International Tax Gap Series
United States citizens and resident aliens are taxed on their worldwide income, whether the person lives inside or outside of the United States. However, qualifying U.S. citizens and resident aliens who live and work abroad may be able to exclude from their income all or part of their foreign salary or wages, or amounts received as compensation for their personal services. In addition, they may also qualify to exclude or deduct certain foreign housing costs.
A common misconception that contributes to the international tax gap is that this potentially excludable foreign earned income is exempt income not reportable on a US tax return. In fact, only a qualifying individual with qualifying income may elect to exclude foreign earned income and this exclusion applies only if a tax return is filed and the income is reported.
Refer to the Foreign Earned Income Exclusion page for more details.
References and Links
International Customer Service: 267-941-1000 (Not a toll-free number)
Publication 54, Tax Guide for US Citizens and Residents
Publication 519, US Tax Guide for Aliens
Form 2555, Foreign Earned Income
Form 2555-EZ, Foreign Earned Income Exclusion
The International Tax Gap Series