy in your case.

OK, with an income of US$31,200 you don't qualify for the Earned Income Tax Credit, especially assuming you're unmarried (filing Single). You also said you have no dependents (no children), so you do not qualify for the Additional Child Tax Credit, another refundable tax credit. I'm 99.9% sure you don't qualify for the Excess Social Security Credit and the Health Coverage Tax Credit -- almost nobody does.

So, just to rule everything out in terms of refundable tax credits, during the tax year did you incur educational expenses as part of the first 4 years pursuing an undergraduate college/university degree? If you did, then you may qualify for the American Opportunity Credit and possibly receive tuition assistance from the IRS. If not, then we've ruled out all five types of free money available from the IRS.

Assuming you're not eligible for any free money -- sorry! -- you would still want to file Form 1116 instead of Form 2555 (or 2555EZ) if your total income tax you're paying in the Czech Republic is higher than what you'd pay in the U.S. on your income. But that looks very unlikely since the Czech Republic does not appear to be a comparatively high income tax jurisdiction. So, if all that is correct, it would appear your best option is Form 2555EZ. So the best you can do is zero U.S. income tax. That's still pretty good, but I'm greedy, which is why I go through the exercise of seeing if I can do better than zero. (Sadly, not for me either. But General Electric routinely does better than zero, so if they can, I at least try. )



> I did follow your instructions with the parentheses and yes I did get to 0 .


Really? I think you should have about $3.31 on line 22 (your interest income). But you're at least closer to the truth. Most probably line 3a will be $3.31, line 21 will be the same number as line 7 (but a negative amount), and line 22 will thus end up as $3.31. Remember, your total worldwide income has to appear somewhere in lines 7 through 21. That includes your $3.31 of bank interest, which goes on line 3a.

While I'm on the subject of worldwide income, keep in mind that some countries deduct income tax on bank interest before the interest is paid. For example, if your bank deducts 15% income tax, and the $3.31 is post-tax, then what you should actually report on line 3a is $3.89. No, this won't actually matter for you in the final calculation -- you're not going to owe U.S. tax either way -- but I thought I'd mention it at least for the future when you're receiving millions of dollars. 

Same thing for your earned income. You should be reporting pre-tax income on line 7 (and in Form 2555/2555EZ, unless otherwise directed). That includes some occasionally weird things. For example, if your employer is paying for life insurance for you, and if the death benefit of that life insurance exceeds $50,000, then the portion of the cost of that life insurance for the death benefit above $50,000 is considered reportable income. Weird, but there you go. Just think about all the income, including non-cash types of income (like that life insurance example), you received and get it listed somewhere in lines 7 to 21, and you'll be fine. The IRS helps you with some good instructions about what counts as income.



> Also, my employer does not send any documents to the IRS, but they gave me something like a summary of one amount (total income) and one amount (total tax payed already over here), I probably should attached a copy of this with the 1040, right? It is in Czech language though.


I agree with Bev. The instructions say to attach your W-2 forms (and sometimes W-2G and 1099-R forms). You don't have any of those forms since you didn't receive U.S. source income. It doesn't matter what language your foreign (non-U.S.) wage statement is in. If the instructions don't request it (and they don't), you don't attach it. Simple.


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## Bevdeforges

One quick caveat to BBCWatcher's advice: you are allowed to round to even dollars if you like. That kind of eliminates the whole issue of the $3 in interest - and frankly, adding a dollar or two "just to be safe" won't affect anything anyhow.

The KISS principle (keep it simple, stupid) most definitely applies to tax matters.
Cheers,
Bev


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## BBCWatcher

Yes, agreed, though in this case (with rounding) it matters: $3 or $4 depending on pre-tax or post-tax.

I prefer not to round for my own sanity since it's easier to figure out what I did (months and years later) if I carry through the cents as I go. I also like to report sub-dollar figures (e.g. $0.13 of interest) on my tax return because then later I know that I checked that particular account and didn't forget it. I've actually done that, many times. Obviously $0.13 of interest doesn't change your tax bill, but it does help maintain some continuity in record keeping so that you know what you did if you ever have to go back and review your own tax returns.

But yes, the IRS lets you round your numbers to whole dollars if you wish, unless they say otherwise in the instructions.


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## Brouk Pytlik

Hi, thank you very much for all your help. This is the first time for me to be filing the taxes and from abroad on top of that and so I got totally lost in all that paperwork when one form refers me to tons of other forms. I looked at the instructions from you and I will correct the forms based on your advice. Thank you again


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## DavidMcKeegan

Hello,

Yes, it is so easy to get confused by the mass number of Forms and Schedules that are out there! It is generally best to just start out with the 1040 and either the F1116 or F2555 and work your way out from there.

Generally the easiest route is to go with Form 2555 (although if you are living in a high tax jurisdiction, that may not always be the most beneficial route). This article will walk you through how to understand and prepare that form.

I hope this helps!

Good luck


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