Taxes In The Usa After Living In Thailand Over A Year

[gray42]

I'm not sure where I should post this, so sorry if it's in the wrong forum. I've been in Thailand over a year and have money that comes in from a company in the US, so according to many websites I should qualify for the Foreign Earned Income Exclusion. Here's something I saw on another website:

"If you have your full time residence abroad for a full calendar year (bonafide residence test) or do not return to the US more than 35 days in a consecutive 12 month period (physical present test), you can exclude up to $91,500 of earned income from U.S. Income Taxation for 2010 and lesser amounts in earlier years."

Since I've been in Thailand for the entire 2012 calendar year, it appears that I shouldn't have to pay any taxes. What I'm wondering is how do I let the IRS know that I've been living abroad? How do I prove that I've been in Thailand this whole time? Are there forms I need to fill out, and if so, will my time already spent in Thailand still count towards the days required living outside of the US?

Thanks for any information...

[lanny]

There is more to it than that! Only EARNED income can be excluded. You don't say where your income comes from. If it is not salary or commission, it doesn't qualify! If it is dividends, interest, rent, etc. it is still taxable in the US.

In any case, you must file a US tax return. If the income can be excluded, you need to report that as income and then tell the IRS about the foreign source, etc. You must give them information showing that you qualify for the exclusion and then deduct the amount from your gross.

Since you don't seem to know anything about the applicable rules, I suggest that you consult a qualified tax professional.

[Thanyaburi Mac]

Sounds like you are NOT talking about "foreign earned income," which the IRS Form 2555 addresses:

http://www.irs.gov/pub/irs-pdf/f2555.pdf

Download the 12 pages (ugh!!) of partially incomprehensible instructions for the form here:

http://www.irs.gov/pub/irs-pdf/i2555.pdf

Good luck.

Mac

[Sheryl]

As others have said, you'll be exempt only if it is earned income for work performed outside the US (that the employer may be US based doesn't matter as long as the work was done abroad). If it is not "earned income" then no exclusion. Interest, dividends, capital gains are all taxed the same as if you were resident in the US.

If you are self-employed, you are still liable for self-employment tax, there is no foreign exclusion for that. You have to pay it even on income that was excluded from the 1040 net as foreign earned.

The foreign exclusion on earned income can be claimed on either of two bases: (1) having established a permanent residence abroad or (2) being physically out of the US for at least 330 days in a consecutive 360 day period (or thereabouts - double check the exact number). That period does not have to exactly coincide with the tax year, it can start prior to or extend beyond as long as it adds up to the right number of days. But you will only be able to exclude income earned abroad so any work done in the US during the tax year is fully taxable regardless. (Same is true if you have a permanent residence established abroad...for example, I've settled permanently in Asia but when I did some work in the US during a trip there a few years back I had to pay income tax on that).

And no matter what, you have to file. But you can get an automatic 3 month filing extension. (This will not however exempt you from interest ion any tax owed).

The forms for claiming the foreign income exclusion and instructions are in the main 1040 booklet (the large one that has multiple forms) or easily downloaded from the IRS website along with related pamphlets.

[TerryLH]

If you no longer live in the states, State Tax filing (and paying) is probably no longer required.

Not sure if that is now for all states, or not.

If you don't file a state return, they may send you a letter asking for payment. Explain that you no longer live there.

It took two letters from Calif for me to get it across to them, but haven't been bothered again in many years.

Terry

[meatballs]

Haven't paid taxes in years.. You don't owe anything if you live abroad. If the guvy don't like it tough.

[HeijoshinCool]

If you no longer live in the states, State Tax filing (and paying) is probably no longer required.

Not sure if that is now for all states, or not.

If you don't file a state return, they may send you a letter asking for payment. Explain that you no longer live there.

It took two letters from Calif for me to get it across to them, but haven't been bothered again in many years.

Terry

They patiently anticipate your return, with great interest.