U.S. Citizens Overseas
Question: I am a U.S. citizen working for a U.S. firm in a foreign country. Are any of my wages or expenses tax deductible?
Answer:
In preparing your U.S. income tax return, U.S. citizens and residents working abroad must correctly report their income and calculate their deductions and credits.
- U.S. citizens and resident aliens are taxed on their worldwide income.
- You must report your wages and other earned income on the correct lines of your Form 1040 (PDF).
- Some taxpayers may qualify to exclude a limited amount of their foreign earned income and either claim the housing exclusion or deduction. To qualify:
- Their tax home must be in a foreign country, and either:
- They must be U.S. citizens who are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year;
- They must be U.S. resident aliens who are a citizen or national of a country with which the United States has an income tax treaty and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year; or
- They must be U.S. citizens and resident aliens who are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
- Their tax home must be in a foreign country, and either:
- Taxpayers may be able to claim a foreign tax credit if required to pay a foreign income tax to the foreign country, if he or she has not elected the foreign earned income exclusion with respect to that income.
- Taxpayers may also qualify to deduct away from home expenses (for travel, meals, and lodging), but not against excluded income.
Additional Information:
- Form 2555EZ (PDF), Foreign Earned Income Exclusion
- Tax Topic 514, Employee Business Expenses
- Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- Form 1116 (PDF), Foreign Tax Credit
- Publication 463, Travel, Entertainment, Gift and Car Expenses
- Form 2555 (PDF), Foreign Earned Income
- Publication 514, Foreign Tax Credit for Individuals
Category: U.S. Aliens and Citizens Living Abroad
Subcategory: U.S. Citizens Overseas
