- Publication 516 - Introductory Material
- Publication 516 - Main Content
- U.S. Tax Return
- Filing Information
- Foreign Bank Accounts
- U.S. Government Payments
- Foreign Earned Income Exclusion
- Tax Treaty Benefits
- Allowances, Differentials, and Special Pay
- Pay differentials.
- Foreign areas allowances.
- Cost-of-living allowances.
- Federal court employees.
- American Institute in Taiwan.
- Federal reemployment payments after serving with an international organization.
- Allowances or reimbursements for travel and transportation expenses.
- Lodging furnished to a principal representative of the United States.
- Peace Corps.
- Taxable allowances.
- Nontaxable allowances.
- Other Income
- Deductions and Credits Business Expenses
- Travel Expenses
- Transportation Expenses
- Other Employee Business Expenses
- Recordkeeping Rules
- How To Report Business Expenses
- Deductions and Credits Nonbusiness Expenses
- Moving Expenses
- Other Itemized Deductions
- Foreign Taxes
- Local (Foreign) Tax Return
- How To Get Tax Help
- Tax reform.
- Preparing and filing your tax return.
- Getting tax forms and publications.
- Access your online account (individual taxpayers only).
- Using direct deposit.
- Refund timing for returns claiming certain credits.
- Getting a transcript or copy of a return.
- Using online tools to help prepare your return.
- Resolving tax-related identity theft issues.
- Checking on the status of your refund.
- Making a tax payment.
- What if I cant pay now?
- Checking the status of an amended return.
- Understanding an IRS notice or letter.
- Contacting your local IRS office.
- Watching IRS videos.
- Getting tax information in other languages.
- The Taxpayer Advocate Service (TAS) Is Here To Help You
- Low Income Taxpayer Clinics (LITCs)
- U.S. Tax Return
- Publication 516 - Additional Material
Publication 516 (11/2018), U.S. Government Civilian Employees Stationed Abroad
Revised: November 2018
For the latest information about developments related to Pub. 516, such as treaties effective after it was published, go to IRS.gov/Pub516.
No miscellaneous itemized deductions allowed. You can no longer claim any miscellaneous itemized deductions, including the deduction for unreimbursed job expenses. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-adjusted-gross-income limitation.
Unreimbursed employee expenses. Only Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses can deduct certain expenses such as travel expenses, and other expenses connected to your employment. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories cannot deduct employee business expenses. See the categories listed under Other Employee Business Expenses .
Moving expense deduction suspended, except for certain Armed Forces members. Beginning in 2018, as part of a provision contained in the Tax Cuts and Jobs Act of 2017, the moving expense deduction for tax years after 2017, and before January 1, 2026, is temporarily suspended, except if you are a member of the Armed Forces on active duty and, due to a military order, you move because of a permanent change of station.
Combat zone participants. If you were a civilian who served in a combat zone or qualified hazardous duty area in support of the U.S. Armed Forces, you can get certain extensions of deadlines for filing tax returns, paying taxes, filing claims for refund, and doing certain other tax-related acts. For details, see Pub. 3, Armed Forces’ Tax Guide.
Death due to terrorist or military action. U.S. income taxes are forgiven for a U.S. Government civilian employee who dies as a result of wounds or injuries incurred while employed by the U.S. Government. The wounds or injuries must have been caused by terrorist or military action directed against the United States or its allies. The taxes are forgiven for the deceased employee’s tax years beginning with the year immediately before the year in which the wounds or injury occurred and ending with the year of death. If the deceased government employee and the employee’s spouse filed a joint return, only the decedent’s part of the joint tax liability is forgiven. For additional details, see Pub. 559, Survivors, Executors, and Administrators.
Form 8938. If you have or had foreign financial assets, you may have to file Form 8938 with your return. See Foreign Bank Accounts, later.
If you are a U.S. citizen working for the U.S. Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. You are taxed on your worldwide income, even though you live and work abroad.
However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States. This publication explains:
Many of the allowances, reimbursements, and property sales you are likely to have, and whether you must report them as income on your tax return, and
Many of the expenses you are likely to have, such as moving expenses and foreign taxes, and whether you can deduct them on your tax return.
