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How to Handle Foreign Income Tax

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By Cellina LaForey
eHow Contributing Writer
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Handle Foreign Income Tax
Handle Foreign Income Tax

If you are currently earning foreign income or have earned foreign income during a given tax year, the IRS requires that you file a foreign earned income tax form. The tax forms must be completed and filed in accordance with the U.S. income tax laws.

From Quick Guide: International Law 101
Difficulty: Moderately Challenging
Instructions

Things You'll Need:

  • IRS Foreign Income Tax Form
  1. Step 1

    Decide whether or not to file the long or short form. Form 2555, Foreign Earned Income, is the tax form to use if you intend to itemize your deductions such as housing, and other allowable expenses. The short form 2555 EZ is the form to use if you’re not itemizing.

  2. Step 2

    Download or request a copy of the form. Both Foreign Earned Income forms are available for download from the IRS website. You can also call the IRS to request the appropriate forms.

  3. Step 3

    Obtain a copy of the instructions. The instructions are not a part of the downloadable Foreign Income Forms 2555 or 2555EZ. Make sure to download the instructions to insure that you properly complete the tax forms. If you requested the tax forms by phone, make sure to request the necessary instructions.

  4. Step 4

    Seek help from a professional. If you are not comfortable completing tax forms, it’s best to seek help from a professional.

  5. Step 5

    Submit the Foreign Earned Income forms in a timely fashion. The Internal Revenue Service expects to receive all tax forms by the tax deadline of April 15h. They will, however, grant an automatic two-month filing extension if you reside outside of the United States or Puerto Rico and your tax home is outside of the United States and Puerto Rico. You must attach a statement with your taxes explaining that you meet the two conditions for an automatic tax extension.

Tips & Warnings
  • The two-month tax extension is not free. The IRS will charge interest from the date the taxes are due until the date they received the outstanding taxes.
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