tax refund when travelling overseas

Still need to file? An expert can help or do taxes for you with 100% accuracy. Get started

Filing Taxes While Overseas

American citizens could owe taxes in two countries. If you've never lived abroad for an extended period of time, you probably don't know the United States requires its citizens to continue to pay taxes back home.

Living abroad

Foreign earned income exclusion, foreign tax credit, foreign currency gain, impact on american expatriates, dodging the value-added tax.

Living abroad is a compelling vision for many people. For some, the attraction is a great job that happens to be in an exotic land; for others, it’s simply the romance of joining the tradition of famous expatriates such as Ernest Hemingway, Scott and Zelda Fitzgerald and Gertrude Stein.

But then, reality strikes. Among the concerns of living outside the United States—making a living and leaving loved ones behind, for example—are the tax issues that develop if you retain your U.S. citizenship.

If you’ve never lived abroad for an extended period of time, you probably don’t know the United States requires its citizens to continue to pay taxes back home. You are required to file taxes on foreign income even if you pay taxes in the host countries.

“We tax both citizens and residents on the basis of worldwide income,” said John Wilson, an adjunct professor of international taxation in the graduate tax program at the University of Denver.

The United States is one of a handful of countries that require this comprehensive taxation. For residents of Canada, the rules are different.

“In Canada, when you move away, you stop being a tax resident,” Wilson said. “The fact that you’re still a Canadian citizen doesn’t subject you to worldwide taxation.”

The good news is that the Internal Revenue Service offers several breaks to keep the long-distance taxes to a minimum.

"We tax both citizens and residents on the basis of worldwide income."

One tax break for expatriates is the Foreign Earned Income Exclusion. If an American moves abroad, they can exclude foreign-earned income up to $120,000 as of 2023 from U.S. taxation. To qualify, that person must have lived outside the United States for 330 days in 12 consecutive months, said Wilson, a partner in the Denver law firm of Holland and Hart.

That means an expatriate making $75,000 overseas would pay no taxes, although they still must file IRS Form 1040 and claim the exclusion. If the expatriate makes $123,000 in 2023, tax must be paid on the difference between his or her salary and $120,000, or $3,000. But if the expatriate visits the United States for more than 35 days in that period, the benefit is lost.

If there’s no government where the expatriate is living, the exclusion can’t be claimed. Wilson recalled a case in which Americans tried without success to claim the exclusion because they were living in Antarctica. The exclusion also can’t be claimed on the high seas, he said.

Once you’ve been overseas for an extended time—usually at least half a year, Wilson said—you become subject to taxes in your country of residence.

If you’re also paying taxes in the United States, that would be double taxation. So, the U.S. tax code allows you to take a foreign tax credit. Under this section of the tax code, you subtract the lower of the tax rates from the higher. In effect, you pay only the higher of the two tax rates, split between the two countries.

Wilson gave this example:

Say you lived and worked in London in 2023 and made $180,000 a year. You can use the Foreign Earned Income Exclusion to exclude $120,000 of that income from taxes. The remainder—$60,000—is subject to U.S. and U.K. tax. Your income tax rate in the United Kingdom could be 20 percent and your American rate 30 percent. You pay the British tax, and subtract that rate from the American tax, so you pay just 10 percent of the $60,000 in American taxes.

A tax issue that surprises some expatriates is a currency gain on which they could owe taxes, Wilson said.

For example, say you bought stock with euros when you were living abroad. Even if the stock's worth in euros remained flat, if the value of the euro versus the dollar rose significantly while you held the stock, you would end up with more dollars if you sold the stock.

So even if the stock didn't rise in market value, you made a profit in dollars when you sell the stock. You would have to list that as income on your tax form, Wilson said.

Not all expats have the same issues.

Raymond, who asked that his last name not be used, worked for an international energy company in the United Kingdom from 2015 to 2020. A combination of the tax exclusions and credits and his company’s policies kept double taxation from being an issue, he said.

Although his company acknowledged that he normally would be subject to taxes both from the United States and the United Kingdom, Raymond said he was told, “I wasn’t going to be taxed twice on my income.”

The tax code provided the credits and exclusions; and his company promised him it would pay any remaining taxes to keep his tax load the same as it was when he worked in the United States. Otherwise, he said, no one would have accepted the assignment.

“As closely as they can, they try to make you whole or keep you whole, so you aren’t negatively impacted by the expat assignment,” Raymond said. “For most of our daily stuff that we did, there was really no impact.”

The value-added tax, or VAT, is similar to the American sales tax, although it often is much larger because an increment is added at each stage of production or distribution of the product or service. The tax can be as high as 25 percent of the pre-tax price, according to a story in USA Today .

If you’re living in a country such as Great Britain or France, which have VATs, you pay it routinely, just as a foreign citizen living in the United States would pay a sales tax, said John Wilson, an adjunct professor of international taxation in the graduate tax program at the University of Denver.

On the other hand, if you’re a tourist, or an expatriate about to leave the country, you can apply to have the VAT removed or refunded. Refunds are allowed only on “significant” purchases, Wilson said. Most countries set minimum values for refunds.

With TurboTax Live Full Service , a local expert matched to your unique situation will do your taxes for you start to finish. Or, get unlimited help and advice from tax experts while you do your taxes with TurboTax Live Assisted . And if you want to file your own taxes, you can still feel confident you'll do them right with TurboTax as we guide you step by step. No matter which way you file, we guarantee 100% accuracy and your maximum refund.

Get unlimited advice, an expert final review and your maximum refund, guaranteed .

~37% of taxpayers qualify.  Form 1040 + limited credits only .

Looking for more information?

