Table of Contents
For the latest information about developments related to Publication 54, such as legislation enacted after it was published, go to www.irs.gov/pub54.
Exclusion amount. The maximum foreign earned income exclusion is adjusted annually for inflation. For 2014, the maximum exclusion has increased to $99,200. See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4.
Housing expenses — base amount. The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. The amount is 16 percent of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your 2014 tax year. For 2014, this amount is $43.48 per day ($15,872 per year). See Housing Amount under Foreign Housing Exclusion and Deduction in chapter 4.
Housing expenses — maximum amount. The amount of qualified housing expenses eligible for the housing exclusion and housing deduction has changed for some locations. See Limit on housing expenses under Foreign Housing Exclusion and Deduction in chapter 4.
Filing requirements. Generally, the amount of income you can receive before you must file an income tax return has increased. These amounts are shown in chapter 1 under Filing Requirements .
Self-employment tax rate. For 2014, the maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $117,000. All net earnings are subject to the Medicare part of the tax. For more information, see chapter 3.
IRA limitations for 2014. . You may be able to take an IRA deduction if you were covered by a retirement plan and your 2014 modified adjusted gross income (AGI) is less than $70,000 ($116,000 if married filing jointly or a qualifying widow(er)). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your 2014 modified AGI is less than $191,000. See the Instructions for Form 1040 or the Instructions for Form 1040A for details and exceptions.
Figuring tax on income not excluded. If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040, line 44. If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251.
Change of address. If you change your home mailing address, notify the Internal Revenue Service using Form 8822, Change of Address. If you are changing your business address, use Form 8822-B, Change of Address or Responsible Party—Business.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication discusses special tax rules for U.S. citizens and resident aliens who work abroad or who have income earned in foreign countries.
If you are a U.S. citizen or resident alien, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. Also, you are subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States. Expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their residency. These provisions are discussed in chapter 4 of Publication 519, U.S. Tax Guide for Aliens.
Green card test. You are a U.S. resident if you were a lawful permanent resident of the United States at any time during the calendar year. This is known as the green card test because resident aliens hold immigrant visas (also known as green cards).
Substantial presence test. You are considered a U.S. resident if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:
31 days during the current calendar year, and
A total of 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year.
You were physically present in the United States on 120 days in each of the years 2012, 2013, and 2014. To determine if you meet the substantial presence test for 2014, count the full 120 days of presence in 2014, 40 days in 2013 (1/3 of 120), and 20 days in 2012 (1/6 of 120). Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2014.
Whether you must file a U.S. tax return,
When and where to file your return,
How to report your income if it is paid in foreign currency,
How to treat a nonresident alien spouse as a U.S. resident, and
Whether you must pay estimated tax.
Contributions to foreign organizations,
Foreign moving expenses,
Contributions to individual retirement arrangements (IRAs), and
Internal Revenue Service
Tax Forms and Publications
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