3 Armed Forces’ Tax Guide
54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
463 Travel, Gift, and Car Expenses
505 Tax Withholding and Estimated Tax
514 Foreign Tax Credit for Individuals
519 U.S. Tax Guide for Aliens
521 Moving Expenses
523 Selling Your Home
Form (and Instructions)
Schedule A (Form 1040) Itemized Deductions
1040 U.S. Individual Income Tax Return
1116 Foreign Tax Credit
4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)
8938 Statement of Specified Foreign Financial Assets
FinCEN Form 114 Report of Foreign Bank and Financial Accounts (FBAR)
If you are a U.S. citizen or green card holder living or traveling outside the United States, you are generally required to file income tax returns in the same way as those residing in the United States. However, the special rules explained in the following discussions may apply to you. See also Tax Treaty Benefits, later.
Most individual tax returns cover a calendar year, January through December. The regular due date for these tax returns is April 15 of the following year. If April 15 falls on a Saturday, Sunday, or legal holiday, your tax return is considered timely filed if it is filed by the next business day that is not a Saturday, Sunday, or legal holiday. If you get an extension, you are allowed additional time to file and, in some circumstances, pay your tax. You must pay interest on any tax not paid by the regular due date.
Your return is considered filed on time if it is mailed from and officially postmarked in a foreign country on or before the due date (including extensions), or given to a designated international private delivery service before midnight of the last date prescribed for filing. See your tax form instructions for a list of private delivery services that have been designated by the IRS to meet this "timely mailing as timely filing/paying" rule for tax returns and payments.
If your return is filed late, the postmark or delivery service date does not determine the date of filing. In that case, your return is considered filed when it is received by the IRS.
Wages earned for performing services outside the United States is foreign income, regardless of your employer. If you are a U.S. citizen or resident alien, you must report all income from worldwide sources on your tax return unless it is exempt by U.S. law. This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains). If you are a nonresident alien, your income from sources outside the United States is not subject to U.S. tax.
Employees of the U.S. Government are not entitled to the foreign earned income exclusion or the foreign housing exclusion/deduction under section 911 because "foreign earned income" does not include amounts paid by the U.S. Government to you as an employee. But see Other Employment, later.
Most income tax treaties contain an article relating to remuneration from government services. Even if you are working in a foreign country with which the United States has an income tax treaty in force and the treaty article that applies to government services says that your government pay is taxable only in the foreign country, the treaty will likely contain a "saving clause," which provides that the United States may tax its citizens and its residents as if the treaty had not come into effect. In some treaties, the government service article is an exception to the saving clause, but often only for individuals who are not U.S. citizens or green card holders. Consequently, if you are a U.S. citizen or green card holder, you will generally not be entitled to reduce your U.S. tax on your government pay. If you are neither a U.S. citizen nor green card holder, and you are treated as a resident of the treaty country under the treaty residence article (after application of the so-called "tie-breaker" rule), then you may be entitled to benefits under the government service article. Review the treaty text carefully.
U.S. citizens must always file Form 1040. Non-U.S. citizens who are treated as a resident of a treaty country under the treaty residence article (after application of the so-called "tie-breaker" rule) may file Form 1040NR and attach Form 8833.
If you pay or accrue taxes to the foreign country on your pay, you may be able to relieve double taxation with a foreign tax credit. Most income tax treaties contain an article providing relief from double taxation. Many treaties contain special foreign tax credit rules for U.S. citizens who are residents of a treaty country. For more information on the mechanics of the foreign tax credit, see Foreign Taxes , later.
Most payments received by U.S. Government civilian employees for working abroad, including pay differentials, are taxable. However, certain foreign areas allowances, cost of living allowances, and travel allowances are tax free. The following discussions explain the tax treatment of allowances, differentials, and other special pay you receive for employment abroad.
Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses may deduct certain expenses such as travel expenses, transportation expenses, and other expenses connected to employment. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not deduct employee business expenses. For more information on employee business expenses, see Pub. 463.