Related articles, more in general.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

TaxCaster Tax Calculator

Estimate your tax refund and where you stand

I’m a TurboTax customer

I’m a new user

Tax Bracket Calculator

Easily calculate your tax rate to make smart financial decisions

Get started

W-4 Withholding Calculator

Know how much to withhold from your paycheck to get a bigger refund

Self-Employed Tax Calculator

Estimate your self-employment tax and eliminate any surprises

Crypto Calculator

Estimate capital gains, losses, and taxes for cryptocurrency sales

Self-Employed Tax Deductions Calculator

Find deductions as a 1099 contractor, freelancer, creator, or if you have a side gig

ItsDeductible™

See how much your charitable donations are worth

Read why our customers love Intuit TurboTax

Rated 4.5 out of 5 stars by our customers.

(146691 reviews of TurboTax Online)

Star ratings are from 2023

Your security. Built into everything we do.

File faster and easier with the free turbotax app.

TurboTax Online: Important Details about Filing Form 1040 Returns with Limited Credits

A Form 1040 return with limited credits is one that's filed using IRS Form 1040 only (with the exception of the specific covered situations described below). Roughly 37% of taxpayers are eligible. If you have a Form 1040 return and are claiming limited credits only, you can file for free yourself with TurboTax Free Edition, or you can file with TurboTax Live Assisted Basic or TurboTax Full Service at the listed price.

Situations covered (assuming no added tax complexity):

• Interest or dividends (1099-INT/1099-DIV) that don’t require filing a Schedule B
• IRS standard deduction
• Earned Income Tax Credit (EITC)
• Child Tax Credit (CTC)
• Student loan interest deduction

Situations not covered:

• Itemized deductions claimed on Schedule A
• Unemployment income reported on a 1099-G
• Business or 1099-NEC income
• Stock sales (including crypto investments)
• Rental property income
• Credits, deductions and income reported on other forms or schedules 

* More important offer details and disclosures

Turbotax online guarantees.

TurboTax Individual Returns:

• 100% Accurate Calculations Guarantee – Individual Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. Excludes payment plans. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax. Excludes TurboTax Business returns. Additional terms and limitations apply. See Terms of Service for details.
• Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back – Individual Returns: If you get a larger refund or smaller tax due from another tax preparation method by filing an amended return, we'll refund the applicable TurboTax federal and/or state purchase price paid. (TurboTax Free Edition customers are entitled to payment of $30.) This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax. Excludes TurboTax Business returns. Additional terms and limitations apply. See Terms of Service  for details.
• Audit Support Guarantee – Individual Returns: If you receive an audit letter from the IRS or State Department of Revenue based on your 2023 TurboTax individual tax return, we will provide one-on-one question-and-answer support with a tax professional, if requested through our Audit Report Center , for audited individual returns filed with TurboTax for the current 2023 tax year and for individual, non-business returns for the past two tax years (2022, 2021). Audit support is informational only. We will not represent you before the IRS or state tax authority or provide legal advice. If we are not able to connect you to one of our tax professionals, we will refund the applicable TurboTax federal and/or state purchase price paid. (TurboTax Free Edition customers are entitled to payment of $30.) This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax. Excludes TurboTax Business returns. Additional terms and limitations apply. See Terms of Service for details.
• Satisfaction Guaranteed: You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. Printing or electronically filing your return reflects your satisfaction with TurboTax Online, at which time you will be required to pay or register for the product.
• Our TurboTax Live Full Service Guarantee means your tax expert will find every dollar you deserve. Your expert will only sign and file your return if they believe it's 100% correct and you are getting your best outcome possible. If you get a larger refund or smaller tax due from another tax preparer, we'll refund the applicable TurboTax Live Full Service federal and/or state purchase price paid. If you pay an IRS or state penalty (or interest) because of an error that a TurboTax tax expert or CPA made while acting as a signed preparer for your return, we'll pay you the penalty and interest. Limitations apply. See Terms of Service  for details.
• 100% Accurate Expert-Approved Guarantee: If you pay an IRS or state penalty (or interest) because of an error that a TurboTax tax expert or CPA made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest. Limitations apply. See Terms of Service  for details.

TurboTax Business Returns:

• 100% Accurate Calculations Guarantee – Business Returns. If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. Excludes payment plans. You are responsible for paying any additional tax liability you may owe. Additional terms and limitations apply. See Terms of Service for details.
• TurboTax Audit Support Guarantee – Business Returns. If you receive an audit letter from the IRS or State Department of Revenue on your 2023 TurboTax business return, we will provide one-on-one question-and-answer support with a tax professional, if requested through our Audit Report Center , for audited business returns filed with TurboTax for the current 2023 tax year. Audit support is informational only. We will not represent you before the IRS or state tax authority or provide legal advice. If we are not able to connect you to one of our tax professionals for this question-and-answer support, we will refund the applicable TurboTax Live Business or TurboTax Live Full Service Business federal and/or state purchase price paid. Additional terms and limitations apply. See Terms of Service for details.

TURBOTAX ONLINE/MOBILE PRICING:

