Poll: Predict the outcome of the U.S. presidential election (electoral college and after)

[doontp]

I live and work in LOS and earned roughly $12,000 in 2011.

The IRS sent me a bill indicating I owe $300 based on my 2011 foreign earned income.

I thought US Expats did not have to pay any taxes using the “Foreign Earned Income Exclusion.”

Also, I lived and worked in LOS in 2010 and 2009, earning the same amount and the IRS says I do not owe money for those two years.

I appreciate any feedback on this.

[Javabear]

^{Did you return to the US for anything? If you stayed in the US for more than 30 days in a 12 month period then you will not qualify for the exclusion.}

[lanny]

If you were self-employed you would still owe social security taxes. The foreign earned income exclusion only applies to income taxes, not to social security, self-employment taxes.

It is NOT true that you would not qualify if you went back to the US for more than 30 days. The requirement is that you be outside the US for 335 days out of any 12 month period. You can use two q month periods in any given year - one for the time before going to the US and one for the time after you return. Since the exclusion is pro-rated on a daily basis, the amount of the exclusion would be less than the full $90,400 but should still cover a $12,000 income.

Did you file a return? I would think so, otherwise how would IRS know about your income? Did you include a Form 2555 in the return you filed? The exclusion is not automatic, you must elect to claim it by filing the Form 2555.

To give you a definite answer, however, you would have to provide more information - what did you report and what did IRS say?

[doontp]

Yes, I did file a return....Form 1040 and I attached Form 2555EZ. I did this for 2009, '10 and '11.

I never received a tax bill for '09 and '10. I claimed roughly $12,000 income for each year. I completed the forms exactly the same way each year. I simply followed the 1040 and 2555EZ instructions to the best of my ability.

Also, I did not spend more than 30 days in the US during any time in the last 3 years. I am not self-employed. I work as an English teacher.

I did not know the foreign earned income exclusion only applies to income taxes, not to social security, self-employment taxes. Thanks for this info. This explains having a tax bill of any kind.

I called the IRS and a lady only indicated what I owed with no explanation. Her tone sounded like she was in a bad mood. She said I could dispute the bill and then transfered me to a different department. I hung up after being on hold for 10 minutes.

[Laceman1]

I received a bill from IRS as well for my Foreign Income. There is a worksheet on page 36 of form 1040 you have to complete. It, in effect, adds foreign income as taxed income. I filed form 2555 in 08,09,10, and 11. First time taxed on my foreign income. Going to try and amend my return somehow first before caving - in and paying.

[el jefe]

Working as an English teacher may not relieve you of your obligation to pay Self-Employment/SocSec/Medicare taxes.

You are also required to pay tax on any investment income you have, no matter the source.

The IRS usually sends an explanation of the changes to your return before just sending a notice stating the balance due. Without seeing that letter and your tax return it's difficult to determine the cause of the problem.

[CaptHaddock]

Did you elect the Foreign Earned Income Exclusion by submitting IRS form 2555? It is not automatically applied.

The exclusion is an election. Taxpayers may claim the exclusion only if they file IRS Form 2555 or Form 2555-EZ. The form must be attached to a timely filed U.S. Individual Income Tax Return (IRS [ Form 1040]) for the first year of election, or an amended timely filed return. IRS regulations allow the election with late filed returns in some cases.[4] The election to exclude may be revoked at any time; however, once revoked the exclusion may not be elected again for five years.

http://en.wikipedia....m_2555_required

The best source of answers to US tax questions is: www.fairmark.com

Edited April 25, 2012 by CaptHaddock

[lifeisthefun]

I received a bill from IRS as well for my Foreign Income. There is a worksheet on page 36 of form 1040 you have to complete. It, in effect, adds foreign income as taxed income. I filed form 2555 in 08,09,10, and 11. First time taxed on my foreign income. Going to try and amend my return somehow first before caving - in and paying.

Yep, be alert to that. I screwed up on it one time and had the IRS on my back. A couple of letters back and forth and at least one phone call resolved the issue.

I recally being terrified the first time I saw the red bordered envelope sitting in my mail tray but the experience wasn't too bad - the people I dealt with seemed reasonable and knowledgable. In fact, if I remember correctly, they took off a penalty when I was able to convince them E*Trade was at fault because of the screwy tax docs they provided me, rather than my own negligence.

So, the IRS may not be all cuddly yet but they don't seem to slap people around anymore either.

Btw, a note about TD F 90-22.1, the form to declare foreign bank accounts. It seems pretty benign and the fact that it goes to the Treasury and not the IRS indicates its purely informational. Was there talk of people renouncing their citizenship over this? Bizarre! Yes, it's intrusive but looks to be a total of 10 mins. to fill out if you have your papers handy.