Filing taxes

[gouchobob]

Lee's right you could just pretend you never left the states and file, but taking the foreign income exclusion eliminates any income tax on the first $91,500 you make. If when you figured it on turbo-tax it may be that you didn't owe any money anyway, if that's the case you don't have to bother with the income exclusion. You aren't declaring the money is foreign, your really just saying you lived abroad and earned the money while in Argentina.

 

[Nicole_Ramirez]

I was asking because Turbo Tax calculating it as if I lived in the States still, was giving me a wonderful refund (more than what I paid in taxes) so I was just afraid if I do it as foreign income the amount might change for the worst. I really have no idea because this is the first time it's come up. I definitly appreciate your help & very happy this board exists!!

 

[gouchobob]

I was asking because Turbo Tax calculating it as if I lived in the States still, was giving me a wonderful refund (more than what I paid in taxes) so I was just afraid if I do it as foreign income the amount might change for the worst. I really have no idea because this is the first time it's come up. I definitly appreciate your help & very happy this board exists!!

Good, do it both ways and submit the one that puts the most money in your pocket.

 

[sdsurfista]

As Lee mentioned, the Foreign Income Exemption is only applicable to income derived outside of the USA. If you live in Argentina, and received your income from the USA (salary, or self employed), there is no exemption.

 

[citygirl]

As Lee mentioned, the Foreign Income Exemption is only applicable to income derived outside of the USA. If you live in Argentina, and received your income from the USA (salary, or self employed), there is no exemption.

That is 100% completely wrong.

You can be paid by a US company into a US bank account and still qualify for a foreign income exemption. It depends on the type of work, etc. Seriously - this is why it is well worth paying a CPA, not listening to strangers on an internet website.

 

[gouchobob]

Whoa! Lets explain this one more time. If you live full-time in another country any money you earn there from a U.S. employer would be exempt from taxation on the first $91,500. The key is that you live in the foreign country the requisite number of days in a year. Where your payment comes from has nothing to do with it.

Again the link to the IRS website that makes this point in black and white, check the link from the IRS I posted earlier. From that link is the following:

Question: I am a U.S. citizen working for a U.S. firm in a foreign country. Is any part of my wages or expenses tax deductible?

Answer:
• U.S. citizens and resident aliens are taxed on their worldwide income.
• Some taxpayers may qualify for the foreign earned income exclusion, foreign housing exclusion, or foreign housing deduction, if:
o Their tax home is in a foreign country,
o They are U.S. citizens who are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
o They are U.S. resident aliens who are a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article 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
o U.S. citizens and resident aliens who are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

Can't be any clearer than this.

 

[citygirl]

Lee
If you haven't already talked to a CPA, I would really recommend you do so. Given what you've shared - that you run your own business(es), that you live overseas, that you earn a comfortable living - a CPA would probably have a lot of strategies to help you maximize your deductions and return.

Turbotax is great - I used it for years but after a certain complexity level (and I definitely include any business owner in that category), a CPA is a better bet and really, not that much more expensive. A professional is up to date on all the latest changes to laws, knows things that most of us never will and will make your life much, much easier.

I used Turbotax for years and when I switched to having a CPA prepare my taxes, they went back and found a lot of things I had overpaid on. It wasn't the fault of TT, I simply didn't know what I didn't know and there were lots of deductions I missed inputting.