• Start for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. For most paid TurboTax online and mobile offerings, you may start using the tax preparation features without paying upfront, and pay only when you are ready to file or purchase add-on products or services. Actual prices for paid versions are determined based on the version you use and the time of print or e-file and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases. Strikethrough prices reflect anticipated final prices for tax year 2023.
• TurboTax Free Edition: TurboTax Free Edition ($0 Federal + $0 State + $0 To File) is available for those filing Form 1040 and limited credits only, as detailed in the TurboTax Free Edition disclosures. Roughly 37% of taxpayers qualify. Offer may change or end at any time without notice.
• TurboTax Live Assisted Basic Offer: Offer only available with TurboTax Live Assisted Basic and for those filing Form 1040 and limited credits only. Roughly 37% of taxpayers qualify. Must file between November 29, 2023 and March 31, 2024 to be eligible for the offer. Includes state(s) and one (1) federal tax filing. Intuit reserves the right to modify or terminate this TurboTax Live Assisted Basic Offer at any time for any reason in its sole and absolute discretion. If you add services, your service fees will be adjusted accordingly. If you file after 11:59pm EST, March 31, 2024, you will be charged the then-current list price for TurboTax Live Assisted Basic and state tax filing is an additional fee. See current prices here.
• Full Service $100 Back Offer: Credit applies only to federal filing fees for TurboTax Full Service and not returns filed using other TurboTax products or returns filed by Intuit TurboTax Verified Pros. Excludes TurboTax Live Full Service Business and TurboTax Canada products . Credit does not apply to state tax filing fees or other additional services. If federal filing fees are less than $100, the remaining credit will be provided via electronic gift card. Intuit reserves the right to modify or terminate this offer at any time for any reason in its sole discretion. Must file by April 15, 2024 11:59 PM ET.
• TurboTax Full Service - Forms-Based Pricing: “Starting at” pricing represents the base price for one federal return (includes one W-2 and one Form 1040). Final price may vary based on your actual tax situation and forms used or included with your return. Price estimates are provided prior to a tax expert starting work on your taxes. Estimates are based on initial information you provide about your tax situation, including forms you upload to assist your expert in preparing your tax return and forms or schedules we think you’ll need to file based on what you tell us about your tax situation. Final price is determined at the time of print or electronic filing and may vary based on your actual tax situation, forms used to prepare your return, and forms or schedules included in your individual return. Prices are subject to change without notice and may impact your final price. If you decide to leave Full Service and work with an independent Intuit TurboTax Verified Pro, your Pro will provide information about their individual pricing and a separate estimate when you connect with them.
• Pays for itself (TurboTax Premium, formerly Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2022. Actual results will vary based on your tax situation.

TURBOTAX ONLINE/MOBILE:

• Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app.
• Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary. The IRS issues more than 9 out of 10 refunds in less than 21 days.
• Get your tax refund up to 5 days early: Individual taxes only. When it’s time to file, have your tax refund direct deposited with Credit Karma Money™, and you could receive your funds up to 5 days early. If you choose to pay your tax preparation fee with TurboTax using your federal tax refund or if you choose to take the Refund Advance loan, you will not be eligible to receive your refund up to 5 days early. 5-day early program may change or discontinue at any time. Up to 5 days early access to your federal tax refund is compared to standard tax refund electronic deposit and is dependent on and subject to IRS submitting refund information to the bank before release date. IRS may not submit refund information early.
• For Credit Karma Money (checking account): Banking services provided by MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply per account.
• Fees: Third-party fees may apply. Please see Credit Karma Money Account Terms & Disclosures for more information.
• Pay for TurboTax out of your federal refund or state refund (if applicable): Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 Refund Processing Service fee may apply to this payment method. Prices are subject to change without notice.
• TurboTax Help and Support: Access to a TurboTax product specialist is included with TurboTax Deluxe, Premium, TurboTax Live Assisted and TurboTax Live Full Service; not included with Free Edition (but is available as an upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. Services, areas of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice. Limitations apply See Terms of Service   for details.
• Tax Advice, Expert Review and TurboTax Live: Access to tax advice and Expert Review (the ability to have a Tax Expert review and/or sign your tax return) is included with TurboTax Live Assisted or as an upgrade from another version, and available through December 31, 2024. Intuit will assign you a tax expert based on availability. Tax expert and CPA availability may be limited. Some tax topics or situations may not be included as part of this service, which shall be determined in the tax expert’s sole discretion. For the TurboTax Live Assisted product, if your return requires a significant level of tax advice or actual preparation, the tax expert may be required to sign as the preparer at which point they will assume primary responsibility for the preparation of your return. For the TurboTax Live Full Service product: Handoff tax preparation by uploading your tax documents, getting matched with an expert, and meeting with an expert in real time. The tax expert will sign your return as a preparer. The ability to retain the same expert preparer in subsequent years will be based on an expert’s choice to continue employment with Intuit. Administrative services may be provided by assistants to the tax expert. On-screen help is available on a desktop, laptop or the TurboTax mobile app. Unlimited access to TurboTax Live tax experts refers to an unlimited quantity of contacts available to each customer, but does not refer to hours of operation or service coverage. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.
• TurboTax Live Full Service – Qualification for Offer: Depending on your tax situation, you may be asked to answer additional questions to determine your qualification for the Full Service offer. Certain complicated tax situations will require an additional fee, and some will not qualify for the Full Service offering. These situations may include but are not limited to multiple sources of business income, large amounts of cryptocurrency transactions, taxable foreign assets and/or significant foreign investment income. Offer details subject to change at any time without notice. Intuit, in its sole discretion and at any time, may determine that certain tax topics, forms and/or situations are not included as part of TurboTax Live Full Service. Intuit reserves the right to refuse to prepare a tax return for any reason in its sole discretion. Additional limitations apply. See Terms of Service  for details.
• TurboTax Live Full Service - File your taxes as soon as today: TurboTax Full Service Experts are available to prepare 2023 tax returns starting January 8, 2024. Based on completion time for the majority of customers and may vary based on expert availability. The tax preparation assistant will validate the customer’s tax situation during the welcome call and review uploaded documents to assess readiness. All tax forms and documents must be ready and uploaded by the customer for the tax preparation assistant to refer the customer to an available expert for live tax preparation.
• TurboTax Live Full Service -- Verified Pro -- “Local” and “In-Person”: Not all feature combinations are available for all locations. "Local" experts are defined as being located within the same state as the consumer’s zip code for virtual meetings. "Local" Pros for the purpose of in-person meetings are defined as being located within 50 miles of the consumer's zip code. In-person meetings with local Pros are available on a limited basis in some locations, but not available in all States or locations. Not all pros provide in-person services.
• Smart Insights: Individual taxes only. Included with TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits, and is available through 11/1/2024. Terms and conditions may vary and are subject to change without notice.
• My Docs features: Included with TurboTax Deluxe, Premium TurboTax Live, TurboTax Live Full Service, or with PLUS benefits and is available through 12/31/2024. Terms and conditions may vary and are subject to change without notice.
• Tax Return Access: Included with all TurboTax Free Edition, Deluxe, Premium, TurboTax Live, TurboTax Live Full Service customers and access to up to the prior seven years of tax returns we have on file for you is available through 12/31/2024. Terms and conditions may vary and are subject to change without notice.
• Easy Online Amend: Individual taxes only. Included with TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits. Make changes to your 2023 tax return online for up to 3 years after it has been filed and accepted by the IRS through 10/31/2026. Terms and conditions may vary and are subject to change without notice. For TurboTax Live Full Service, your tax expert will amend your 2023 tax return for you through 11/15/2024. After 11/15/2024, TurboTax Live Full Service customers will be able to amend their 2023 tax return themselves using the Easy Online Amend process described above.
• #1 best-selling tax software: Based on aggregated sales data for all tax year 2022 TurboTax products.
• #1 online tax filing solution for self-employed: Based upon IRS Sole Proprietor data as of 2023, tax year 2022. Self-Employed defined as a return with a Schedule C tax form. Online competitor data is extrapolated from press releases and SEC filings. “Online” is defined as an individual income tax DIY return (non-preparer signed) that was prepared online & either e-filed or printed, not including returns prepared through desktop software or FFA prepared returns, 2022.
• CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees . Limitations apply. See Terms of Service   for details.
• TurboTax Premium Pricing Comparison: Cost savings based on a comparison of TurboTax product prices to average prices set forth in the 2020-2021 NSA Fees-Acct-Tax Practices Survey Report.
• 1099-K Snap and Autofill: Available in mobile app and mobile web only.
• 1099-NEC Snap and Autofill: Available in TurboTax Premium (formerly Self-Employed) and TurboTax Live Assisted Premium (formerly Self-Employed). Available in mobile app only. Feature available within Schedule C tax form for TurboTax filers with 1099-NEC income.
• Year-Round Tax Estimator: Available in TurboTax Premium (formerly Self-Employed) and TurboTax Live Assisted Premium (formerly Self-Employed). This product feature is only available after you finish and file in a self-employed TurboTax product.
• **Refer a Friend: Rewards good for up to 20 friends, or $500 - see official terms and conditions for more details.
• Refer your Expert (Intuit’s own experts): Rewards good for up to 20 referrals, or $500 - see official terms and conditions for more details.
• Refer your Expert (TurboTax Verified Independent Pro): Rewards good for up to 20 referrals, or $500 - see official terms and conditions for more details
• Average Refund Amount: Sum of $3140 is the average refund American taxpayers received based upon IRS data date ending 2/17/23 and may not reflect actual refund amount received.
• Average Deduction Amount: Based on the average amount of deductions/expenses found by TurboTax Self Employed customers who filed expenses on Schedule C in Tax Year 2022 and may not reflect actual deductions found.
• More self-employed deductions based on the median amount of expenses found by TurboTax Premium (formerly Self Employed) customers who synced accounts, imported and categorized transactions compared to manual entry. Individual results may vary.
• TurboTax Online Business Products: For TurboTax Live Assisted Business and TurboTax Full Service Business, we currently don’t support the following tax situations: C-Corps (Form 1120-C), Trust/Estates (Form 1041), Multiple state filings, Tax Exempt Entities/Non-Profits, Entities electing to be treated as a C-Corp, Schedule C Sole proprietorship, Payroll, Sales tax, Quarterly filings, and Foreign Income. TurboTax Live Assisted Business is currently available only in AK, AZ, CA, CO, FL, GA, IL, MI, MO, NC, NV, NY, OH, PA, SD, TX, UT, VA, WA, and WY.
• Audit Defense: Audit Defense is a third-party add-on service provided, for a fee, by TaxResources, Inc., dba Tax Audit. See Membership Agreements at https://turbotax.intuit.com/corp/softwarelicense/ for service terms and conditions. 