Subject to certain limits, you can deduct your unreimbursed ordinary and necessary expenses of traveling away from home in connection with the performance of your official duties. These expenses include such items as travel costs, meals, lodging, baggage charges, local transportation costs (such as taxi fares), tips, and dry cleaning and laundry fees.
Your home for tax purposes (tax home) is your regular post of duty regardless of where you maintain your family home. Your tax home is not limited to the Embassy, consulate, or duty station. It includes the entire city or general area in which your principal place of employment is located.
You can deduct allowable transportation expenses that are directly related to your official duties. Transportation expenses include the cost of transportation by air, rail, bus, or taxi, and the cost of driving and maintaining your car. They do not include expenses you have when traveling away from home overnight. Those expenses are deductible as travel expenses and are discussed earlier.
If you are one of the following individuals, special rules apply to deducting your employee business expenses.
To deduct any expenses for travel, including those certified by the Secretary of State, you must meet the rules for recordkeeping and accounting to your employer. These rules are explained in Pub. 463.
If you claim a deduction for unreimbursed business expenses, you must keep timely and adequate records of all your business expenses.
For example, you must keep records and supporting evidence to prove the following elements about deductions for travel expenses (including meals and lodging while away from home).
The amount of each separate expense for travel away from home, such as the cost of your transportation, lodging, or meals. You may total your incidental expenses if you list them in reasonable categories such as daily meals, gasoline and oil, and taxi fares.
For each trip away from home, the dates you left and returned and the number of days spent on business.
The destination or area of your travel, described by the name of the city, town, or similar designation.
The business reason for your travel or the business benefit gained or expected to be gained from your travel.
As a U.S. Government employee, your business expense reimbursements are generally paid under an accountable plan and are not included in your wages on your Form W-2. If your expenses are not more than the reimbursements, you do not need to show your expenses or reimbursements on your return.
However, if you do not account to your employer for a travel advance or if you do not return any excess advance within a reasonable period of time, the advance (or excess) will be included in your wages on your Form W-2.
In addition to deductible business expenses, you may be entitled to deduct certain other expenses.
If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you can deduct your unreimbursed moving expenses.
You may be able to claim other itemized deductions not connected to your employment.
Adam is a federal employee working overseas who receives a $6,300 tax-free housing and utility allowance. During the year, Adam used the allowance, with other funds, to provide a home for himself. His expenses for this home totaled $8,400 and consisted of mortgage principal ($500), insurance ($400), real estate taxes ($1,400), mortgage interest ($4,000), and utility costs ($2,100). Adam did not have any other expenses related to providing a home for himself.
Adam must reduce his deductions for home mortgage interest and real estate taxes. He figures a reasonable way to reduce them is to multiply them by a fraction: its numerator is $6,300 (the total housing and utility allowance) and its denominator is $8,400 (the total of all payments to which the housing and utility allowance applies). The result is 3/4. Adam reduces his otherwise allowable home mortgage interest deduction by $3,000 (the $4,000 he paid × 3/4) and his otherwise allowable real estate tax deduction by $1,050 (the $1,400 he paid × 3/4). He can deduct $1,000 of his mortgage interest ($4,000 − $3,000) and $350 of his real estate taxes ($1,400 − $1,050) when he itemizes his deductions.
If you pay or accrue taxes to a foreign government, you generally can choose to either claim them as a credit against your U.S. income tax liability or deduct them as an itemized deduction when figuring your taxable income.
Do not include the foreign taxes paid or accrued as withheld income taxes on your Form 1040.
As a U.S. Government employee, you are expected to observe and fulfill all tax obligations imposed by the host country government. Check with local tax authorities to determine whether you are considered a tax resident of your host country, whether you are required to file a host country tax return and whether you owe taxes to the host country.
As discussed earlier, most income tax treaties contain an article relating to remuneration from government services. Review the treaty text carefully to determine whether your U.S. Government remuneration is taxable in the host country. You will first have to determine whether you are a resident of your host country under the treaty residence article (after application of the so-called "tie-breaker" rule).
If you or your spouse receives income from a private employer or self-employment, review the tax treaty rules relating to income from personal services and to business profits to determine whether that income is taxable in the host country.
