Have a Tax Question? Ask a Tax Expert
Assuming you had income - as US citizen - you are required to file a fax return and report your worldwide income.
Filing requirements (based on income level ) are listed in IRS publication 501 - http://www.irs.gov/pub/irs-pdf/p501.pdf
If you are living abroad - you may claim a foreign earned income exclusion.
The person may qualify for the foreign earned income exclusion - he/she should: -- Work and reside outside the United States for at least 330 days during the year, or -- Meet either the Bona Fide or Physical Presence tests.If the person qualifies, he/she may exclude up to $91,400 (2009 in foreign wages -- plus housing allowances (limited to 30% of the earned income exclusion).
To receive that exclusion - the taxpayer should file either form 2555 or 2555EZ.
Here are forms you likely need:
Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable - income from wages and self-employment. For instance - dividends, investment income, rental income, etc - are not excludable.
Please also be aware that this credit is not granted automatically - you need to file a tax return and claim the credit.
If the same income is taxable in the US and in a foreign country - you may claim a credit for taxes paid in a foreign country on your US tax return.
To determine the amount of credit -the person should use the form 1116 and attach it to the tax return. - http://www.irs.gov/pub/irs-pdf/f1116.pdf
Here are instructions - http://www.irs.gov/pub/irs-pdf/i1116.pdf
Let me know if you need any clarification or help with reporting.
You gave a general answer and did not really answer my question.
The only reason I need the 1040 is for the US consulate.
The question is whether there is another way to satisfy them or do I really have to file.
If you believe there is no way I can satisfy them withour filing, then the next question is whether I have to file for 7 years back.
What happens if I file for one year only (say 2008)?
Depending on your income and filing requirements - you need to determine if you are required to file or not.
If you do not required to file - you may provide information about your income accomplished by the statement that you was not required to file.
If indeed you was required to file - you do not have any choice, but to file.
Generally - you need to file for each year you was required to file.
If you do not file - and the IRS will get information about your income - you may expect to receive a note asking for explanation - as they do not know if you are eligible for any credit.
As for immigration authorities - they normally require tax returns for last three years.
Please be aware that according to the US law - government agencies may not provide your personal information to each other.
Let me know if you need any help.
You say that whether I need to file depends on:
1) my income
2) filing requirements.
Regarding 1 - My salary is about $55,000-65,000 gross per year (in Israeli Shekels). I also get about $1000-2000 interest from bank deposits. Other than this I have no income.
Regarding 2 - what do you mean by "filing requirement"?
And finally - do i need to file or I can tell them that I am not required to file?
As an US citizen - you are required to file a fax return and report your worldwide income.
as your income is above that level - you are REQUIRED to file your tax return regardless if you owe any taxes or not.
That is from IRS side.
From immigration point of view - if you tell that you are not required to file - that will be incorrect.
For immigration purposes - most likely you need to provide tax returns for last three years.
Let me know if you need any help.