TURBOTAX DESKTOP GUARANTEES

TurboTax Desktop Individual Returns:

• 100% Accurate Calculations Guarantee – Individual Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we’ll pay you the penalty and interest. Excludes payment plans. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details.
• Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back – Individual Returns: If you get a larger refund or smaller tax due from another tax preparation method by filing an amended return, we'll refund the applicable TurboTax federal and/or state software license purchase price you paid. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details.
• Audit Support Guarantee – Individual Returns: If you receive an audit letter from the IRS or State Department of Revenue based on your 2023 TurboTax individual tax return, we will provide one-on-one question-and-answer support with a tax professional, if requested through our Audit Report Center , for audited individual returns filed with TurboTax Desktop for the current 2023 tax year and, for individual, non-business returns, for the past two tax years (2021, 2022). Audit support is informational only. We will not represent you before the IRS or state tax authority or provide legal advice. If we are not able to connect you to one of our tax professionals, we will refund the applicable TurboTax federal and/or state license purchase price you paid. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details.
• Satisfaction Guarantee/ 60-Day Money Back Guarantee: If you're not completely satisfied with TurboTax Desktop, go to refundrequest.intuit.com within 60 days of purchase and follow the process listed to submit a refund request. You must return this product using your license code or order number and dated receipt.

TurboTax Desktop Business Returns:

• 100% Accurate Calculations Guarantee – Business Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we’ll pay you the penalty and interest. Excludes payment plans. You are responsible for paying any additional tax liability you may owe. Additional terms and limitations apply. See License Agreement for details.
• Maximum Tax Savings Guarantee – Business Returns: If you get a smaller tax due (or larger business tax refund) from another tax preparation method using the same data, TurboTax will refund the applicable TurboTax Business Desktop license purchase price you paid. Additional terms and limitations apply. See License Agreement for details.

