I have Greencard for about 2 years. Currently I am out of job. I am thinking of going out of this country and working for different country for about 2 years and come back to the US. In the next 2 years I will try to go back to USA every 5 months. I knew that if I learn less than 70K I don\'t need to pay for the US tax on that. However that might show the immigration office that I am not in the US for 2 years. I just wonder if anyone know will it be a problem of getting citizenship after one year I come back to USA ? Thanks
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Help on Naturalization
- Thread starter fsk
- Start date
Foreign Earned Income Exclusion and Foreign Tax Credit
I can give you a brief description of the $70K (actually it\'s
$76K now! even better!) tax exclusion rule:
To encourage people (US citizens/resident aliens) to work abroad,
Congress has provided alternative forms of relief from taxes on
foreign earned income. The taxpayer can elect either (1) to
include the foreign income in his/her taxable income and then
claim a credit for foreign taxes paid or (2) to exclude the
foreign earnings from his/her US gross income. The (2) is
so-called Foreign Earned Income Exclusion. As you can tell
from the following discussion, most people choose the exclusion
over the credit.
Foreign earned income consists of the earnings from the individual\'s
personal services rendered in a foreign country (other than
as an employee of the US government). To qualify for the exclusion,
the taxpayer must be either of the following:
1. A bona fide resident of the foreign country;
2. Present in the a foreign country for at least 330 days during any
12 consecutive months.
Also, when calculating your actual exclusion, only the days
when you are physically present in a foreign country count.
Say, your salary was $76K in 2001, and you resided in a foreign
country for 360 days and back in US for 5 days in that year,
so you certainly qualify for the exclusion, but your actual exclusion
amount is: $76K x (360/365).
In addition, the reasonable housing costs incurred by the taxpayer
and the taxpayer\'s family in a foreign coutnry in excess of
a base amount may be excluded too. The base amount was 16% in 1996
of the US government pay scale for GS-14 (Step 1) employee, which
varies from year to year. I am not sure if the percentage has
changed or not.
As discussed above, most people would choose this exclusion
benefit instead of taking credit, UNLESS your foreign earned
income far exceeds the excludible amount so that the foreign
taxes paid exceed the US tax on the amount excluded. However,
once an election is made, it applies to all subsequent years
unless affirmatively revoked. A revocation is effective for the
year of the change and the four subsequent years.
Either way, you still need to file tax forms (you may not have
to pay taxes but you need to file certain forms to claim the
benefits), which can be used to show the immigration officers
that you are still a US tax payer, whether or not you actually
have paid tax in dollar is irrellevant.
To see a more complete and detailed discussion on this subject,
go to:
http://www.irs.gov/businesses/small/intltaxpayer/display/0,,i1=2&i2=23&i3=37&genericId=20436,00.html
I can give you a brief description of the $70K (actually it\'s
$76K now! even better!) tax exclusion rule:
To encourage people (US citizens/resident aliens) to work abroad,
Congress has provided alternative forms of relief from taxes on
foreign earned income. The taxpayer can elect either (1) to
include the foreign income in his/her taxable income and then
claim a credit for foreign taxes paid or (2) to exclude the
foreign earnings from his/her US gross income. The (2) is
so-called Foreign Earned Income Exclusion. As you can tell
from the following discussion, most people choose the exclusion
over the credit.
Foreign earned income consists of the earnings from the individual\'s
personal services rendered in a foreign country (other than
as an employee of the US government). To qualify for the exclusion,
the taxpayer must be either of the following:
1. A bona fide resident of the foreign country;
2. Present in the a foreign country for at least 330 days during any
12 consecutive months.
Also, when calculating your actual exclusion, only the days
when you are physically present in a foreign country count.
Say, your salary was $76K in 2001, and you resided in a foreign
country for 360 days and back in US for 5 days in that year,
so you certainly qualify for the exclusion, but your actual exclusion
amount is: $76K x (360/365).
In addition, the reasonable housing costs incurred by the taxpayer
and the taxpayer\'s family in a foreign coutnry in excess of
a base amount may be excluded too. The base amount was 16% in 1996
of the US government pay scale for GS-14 (Step 1) employee, which
varies from year to year. I am not sure if the percentage has
changed or not.
