US Tax Question - 2555EZ

[BKKSnowBird]

I have another tax question if anyone can help please?

I have been teaching in Thailand. I use 255EZ to exclude this income on my US tax return. I also understand you are only liable for social security tax if I entered my contract while still in the US. I found my job after I arrived.

If I was to get audited, what proof would I need? I am guessing my passport would be OK for the “physical presence test”?

I now have a contract, work permit, proof I pay Thai tax, but my first year teaching was with a shady company. I can’t even find my contract.

Anyway, I hope I don’t ever get audited, but it does worry me.

Any advice please?

[NeverSure]

The IRS isn't that bad. If your story is reasonable, they'll buy it. I was once audited for 2 years in a row because my tax return didn't look reasonable. With stories about the IRS I was worried. It turned out to be a piece of cake and they understood why certain things happened.

If you're 45 or older, don't skimp on social security payments. It's the biggest bargain you'll ever get. They look at your last 20 years of payments and calculate how much you get monthly for life from what you paid in. Some people who thought they were smart get nothing, and others get as much as $3,200 per month if they paid the max and worked until age 70. It can also be anything in between that.

[BKKSnowBird]

I read an article that a 2555 was rarely audited in the past but not the case anymore.

[IMA_FARANG]

I am not an expert here but I filled form(s) 2555 for many years while working overseas for a U.S. company.

I am NOT AN EXPERT, but I see a possible problem here in that you might have been required to file a Form 2555 and not a form 2555EZ to claim such income as exempt,

In my years of filing for the overseas income exemption I always made it a practice to file a:

• Full form 1040 not a form 1040EZ
• Full form 2555 and not a 255EZ

Yes it is a little more work, but not all income may be allowed to be exempted on a Form 2555EZ that can be exempted on a Form 2555.

Also, although again I am NOT an expert..... I don't believe the Form 2555 is the correct form to use for income earned overseas from for income earned from a foreign source paid by a non U.S. company.

I believe the form for exemption of foreign tax earned when paid by a non U.S. owned company is another form and not Form 2555 or a Form 2555EZ.

But I admit the last time I files using either one of those forms was in 2010 .... I have been retired since then.

Be careful, simply being outside the U.S. does NOT allow you to take the overseas income exemption that can be claimed on the Form 2555 or Form 2555EZ as I recall it.

Your income to file either of those forms must be from a U.S. source and paid as a result of your employment by that U,S, firm for working outside the U.S.

That's why they ask for the name and U.S. address of the U.S. company you are working for on the forms when you file them.

As I recall it, I qualified for the overseas earned income exception because I worked for a U.S. company outside the U.S. and was paid for that work by the U.S company I worked for.

That was where the Form 2555 and 2555EZ came into the picture.

[BKKSnowBird]

I thought if you worked for a US company, you would not be able to exclude income. I thought it was only if you worked for a for a non-US company or self employed. Although if self employed, you still have to pay social security tax.