TURBOTAX DESKTOP

• Installation Requirements: Product download, installation and activation requires an Intuit Account and internet connection. Product limited to one account per license code. You must accept the TurboTax License Agreement to use this product. Not for use by paid preparers.
• TurboTax Desktop Products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees may apply for e-filing state returns. E-file fees may not apply in certain states, check here for details . Savings and price comparison based on anticipated price increase. Software updates and optional online features require internet connectivity.
• Fastest Refund Possible: Fastest federal tax refund with e-file and direct deposit; tax refund time frames will vary. The IRS issues more than 9 out of 10 refunds in less than 21 days.
• Average Refund Amount: Sum of $3140 is the average refund American taxpayers received based upon IRS data date ending 02/17/23 and may not reflect actual refund amount received.
• TurboTax Product Support: Customer service and product support hours and options vary by time of year.
• #1 Best Selling Tax Software: Based on aggregated sales data for all tax year 2022 TurboTax products.
• Deduct From Your Federal or State Refund (if applicable): A $40 Refund Processing Service fee may apply to this payment method. Prices are subject to change without notice.
• Data Import: Imports financial data from participating companies; Requires Intuit Account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2021 and higher) and QuickBooks Desktop (2021 and higher); both Windows only. Quicken import not available for TurboTax Desktop Business. Quicken products provided by Quicken Inc., Quicken import subject to change.
• Audit Defense: Audit Defense is a third-party add-on service provided, for a fee, by TaxResources, Inc., dba Tax Audit. See Membership Agreements at https://turbotax.intuit.com/corp/softwarelicense/ for service terms and conditions.

All features, services, support, prices, offers, terms and conditions are subject to change without notice.

Compare TurboTax products

All online tax preparation software

TurboTax online guarantees

TurboTax security and fraud protection

Tax forms included with TurboTax

TurboTax en español

TurboTax Live en español

Self-employed tax center

Tax law and stimulus updates

Tax Refund Advance

Unemployment benefits and taxes

File your own taxes

TurboTax crypto taxes

Credit Karma Money

Investment tax tips  

Online software products

TurboTax login

Free Edition tax filing

Deluxe to maximize tax deductions

TurboTax self-employed & investor taxes

Free military tax filing discount

TurboTax Live tax expert products

TurboTax Live Premium

TurboTax Live Full Service Pricing

TurboTax Live Full Service Business Taxes

TurboTax Live Assisted Business Taxes

TurboTax Business Tax Online

Desktop products

TurboTax Desktop login

All Desktop products

Install TurboTax Desktop

Check order status

TurboTax Advantage

TurboTax Desktop Business for corps

Products for previous tax years

Tax tips and video homepage

Browse all tax tips

Married filing jointly vs separately

Guide to head of household

Rules for claiming dependents

File taxes with no income

About form 1099-NEC

Crypto taxes

About form 1099-K

Small business taxes

Amended tax return

Capital gains tax rate

File back taxes

Find your AGI

Help and support

TurboTax support

Where's my refund

File an IRS tax extension

Tax calculators and tools

TaxCaster tax calculator

Tax bracket calculator

Check e-file status refund tracker

W-4 tax withholding calculator

ItsDeductible donation tracker

Self-employed tax calculator

Crypto tax calculator

Capital gains tax calculator

Bonus tax calculator

Tax documents checklist

Social and customer reviews

TurboTax customer reviews

TurboTax blog

TurboTax Super Bowl commercial

TurboTax vs H&R Block reviews

TurboTax vs TaxSlayer reviews

TurboTax vs TaxAct reviews

TurboTax vs Jackson Hewitt reviews

More products from Intuit

TurboTax Canada

Accounting software

QuickBooks Payments

Professional tax software

Professional accounting software

Credit Karma credit score

More from Intuit

©1997-2024 Intuit, Inc. All rights reserved. Intuit, QuickBooks, QB, TurboTax, ProConnect, and Mint are registered trademarks of Intuit Inc. Terms and conditions, features, support, pricing, and service options subject to change without notice.

Security Certification of the TurboTax Online application has been performed by C-Level Security.

By accessing and using this page you agree to the Terms of Use .

Use your tax refund for an unexpected vacation this spring

With tax season upon us, many Americans are anxious to know what it will mean for their tax payments — and refunds. The good news is that the average tax refunds have been increasing over the past few years, and according to the IRS , that trend is still continuing as of the latest data. This means, there's the potential for even more surprise money to hit your pocket this tax season.

Tax returns vary state to state and person to person, but past data and future estimates can still give taxpayers a sense of what they'll be forking over to the IRS — or getting back as a return — come April. As the data shows, the average refund as of late February is $3,213 — up 4.3% from last year.

Some states also typically have higher averages than other. With data put together from LendingTree for the tax year 2021, residents of Wyoming, Massachusetts, Florida and Washington, D.C., received the largest average refund, at over $5,000. On the flip side, for the same tax year, residents of Maine, West Virginia and Vermont received the smallest average refunds — with numbers in the low $3,000s. While the exact averages for this year will be slightly different, the highest and lowest states usually stay pretty similar.

Each individual will spend their tax refund differently, and some will even use it to pay off their debt or put into savings. But, if you were hoping to put your refund towards travel, we have some great options for you. And really, what better way to celebrate spring (and the end of tax season) than with a trip paid for in full with a tax refund?

Despite the refund amount, you might be pleasantly surprised to see how far it can take you. There are also many sites you can use, such as Going.com and Skyscanner.com, to figure out last-minute vacation deals.

$3,000 to $3,200

With a more modest tax refund, visitors can still plan an awesome trip, either domestically or abroad. The lowest tax refund is, typically, in Maine, where the average taxpayer saw a refund of $3,144 (based on tax year 2021). With that money, a solo traveler could travel to Cartagena, Colombia. We found nonstop flights from New York City for $669 in May or, if you're willing to have a layover, flights as low as $363.

You could also enjoy Dublin this spring for just $607 round-trip. With close to $2,500 remaining, that could go a long way for accommodations, food and entertainment.

Related: JetBlue plots 'opportunistic' growth in Europe as carrier inaugurates new Dublin routes

Of course, the budget won't go as far for couples, but we were able to find flights to Reykjavik on low-cost carrier PLAY for as low as $387 round-trip. This means a couple can fly across the pond for less than $800 round-trip and enjoy a multi-day trip exploring Iceland. While Iceland isn't necessarily the cheapest destination, there are many points-friendly properties in the city .

