IRS Taxes

Internal Revenue Service

Frequently Asked Questions

Which tax form should I use — Form 1040 or 1040NR?

Resident aliens and U.S. citizens must use Form 1040. Nonresident aliens must use Form 1040NR or 1040NR-EZ. The determining factor is whether your tax status is resident or nonresident alien. You may use this flowchart to help determine your nonresident or resident alien status.

What exchange rate should I use when I convert my income to US dollars?

The 2004 average rate was $1 to Tunisian Dinar            

What is the due date for filing tax returns?

For taxpayers living and working abroad, the filing deadline for payment is extended automatically to June 15th.   Note that the deadline for payment is not extended; to avoid penalties and interest, any anticipated balance due should have been paid to IRS on or before April 15.

Taxpayers who cannot file by June 15 should file Form 4868 ("Application for Automatic Extension of Time to File U.S. Individual Income Tax Return") on or before that date.  By writing "Taxpayer Abroad" across the top of Form 4868 before filing it in, the filing deadline will be extended to August 16th.  Copies of Form 4868 are available at the IRS website.

Taxpayers filing their first overseas return may elect to file Form 2350 anytime before the due date of their return (including extensions) in order to meet residency requirements to exclude foreign income.

How should I file my return? Are foreign postmarks acceptable?

You may send your return either to our Philadelphia Service Center or to our London office.  Postmarks from any official postal system, foreign or domestic, are valid as a record of timely filing.

What is the foreign earned income (FEI) exclusion?

Central to the tax rules for certain filers of US tax returns who live and work abroad is the ability to exclude up to $80,000 of earned income annually. Earned income that may be excluded means wages, salaries, professional fees, and other compensation received for personal services performed in a foreign country. It does not include pensions, annuities, social security, interest, dividends, capital gains, or alimony. The exclusion is available to both spouses on a joint return assuming both persons meet the qualifications. More details are available on the FEI information page.

I paid tax when I was working in the United States last year on a visa.  How can I get it back?

A nonresident alien must file Form 1040NR or 1040NR-EZ to claim a refund of any overpaid taxes.  You may use this flowchart to help determine your nonresident or resident alien status.

Am I eligible to exclude the income from my Fulbright (or other teaching) grant under the FEI exclusion?

No. Because Fulbright grantees have no intention of remaining "indefinitely" outside the U.S., they do not meet the tax home test. Since the vast majority of grantees spend one school year or less abroad, they would be allowed to deduct certain expenses of being away from home as business expenses. It is essential to note that the allowed expenses are for the grantee only, and not the spouse and children who may accompany him or her.  You may use the foreign per diem rates on the Department of State web site to calculate the away from home expenses.

If I am able to exclude all my income, why do I have to file?

A U.S. citizen or lawful resident alien is required to report worldwide income if you exceed the minimum filing requirements.

If your tax liability is zero there is no penalty for not filing, but you may risk eligibility for future exclusions or deductions by not filing a timely and accurate return.

Income filing requirements for dependent children.

I am a U.S. citizen married to a nonresident alien. Can I claim an exemption for each of us?

Yes, provided the NRA spouse did not have any income from U.S. sources and he or she has been issued an ITIN (Individual Tax Identification Number).

Do I need an ITIN?

Generally, anyone who must file a U.S tax return but does not qualify for a Social Security number must apply for an ITIN.  The same requirement applies to anyone who will be claimed as an exemption on a U.S. return.   Please note persons, other than your spouse, must be either a U.S. citizen or resident to be claimed as a dependent.    If legally adopted by a U.S. citizen then he or she is considered a U.S. citizen.  Please check the ITIN page for more details.

Can I claim my stepchildren as depends on my tax return?

If you are married to a nonresident alien who has children from a previous relationship, generally you may not claim them as your dependents.  There are five dependency requirements that must be met, one of which is that the person must be a U.S. citizen or resident, or reside in Canada or Mexico for at least some part of the tax year.  Since citizenship is conferred by adoption and not by marriage, your stepchild will not qualify as your dependent, unless legally adopted.

I received a tax package, but I am not required to file.  What should I do?

If you are neither a U.S. citizen nor a green card holder and you have less than $3000 income from the U.S. you do not need to file a tax return for 2003.  You may, however, file a return if you had tax withheld and are due a refund.

The Internal Revenue Service sends tax packages to all taxpayers who filed returns the previous year (usually the same type of form filed in the past).  However, if you are not required to file, do not send a form marked "nil" or with zeroes as entries; this will merely serve to keep you on the list to receive subsequent returns.  You may discard the form; no IRS notification is necessary.

What is Alternative Minimum Tax (AMT)?

Over the years, legislative changes have created a number of avenues through which taxes can be avoided legally, most of which are available only to high-income taxpayers. In order to ensure that all taxpayers pay at least some income tax, Congress enacted the Alternative Minimum Tax.

Overseas, taxpayers who offset their regular US income tax with a substantial foreign tax credit often become liable for AMT, and the resulting calculations can be extremely complex. AMT is computed using IRS Form 6251.

What is the maximum gift I can give without incurring a liability for gift tax?

Generally, a U.S. citizen or resident may give any one person up to $11,000 in any year, with no limit on the number of persons. There is no requirement for the recipients to be related to the donor. If you give anyone more than $11,000 in cash or property in any one year, you must file a gift tax return, IRS Form 709. See also IRS Publication 950 for more information.

A recipient of a gift does not incur a tax liability on the gift itself. However, if the recipient invests the gift, any subsequent earnings on that investment are subject to tax.

My Tunisian employer did not give me a Form W-2. Is that a problem?

Not at all. W-2s are used primarily to verify Federal Income Tax Withheld from wages, which is not done by Tunisian employers. Therefore, it is not necessary to attach any wage statement other than Form W-2 to your U.S. tax return.

I am a U.S. citizen who moved to the Tunisia several (or many) years ago and thought I did not have to file U.S. tax returns any longer. Now I have learned that information was incorrect. What do I do?

This is a common misunderstanding among Americans abroad, and should not create anxiety for those who find themselves in this situation. Generally, you should file returns for the past three years, taking the foreign earned income exclusion, the foreign tax credit, or both. It would be extremely unlikely that there would be any late penalties assessed, since penalties are computed as a percentage of tax owed, and only the rare taxpayer would actually owe tax in this situation.

You may contact us for prior year tax forms, or download them from the IRS web site. To find older forms, enter the year required in the Search for... box on the top-left of the page. The search typically returns Forms and Publications for the year on which you will have seached.

How can I file my state tax returns?

Each state has its own website, URLs can be found listed at the Federation of Tax Administrators web site. You may request information and forms from the website or by mail or phone.  State Tax Office Addresses are listed here State Tax office addresses [PDF, 70Kb].