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Wendy Reed
Wendy Reed, Enrolled Agent
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Experience:  15+ years tax preparation and tax advice.
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if i work overseas and work for a over seas company and i dont

Customer Question

if i work overseas and work for a over seas company and i dont make any money in the USA and dont work for a USA company do i still have to pay income taxes
Submitted: 3 years ago.
Category: Tax
Expert:  Wendy Reed replied 3 years ago.

Thank you for giving me the opportunity to assist you. I will give the best answer that I can with the information provided.

 

Hello there,

 

As a US Citizen/resident, you must declare your worldwide income on an income tax return, even if it is not earned in the US. Just because there are persons who live/work out of the US and don't report their income, it is not necessarily the correct or legal thing to do.

 

There are several different concerns for you. One, is whether or not you are entitled to the foreign income exclusion. This is a tax provision for individuals who live and work abroad, and if you meet certain requirements, you are able to exclude up to $91,500 of income from tax in 2010, and up to $92,900 in 2011. However, to use this exclusion, you must still file a tax return: http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

 

http://www.irs.gov/pub/irs-pdf/p54.pdf

 

If your income exceeds this amount, or if you are not eligible for this provision, there are other possibilities of paying less US tax on your income if you pay income tax to the foreign country, through the foreign income tax credit or deduction, or US-foreign country tax treaties.

 

Please let me know if you need additional information.

 

 

 

Customer: replied 3 years ago.
even if the company is not a USA company. i dont pay foregin taxes so that does not help me out, what is the amount you can make to be able to exclude the first 91,500
Expert:  Wendy Reed replied 3 years ago.

Hello, it does not matter if the company is not located in the US or owned by a US company. A foreign tax credit or deduction won't help you if you don't pay foreign taxes, but you still may be eligible for the foreign tax exclusion.

 

$91500 is the amount that you are able to exclude if you meet certain requirements that are listed in the links I gave you. There is no specific amount that you have to make to be able to exclude the $91500---it is up to $91500.

 

You must meet either one of two tests, the bona fide residence test or the physical presence test.

 

Here is a short questionnaire to determine if you can take the exclusion:

http://www.irs.gov/businesses/small/international/article/0,,id=96822,00.html

 

Here is more info about the physical presence test and the bona fide resident test:

 

http://www.irs.gov/businesses/small/international/article/0,,id=96968,00.html

 

http://www.irs.gov/businesses/small/international/article/0,,id=96960,00.html

 

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Wendy Reed
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