If you're looking for somewhere to take the entire family, you can spend a week in Sedona, Arizona, hiking the red rocks or choose to lounge on the beach in Florida's Key West — as we found round-trip flights around $200 to $300 from many East Coast airports.

Related: 4 family-friendly road trips you can take through Arizona

$3,250 to $3,450

Taxpayers who fall into this band — which is currently the average person as of February — can escape still-chilly temperatures with trips to sunny and beautiful destinations across the U.S.

For a lower-budget trip, you can fly nonstop from Burlington, Vermont, to Orlando for as low as $151 round-trip on Breeze Airways . A visit to Orlando absolutely doesn't have to include visiting the mouse, as both Disney World and Universal offer many attractions that don't require a park ticket. You'll find many fun and entertaining hotels — at inexpensive rates — throughout the area.

Related: Splash into fun — The 14 best hotel pools in Orlando

For international vacations, we found flights from Boston to Frankfurt for just $437 round-trip per person. You could also take a quick flight to the island of Aruba from Washington, D.C., for just $396. Entire families can enjoy a trip here by using points to reserve a stay at one of the island's many great points properties .

$3,550 to $4,550

If you're able to snag a refund higher than the current average, this could potentially allow you to spend some portion on travel and save the rest.

For residents of Nevada, Alaska, or any other western states, the San Juan Islands off the coast of Washington are a short flight and boat ride away. The idyllic archipelago is filled with state parks and greenery, making it the perfect option for nature lovers who want to hike, kayak, swim or watch for orcas starting in May. Flights originating from the west can be as low as $90 per person (from what we saw from Las Vegas to Seattle on Frontier Airlines), and hotels on the islands usually cost from $115 to $285 per night in late May.

Related: Earn points, miles and cash back while doing your taxes

For international locations, residents of the West Coast can fly to parts of South America in just a few hours. Flights from California to Bogota, Colombia, are typically between $300 and $400 in May.

East Coast residents can turn to St. Martin for a great getaway as flights cost around $300 on Delta. Or, take a nonstop flight to Paris for about $500 from New York on airlines such as French Bee, Air Caraibes or Norse Atlantic Airways. Travelers can splurge at one of the best hotels in Paris , such as the Ritz Paris or Park Hyatt Paris-Vendome . Or, cash in your hotel points for an award night, and you'll have plenty of refund money left over to experience some incredible French dining.

$4,800 to $6,000

If you happen to live in one of the highest refund states — which typically includes Connecticut, Nevada, New York, Florida, Massachusetts, Washington, D.C., and Wyoming — you could embark on the vacation of a lifetime.

Southeast Asia can be extremely inexpensive, allowing your refund to go quite far. While your flight will eat up the bulk of your refund — we found flights to Bali starting at $1,500 per person — hotels, experiences and dining are extremely inexpensive. So, even though flights might cost north of $3,000 if you're traveling as a couple, you can easily stay for 10 days with just $1,800 to $3,000 in your back pocket.

For example, we found rates at the Aloft Bali, Seminyak for less than $100 per night (and you'll be within walking distance of the beach). You can then enjoy the spectacular scenery in and around Ubud for just $125 per night at the Sthala, a Tribute Portfolio Hotel (another Marriott property).

Related: Bali on a budget: Booking 6 nights in luxury hotels for just 36,000 points

If you're looking for something completely different, North African temperatures tend to be relatively mild in the spring, making it a great time to visit Morocco. Flights to Africa tend to run on the more expensive side, regardless of the time of year. However, flights to Casablanca are actually quite reasonable and can be found between $500 and $900 round-trip — depending on whether you want a nonstop flight or one with a layover. Visitors can rent entire homes near Casablanca with Airbnb for slightly over $100 per night, and many even include their own pools.

Bottom line

Although your tax refund is technically excess taxes you've paid throughout the year — or have had withheld from your paycheck — it can often feel like free money. There's no better way to travel than with unexpected money that just landed on your lap.

With my travel options, you can put this tax refund to good use and truly experience a fun vacation.

Related reading:

• Key travel tips you need to know — whether you're a beginner or expert traveler
• The best travel credit cards
• Where to go in 2024: The 16 best places to travel
• 6 real-life strategies you can use when your flight is canceled or delayed
• 8 of the best credit cards for general travel purchases
• 13 must-have items the TPG team can't travel without

Receiving a tax refund abroad

Jul 11, 2022

We’ve been getting a lot of inquiries about tax refunds for U.S. citizens who live abroad. If you live in the U.S., your refund woud be directly deposited to your account. Once you move overseas, receving a refund becomes more complicated as many U.S. Expats no longer keep their U.S. bank account.

Since the refunds cannot be deposited to a foreign bank account, taxpayers living overseas receive a check instead. However, these can take month to arrive. There are few things you can do to ensure you receive your refund faster.

Receiving a Tax Refund for U.S. Citizens Abroad

Receiving a tax refund is surely the best thing about filing your U.S. Expat Tax Return . You cannot imagine how much joy it brings us to inform our clients they’re now not only compliant, but they are actually due a refund. Many taxpayers are simply not aware of the credits they are eligible for. The additional child tax credit is the most common example of a tax credit U.S. expats don’t know about.

Although many expats receive refunds every year, there are ways to speed up processing of your refund. Most U.S. citizens abroad receive their refund in a mail, often waiting even months for their checks. In this blog post we’ll discuss the ways to ensure your refund isn’t delayed.

Are you entitled for a tax refund when you live abroad?

Surprisingly, even if you didn’t file tax returns in years, or if you have a child (US citizen with SSN), the answer is most likely yes.

Recovery rebate credit (aka Covid 19 Stimulus checks)

The covid 19 stimulus checks were issued based on the 2019 (and later 2020) federal tax return, as such, if the IRS didn’t have such a return on file, they couldn’t issue a check.

