# Student abroad-behind on taxes



## Erefornorn (Nov 29, 2017)

Hello everyone!

A friend of mine was telling me as a US citizen I have to report foreign income and I've been very confused as to what to do and where/how to start. I moved to Iceland on a student visa in August 2015 and worked a part time job starting Sept 2015 and have worked in that job in parallel with my studies since then to this day.

Information about my situation:

Filed for 2015 tax year in Feb 2016 but did not report the foreign income I earned nor reported that I have a bank account in Iceland (it has never gone over $10,000, btw).

I have not filed for 2016 tax year, yet. It looks like i have already missed the deadline in April and even the extension deadline. I was thinking of going ahead and file it late sometime in December.

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I'm wondering if I should amend my 2015 taxes and go ahead and file my late 2016 taxes.

I'm not sure if I qualify for FEIE via bona fide resident or not. My tax home is Iceland, I have a resident card. The only period I would qualify for the physical presence test for FEIE is the period between sept 2015 until sept 2016 (only traveled to the US for a total of 30 days). If I were to use the physical presence test period for sept 2015-sept 2016, I'm not sure how to factor that in with an amended 2015 filing and a late 2016 filing.

I have wondered if the streamlined option would benefit me or not.

It looks like my options are:

1. Amend 2015, file late 2016, and file 2017 on time in the upcoming spring.

2. Do nothing and hope for the best. If I did this, if and when I move back to the US, I am not sure if 2 missing years of tax filings would look suspicious to the IRS or not.

Any thoughts advice or feedback?


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## Bevdeforges (Nov 16, 2007)

How about "none of the above" as far as your options are concerned?

OK, first of all, the way the FEIE works, you need 12 consecutive months of living outside the US before you can use it. But in your case, you could have taken the FEIE for all salary earned outside the US once you fulfilled the physical presence test requirement. What you "should" have done was to have filed for an extension for 2015 until you hit the one year mark (August or September of 2016) and then filed 2015, with your Iceland income excluded (using form 2555) - so net-net, no change in anything you owed anyhow. At this point, I wouldn't bother amending your 2015 filing.

As for 2016, the deadline for anyone outside the US is automatically deferred to June 15th. But ok, you've missed that one, too. Still, you can file the 2016 return now and, assuming you owe no taxes (taking the FEIE for your Iceland job salary), the penalty for late filing is $0. 

You can then file your 2017 return by June 15th in good conscience.

One other thing to remember is that, assuming you're single, the filing threshold is a little bit more than $10,000. If you didn't make at least that in 2016, you don't have to file a return at all. (Though you do have to count the salary from your job, even though they are going to exclude it.) I mention this only because student jobs have a tendency not to pay very much. And part-time student jobs very often fall below the filing threshold.
Cheers,
Bev


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## Erefornorn (Nov 29, 2017)

Thanks for your quick reply, Bev! It was very helpful.

I do still have a concern. My concern with filing the late 2016 filing next month is if i indicate that I have a foreign bank account (isn't that on Form B or something like that?), this year, wouldn't it look suspicious that I didn't indicate this on the 2015 filing? Perhaps it's best to let the 2015 one go and not amend it, like you said. 

If i use the bona fide residence test, then wouldn't i have to say that the bona fide residence began Aug 2015 or do i just say Jan 2016 for this purpose?

And by the way, my income was about 16,000 USD for 2016, since wages are very high in Iceland, even for part time work.


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## Bevdeforges (Nov 16, 2007)

Don't overthink this. 



Erefornorn said:


> Thanks for your quick reply, Bev! It was very helpful.
> 
> I do still have a concern. My concern with filing the late 2016 filing next month is if i indicate that I have a foreign bank account (isn't that on Form B or something like that?), this year, wouldn't it look suspicious that I didn't indicate this on the 2015 filing? Perhaps it's best to let the 2015 one go and not amend it, like you said.


They really don't check that Schedule B thing all that closely. If the account is, as you say, less than $10,000 you aren't required to report it on an FBAR anyhow. And who's to say that you set up your bank account in 2015 anyhow? Seriously, I wouldn't worry about it. 



> If i use the bona fide residence test, then wouldn't i have to say that the bona fide residence began Aug 2015 or do i just say Jan 2016 for this purpose?


No, you should be using the physical presence test - not the bona fide residence test. Physical presence only requires that you are outside the US for 330 days of a period of 12 consecutive months. So your physical presence started August 2015 - not only for your 2015 return, but for your 2016 and 2017 returns.

Bona fide residence requires an entire calendar year spent outside the US. So for 2015 you don't qualify for bona fide residence. For 2016 you can use the bona fide residence test if you like (or the physical presence, if you prefer), and for that, the date your bona fide residence started is still Aug, 2015. It's just that you don't qualify for FEIE under bona fide residence until Jan. 1 2017 (full calendar year). 


> And by the way, my income was about 16,000 USD for 2016, since wages are very high in Iceland, even for part time work.


OK, so you have to file. (I tried. <g>) but the limit for the FEIE is over $100,000 so you will be able to exclude your entire earned income anyhow - and your AGI on the last line of the first page of your 1040 should amount to just any bank interest you may have received during the year.

Pub 54 for details of how to fill out the forms, if you haven't already looked at it.
Cheers,
Bev


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## Erefornorn (Nov 29, 2017)

Bevdeforges said:


> No, you should be using the physical presence test - not the bona fide residence test. Physical presence only requires that you are outside the US for 330 days of a period of 12 consecutive months. So your physical presence started August 2015 - not only for your 2015 return, but for your 2016 and 2017 returns.
> 
> Bona fide residence requires an entire calendar year spent outside the US. So for 2015 you don't qualify for bona fide residence. For 2016 you can use the bona fide residence test if you like (or the physical presence, if you prefer), and for that, the date your bona fide residence started is still Aug, 2015. It's just that you don't qualify for FEIE under bona fide residence until Jan. 1 2017 (full calendar year).


Okay. I'm doing my best to not overthink this. 

I might need to clarify something which is probably why i'm confused as to whether I should use the bona fide resident test or the physical presence test when I file for 2016 next month.

From Sept 2015-Sept 2016, I was in Iceland for 335 days. From Sept 2016 until now I was in Iceland for about 306 days.

However, I have had my residence card and had my tax home in Iceland since August 2015.

I downloaded Pub 54 and am now educating myself on the forms!


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## Bevdeforges (Nov 16, 2007)

What most folks do is to file using the physical presence test for their first year outside the US. This is because you only need 12 consecutive months of physical presence vs. the "full calendar year" bit for bona fide resident. 

The second year (2016) you can claim bona fide resident because you have the requirements for that. (And technically speaking, you don't have to maintain the 330 days outside the US thing for bona fide resident.) But your date that your overseas residence began is still August, 2015. The bona fide resident requirements are a bit more open to interpretation. I know I was always concerned about the line that asks you what sort of visa you're on, because my first two years in France I was technically a "*******" (long story - kind of a massive misunderstanding) so I filled that in with "n/a." Never had anyone ask me about that.
Cheers,
Bev


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