US citizen living outside US- need to file income tax?

Question

My brother who is a US citizen has been living outside of the US through all of 2006. He came back to visit for a few weeks but thats all. I remember someone once told me that if you're living outside the US for more than X days out of the year then you don't need to file income tax. Is this true and does anyone know how many days?

Thanks.

Answer 1

No, that is not true. US citizens (and resident aliens as well) must pay taxes on their world-wide income wherever it comes from without regard to where they live.

Depending upon who you work for, you may be able to exclude up to $80,000 per year from US Federal taxes (state rules vary) or you may take a credit for the foreign income taxes you paid on that income. You may figure your taxes both ways and choose which works out best for you.

If you work for a US governmental agency you are not entitled to the exclusion and are generally not subject to taxation by the foreign government. Military personnel stationed overseas as well as consular officials and their staffs, and other government empolyees are a good example of this group.

If you are outside the US on April 15th, you MAY qualify for an automatic extension of the time to file your tax return (military personnel are included in this) without asking for an extension.

Answer 2

Not true, the rules for filing are the same as for in the US.

However, there is a deduction, last time I checked, of 85,000 of earned income, so very often people working outside the US owe no tax (I liveoutside the US, and *wish* I earned enough money to pay tax!)

Make sure he files form 2555, US citizen living abroad. There are 2 tests of overseas residence, I believe they both basically boil down to over 11 consecutive months living outside the US, but the details are on form 2555.

Answer 3

Your brother needs to consult a tax accountant. I believe that if you are a us citizen working abroad, there are different criteria from those working stateside.