Many taxpayers who were not in compliance (didn’t file their tax returns) can now request them as a refundable tax credit on their 2020 & 2021 tax returns. For single filers with no dependents who earn less than 75,000 USD, the refund would be 1,800 USD on the 2020 tax return and 1,400 USD on the 2021 tax return.

This applies to others who didn’t receive the original checks for various reasons.

If you haven’t file a tax return in year, there hasn’t been a better time to become compliant. You now can claim all the stimulus checks by filing your delinquent returns.

Additional Child Tax Credit

For those living outside the US, a taxpayer can still request the 2,000 USD child tax credit, 1,400 USD of which is refundable.

Starting in 2021, those who spent over 6 months in the year in the U.S. are entitled to a higher child tax credit.

The additional child tax credit is not compatible with the Foreign Earned Income Exclusion, so the Foreign Tax Credit would have to be used. Your US citizen child would also need to have a US Social Security Number for the tax year in question.

Important: The Foreign Tax Credit is not a refundable credit. Learn more about the Foreign Tax Credit here.

Ways to get your refund faster

E-file and file early the fastest way to receive your refund is to file early. the sooner the irs can process your return, the soonest you can enjoy your refund. if you file your return electronically, the irs can process the returns right away. as such, if you can, you should e-file your tax return or your tax preparer can e-file the return on your behalf. if you file your return electronically, your refund should be issued in less than three weeks, even faster when you choose direct deposit. however, in some circumstances, the return cannot be electronically filed for example, if your spouse is a non resident alien (nra) and doesn’t have a ssn. the software would identify an error and the return couldn’t be electronically filed. for returns filed on paper your refund should be issued in about six to eight weeks from the date irs receives your return. monitor your refund. where is my refund.

You can now check the status of your refund on the IRS’ website as well as on your mobile device using the IRS2go app. You will need your SSN, your filing status and your exact refund amount to login to your account.

You can check the status of your refund 24h after e-filing your tax return or 4 weeks after mailing your paper return.

The IRS account will provide you with the data your return has been processed, when the refund was approved and how and when you’ll receive it.

Can the IRS deposit the check to a foreign bank account?

No, the IRS will only deposit refunds to U.S. bank accounts. If you live overseas and no longer have a US bank account, you will receive a check instead of a direct deposit.

Important: Ensure correct mailing address and be patient. It can take up to several months for the checks to arrive.

There is another workaround where you can open US bank details as a US citizen living abroad using smart fintech companies that give you access to international bank details no matter where you are in the world. Read on to find out more.

How to cash US checks overseas?

I already discussed it in my previous post on Stimulus Checks and you can read it here.

In a nutshell, if you do have a US bank account, but for some reason you did not provide your account details on your tax return and received a check, you can use the bank’s mobile app to take a picture of the check and deposit the amount to your account.

Direct deposit

If you don’t have a U.S. bank account, it might still be worthwhile to request a direct deposit. Not only will it be faster, but you will save the bank fees associated with depositing a US check into a foreign bank account.

Using direct deposit is not only fast, but it doesn’t make you reliant on postal services. This would be an additional incentive for people who live in countries in which the postal system is less reliable.

Opening a U.S. bank account as a non-resident

Most US banks will require you to appear personally in their branch (in the US) in order to open a bank account.

• SDFCU (the Department of State credit union) is one of the rare options which allow you to open a bank account remotely. You would need to have an affiliated membership, which would normally mean that you would pay 70 USD for an ACA membership. You would have to go through a bank opening process which can take a week or two. And you would have to wait to get that bank account open in order to be able to enter the ACH and bank account numbers on your tax return, delaying the process. With that being said, SDFCU does provide full service banking. As such, you would have a checkbook and other traditional functionalities.
• Wise (formerly Transferwise) are a global technology platform that makes it cheaper, easier and more convenient to send, receive and spend money overseas. Wise offers multi-currency accounts. For these accounts (aside from less mainstream currencies), you get local account details eg. account number and routing number for that country. As such, a USD account will have a US based bank account number and ACH number, which can be used to request a direct deposit from the IRS. A huge benefit of Wise is that you can open these international account details online in minutes from anywhere in the world. Just go to their website and after a few minutes of filling out their registration form you’ll get access to your account number and ACH immediately. Another advantage of Wise is they have one of the most competitive / lowest fees for international wire transfers on the market. This is because they always convert your money at the mid-market rate and add no mark ups. You can easily access your international funds, hold over 50 currencies and spend money abroad using their Wise debit account. You can manage your money via their app or desktop and keep on track of all your transfers and spending. For these reasons I would recommend using Wise over other options. Get your cha ching faster.

Kasia Strzelczyk, EA

A certified accountant and IRS enrolled agent with over 8 years of experience working with US expats. With a deep understanding of the unique financial challenges faced by expats, Kasia is dedicated to helping clients navigate complex tax laws and regulations.

RECOMMENDED FOR YOU

Irs form 8938: reporting requirements overview.

FBAR and FATCA , Personal U.S. expat taxes

Foreign Self-Employment Income: A US Expat’s Guide

Personal U.S. expat taxes

The Refundable Additional Child Tax Credit Guide for Expats

Tips for mailing your tax return from abroad, form 8854: the final step in leaving u.s. tax system.

FREE U.S. Tax Guide for Americans Abroad

The only e-book about U.S. Expat Taxes you need to read! Covers

1. Foreign Tax Credit vs. Foreign Earned Income Exclusion

2. The Additional Child Tax Credit. Get a $1,400 refund!

3.  What happens if I don't file?

and more...

Thanks for requesting our free tax guide! It will be delivered to your inbox shortly.

We respect your privacy and will not share your information with third parties

Home » Tax Samaritan Blog » Expat Tax Solutions » Tips For Receiving Your Overseas Tax Refund When Living Abroad

Tips For Receiving Your Overseas Tax Refund When Living Abroad

Tips To Receive Your Overseas Tax Refund

When living abroad, the quickest and best way to receive your overseas tax refund from the IRS is by direct deposit to your bank account. With the varying reliability of mail service overseas, direct deposit ensures delivery. However, direct deposit of your overseas tax refund can only be made to a U.S. bank account.