If you pay or accrue taxes to both the host country and the United States, you may be able to relieve double taxation with a foreign tax credit. Most income tax treaties contain an article providing relief from double taxation. Many treaties contain special foreign tax credit rules for U.S. citizens who are residents of a treaty country. For more information about the foreign tax credit, see Foreign Taxes , earlier.
The United States may be a party to agreements other than income tax treaties that may affect your tax obligations to the host country. For example, consular employees may be exempt from host country tax under the Vienna Convention on Consular Relations or bilateral consular agreements. Similarly, certain diplomatic staff may be exempt from host country tax under the Vienna Convention on Diplomatic Relations. Check with the appropriate U.S. Embassy for more information.
If your U.S. Government pay is subject to withholding in both the United States and the foreign country, you may reduce the amount of U.S. tax that is withheld from your pay if you expect to be entitled to a foreign tax credit on your U.S. income tax return on this income. See Pub. 505, Tax Withholding and Estimated Tax, for a worksheet to determine how to revise Form W-4, Employee’s Withholding Allowance Certificate.
If you have questions about a tax issue, need help preparing your tax return, or want to download free publications, forms, or instructions, go to IRS.gov and find resources that can help you right away.
Getting answers to your tax questions. On IRS.gov, get answers to your tax questions anytime, anywhere.
Go to IRS.gov/Help for a variety of tools that will help you get answers to some of the most common tax questions.
Go to IRS.gov/ITA for the Interactive Tax Assistant, a tool that will ask you questions on a number of tax law topics and provide answers. You can print the entire interview and the final response for your records.
Go to IRS.gov/Pub17 to get Pub. 17, Your Federal Income Tax for Individuals, which features details on tax-saving opportunities, 2018 tax changes, and thousands of interactive links to help you find answers to your questions. View it online in HTML, as a PDF, or download it to your mobile device as an eBook.
You may also be able to access tax law information in your electronic filing software.
TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Their job is to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.
The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.
TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your family, or your business;
You face (or your business is facing) an immediate threat of adverse action; or
You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.
TAS has offices in every state, the District of Columbia, and Puerto Rico. Your local advocate’s number is in your local directory and at TaxpayerAdvocate.IRS.gov/Contact-Us. You can also call them at 877-777-4778.
TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, please report it to them at IRS.gov/SAMS.
TAS also has a website, Tax Reform Changes, which shows you how the new tax law may change your future tax filings and helps you plan for these changes. The information is categorized by tax topic in the order of the IRS Form 1040. Go to TaxChanges.us for more information.
LITCs are independent from the IRS. LITCs represent individuals whose income is below a certain level and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. In addition, clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. To find a clinic near you, visit TaxpayerAdvocate.IRS.gov/LITCmap or see IRS Pub. 4134, Low Income Taxpayer Clinic List.
- Business expenses, how to report, How To Report Business Expenses
- Federal court employees, Federal court employees.
- Federal crime investigations, Exception for federal crime investigations or prosecutions.
- Filing information, Filing Information, When To File and Pay
- Foreign areas allowances, Foreign areas allowances.
- Foreign bank accounts, Foreign Bank Accounts
- Foreign earned income and housing exclusions, Foreign Earned Income Exclusion
- Foreign income, U.S. Government Payments
- Foreign taxes, Foreign Taxes
- Identity theft, Resolving tax-related identity theft issues.
- Interest on home mortgage, Real estate tax and home mortgage interest.
- International organization, U.S. reemployment after serving with, Federal reemployment payments after serving with an international organization.
- Itemized deductions
- Pay differentials, Pay differentials.
- Peace Corps volunteers, Peace Corps.
- Personal property, sale of, Sale of personal property.
- Post differentials (see Pay differentials)
- Post exchanges, Employees of post exchanges, etc.
- Principal representative, Lodging furnished to a principal representative of the United States.
- Proving expenses, Recordkeeping Rules
- Publications (see Tax help)
- Real estate tax, Real estate tax and home mortgage interest.
- Recordkeeping, business expenses, Recordkeeping Rules
- Reemployed by federal agency, Federal reemployment payments after serving with an international organization.
- When to file return, When To File and Pay