Are you moving to an exotic city outside the United States for a new job? Did you enlist and are now being stationed in Japan or Germany? Regardless of where you live, your income is subject to American income tax laws. Whether you live here in Texas or are serving our great country overseas, the experts at Gonzalez & Arrambide, Inc. can get your taxes filed no matter where you call home.
According to the Department of Veterans Affairs, Texas has one of the highest military veteran populations. Cameron and Hidalgo Counties contain some of the highest densities of military personnel in the state. With so many military families living in the Rio Grande Valley, questions regarding tax laws and codes for earned income while residing outside the country are expected.
Whether you are serving in the military on duty or reside outside of the country, and your place of business is outside of the country as well, you are allowed an automatic two-month extension to file your tax return to pay any federal income taxes that are owed. With an extension comes interest due on any taxes not paid by the regular due date.
A Few Options
If a spouse is serving overseas, there are two options when filing a joint return:
- One spouse can prepare, sign and send the return to the other spouse early enough to be filed by the due date
- The spouse who expects to be overseas on the return’s due date can file a Form 2848, which specifically designates the stateside spouse to sign for the absent spouse
If your spouse is in a combat zone or performing qualifying service outside of a combat zone, you can sign on their behalf. Just attach a signed statement to your return explaining that your spouse is serving in combat.
Foreign Earned Income Exclusion
To qualify for the foreign earned income exclusion, there are three conditions:
- Your place of residence, “or tax home”, must be in a foreign country. A tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual
- Your income is from sources outside of the United States
- You pass the “bona fide residence” test or “physical presence test”
Being “Bona Fide”
The bona fide residence test is living and working outside the United States for an entire tax year plus filling out IRS Form 2555 stating your residency and income to the IRS. The physical presence test means physically being in a different country or countries for at least 330 days of 12 consecutive months. This test does not rely on you establishing residency or the nature and purpose of your stay abroad.
Lets Get Started
Whether it’s you or your spouse serving overseas, or a loved one living abroad, our certified public accountants in Weslaco know tax returns are the last thing you want to worry about. Let us make this tax season stress-free for you and your family. Schedule an appointment with us before this year’s deadline by calling 956.447.9009.