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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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My wife and I are US citizens residing permanently overseas.

Customer Question

My wife and I are US citizens residing permanently overseas. My home of record prior to relocating overseas was New Hampshire, which does not have an income tax. We do not own any property or have any business interest in the USA. My wife’s home of record is the Philippines. She is unemployed and draws no income, pension, or compensation. I am receiving disability compensation from the U.S. Social Security Administration (SSA); disability pension from the U.S. Office of Personnel Management (OPM); and a small military retirement. (1) Are we required to file a federal tax return, and (2) are we subject to tax on my disability compensation and pension?
Submitted: 5 years ago.
Category: Tax
Expert:  Jax Tax replied 5 years ago.

Jax Tax : First and foremost, you will be required to file a US tax return as long as you remain a citizen or receive income from US sources.
Jax Tax : SSDI is taxable if your modified adjusted gross income exceeds $32k which is 1/2 SSDI plus all other income. This changes every couple of years.
Jax Tax : Your military disability is not taxable and is not used in calculating your modified adjusted gross.
Jax Tax : Your military pension is taxable.
Jax Tax : Any income you earn overseas is taxable in the US subject to foreign tax credits claimed on form 1116 and if you are out of the US 330 days out of a 12 month period, up to $91k can be excluded as foreign earned income from US tax. This is $91k of the foreign income only.
Jax Tax : Regardless of any circumstance, even if you were to give up US citizenship, US based income will result in US filing and taxation.
Jax Tax : Keep in mind, you will have FBAR filing requirements for foreign bank accounts and investments that must be filed with your 1040.
Jax Tax : Based on the informational provided, of does not appear any state can claim you as a resident so you will not be filing any state return though that never seemed to be in question.
Expert:  Jax Tax replied 5 years ago.
To summarize, yes you must file, SSDI may be taxable, your pension is taxable, and your military disability is not taxable.