As discussed above, most people would choose this exclusion
benefit instead of taking credit, UNLESS your foreign earned
income far exceeds the excludible amount so that the foreign
taxes paid exceed the US tax on the amount excluded. However,
once an election is made, it applies to all subsequent years
unless affirmatively revoked. A revocation is effective for the
year of the change and the four subsequent years.
Either way, you still need to file tax forms (you may not have
to pay taxes but you need to file certain forms to claim the
benefits), which can be used to show the immigration officers
that you are still a US tax payer, whether or not you actually
have paid tax in dollar is irrellevant.
To see a more complete and detailed discussion on this subject,
go to:
http://www.irs.gov/businesses/small/intltaxpayer/display/0,,i1=2&i2=23&i3=37&genericId=20436,00.html
One of the three
You only need to be one of the following three to qualify:
1.A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
2.A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
3.A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
As you can see, the most important part is the length of time
you reside in a foreign country (countries). What I provided
was a brief, overall description about the exclusion benefit.
I did not intentionally leave out anything. If you don\'t meet
the #2 requirement in terms of tax treaty, you may still qualify
under #1 or #3. Even #2 has residence time requirement. Again,
the most important thing is the length of time.
You only need to be one of the following three to qualify:
1.A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
2.A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
3.A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
As you can see, the most important part is the length of time
you reside in a foreign country (countries). What I provided
was a brief, overall description about the exclusion benefit.
I did not intentionally leave out anything. If you don\'t meet
the #2 requirement in terms of tax treaty, you may still qualify
under #1 or #3. Even #2 has residence time requirement. Again,
the most important thing is the length of time.
Dawson Dong
Registered Users (C)
but, if you reside outside the US for over 330 days in a year, how do you qualify for the 30 months
Tax is not Naturalization
My postings were only pertient to the tax issue mentioned in the
original message, which has nothing to do with naturalization.
It is a completely different subject on whether you can
come up with a plan to get the best from both. My initial
thought on this would be: if you work abroad for only like 2
years or so, you may still be able to qualify for citizenship
while enjoying the tax relief for the two years working abroad.
Of course, during the 2 years, you will have to come back
every 6 months to fulfill the continuous residence requirement
unless you are eligible for N470. Nobody ever said you have
to work abroad every year unless you want to. Again, tax is tax,
and naturalization is naturalization. Don\'t mix them up here.
If you want to benefit from the tax rule, do what it says; if
you want to be a US citizen, then follow the naturalization
rule. You can certainly manage to get both, but it\'s a different
story.
Now, please don\'t throw any more irrelevant things here, such as
the haunting re-entry permit issue. I know someone is going to do it
though. These are all different issues, although there are
possbilities where people can take advantage of all the favorable
parts of the rules while not breaking any restrictive parts of the
rules.
My postings were only pertient to the tax issue mentioned in the
original message, which has nothing to do with naturalization.
It is a completely different subject on whether you can
come up with a plan to get the best from both. My initial
thought on this would be: if you work abroad for only like 2
years or so, you may still be able to qualify for citizenship
while enjoying the tax relief for the two years working abroad.
Of course, during the 2 years, you will have to come back
every 6 months to fulfill the continuous residence requirement
unless you are eligible for N470. Nobody ever said you have
to work abroad every year unless you want to. Again, tax is tax,
and naturalization is naturalization. Don\'t mix them up here.
If you want to benefit from the tax rule, do what it says; if
you want to be a US citizen, then follow the naturalization
rule. You can certainly manage to get both, but it\'s a different
story.
Now, please don\'t throw any more irrelevant things here, such as
the haunting re-entry permit issue. I know someone is going to do it
though. These are all different issues, although there are
possbilities where people can take advantage of all the favorable
parts of the rules while not breaking any restrictive parts of the
rules.
"bona fide resident of foreign country"???
for a lawful permanent resident to use this form to avoid paying his US taxes on his foreign earned income is to declare that he is a "bona fide resident of a foreign country." This will probably result in the determination that he/she has lost US permanent residence.
OOOOPS.
for a lawful permanent resident to use this form to avoid paying his US taxes on his foreign earned income is to declare that he is a "bona fide resident of a foreign country." This will probably result in the determination that he/she has lost US permanent residence.
OOOOPS.