In the event you don’t have a U.S. bank account or choose to have a direct deposit of your overseas tax refund, your refund will be mailed to the address listed on your tax return. Mailing a check overseas can take a long time and to help ensure deliverability and any undue delay, make sure that the correct mailing address is reflected on your tax return.

What To Do If You Haven’t Received Your Overseas Tax Refund

If an error is made in your mailing address, the IRS will require a Form 8822, Change of Mailing Address before re-sending a replacement check. Before a replacement check is issued, you will want to make sure that you send a new Form 8822 and contact the IRS international office at 267-941-1000 to let them know that your overseas refund check has not been received and that the check should be cancelled and re-issued to your corrected address.

IRS overseas tax refund status can be checked 24/7 at Where’s My Refund . If the response indicates that your overseas tax refund check was mailed, but you do not receive it within 45 days after the mailing date, call the International Taxpayer Service Call Center by phone or fax. The International Call Center is operational Monday through Friday, from 6:00 a.m. to 11:00 p.m. (Eastern Time). The telephone number (not toll-free) is 267-941-1000. The fax number (not toll-free) is 267-941-1055.

If you are a U.S. citizen or legal permanent resident (i.e. green card holder) living outside the United States, please register with the State Department’s Office of American Citizens Services and provide them with your most current contact information (local address and phone number, email address, etc.) and update them as frequently as necessary. This will help them contact you about the delivery of any refund check that may not include your correct mailing address.

Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our clients. We are not only tax preparation and representation experts, but strive to become valued business partners. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions. If you would like a quote for the preparation of your overseas tax return, please click on the button below for a free, no obligation Tax Preparation quote and/or free 30-minute consultation to discuss your situation further:

Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.

When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent ( America’s Tax Experts ). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation , like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).

Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.

Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.

All About Randall Brody Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

My TRS Claim

Browser not supported

The browser that you are using cannot run the TRS Claim application: it does not properly support html "canvas" elements and so cannot be used to generate a QR code.

Please install a more up-to-date browser, such as the latest version of Chrome , Firefox , or Edge .

• 1. Disclaimer
• 2. My Travel Details
• 3. My Invoices
• 4. My Payment Details
• 5. My Claim Code

Step 2 of 5 -

Important note to all claimants.

This web page will assist you to enter information required to lodge a Tourist Refund Scheme (TRS) claim.

When you have finished entering your information it will be stored in a QR code. This QR code is your TRS Claim Code, and it must be presented at the TRS location at the airport on the day you depart from Australia.

Creating a TRS Claim 'QR' Code may allow your claim to be processed faster at TRS as your claim information is pre-filled.

Your Privacy

The Department of Home Affairs collects and deals with personal information in accordance with its Privacy Policy.

Your use of this TRS Application is regulated by its Terms and Conditions, including the application's Privacy Statement.

By checking this box, I understand and accept the TRS Application's Terms and Conditions, including the Privacy Statement.

Tax Invoice Requirements

A valid tax invoice includes:

• the retailer's name, address and Australian Business Number (ABN)
• a description of the goods that allows us to match the goods to the invoice
• the purchase price of the goods, including the GST or WET paid (or total price including GST)
• the date of purchase
• the invoice must be in English.

Tax invoices for $1,000 or more must also show your name (and only your name) as it appears in your passport.

Tax Invoice s :

Invoice Date: Invoices must be dated within 60 days of your Departure Date Invoices cannot be dated in the future Invoice/Receipt Number:

Total for : $

Estimated Refund for ABN: $

The invoices for ABN are not eligible for a refund because they total less than $300.

Total Of All Invoices: $ Estimated Total GST/WET Refund Being Claimed: $

Each abn on the claim must have invoices totalling a minimum of $300. the highlighted abns do not qualify., up to 10 invoices may be added..

* How do you want your refund to be paid, if approved?

 Credit Card

The following credit cards are accepted:

Please note Union Pay debit cards are not accepted.

This application does not collect credit card details. Present your credit card when submitting your claim on departure.

 Australian Bank Account

 Cheque (not recommended)

Cheques may take 2 months to arrive, from date of departure.

Travel Details:

Passport Issuing Country:

Passport Number:

Australian Resident:

Departure Date:

Invoice Date: Invoice/Receipt Number:

Total All Invoices: $

Estimated gst/wet refund in australian dollars being claimed against all invoices (if approved): $, payment details:.

Payment Method:

Present your credit card when submitting your claim on departure.

Account Name:

BSB Number:

Account Number:

Cheque Currency:

Declaration:

I claim the Goods and Services Tax (and Wine Equalisation Tax if applicable) under the Tourist Refund Scheme (TRS) for the goods described in this TRS claim application.

I confirm that:

• These goods were acquired by me within 60 days of my departure date, and paid in full for the amounts indicated in this TRS claim on the associated invoices;
• The goods in this TRS claim will be in my possession and exported by me on the specified date of departure from Australia.

I understand that if I return to Australia with the goods, I may be required to pay applicable duties including GST and WET.

You have finished supplying the information needed to process your TRS claim and it is now saved in the following claim code. Please print or save this claim code.

You may save the claim code by right-clicking it and selecting your browsers Save Image/Picture... option.

To submit your TRS claim, you must present this claim code and any additional claim codes you have created at the TRS location at your port of departure from Australia.

Ensure you have the following items ready to be inspected:

• The goods you are claiming a refund against;
• Your Tax Invoice(s);
• Your passport; and
• Your boarding pass.

If you cannot present your claim code, your claim will be processed manually.

If when requested by an ABF officer you cannot present some or any of the goods listed above, some or all of your claim may be rejected.

Please note: this claim contains invoices that do not meet eligibility requirements.

To submit your Tourist Refund Scheme (TRS) claim, you must present this claim code at the TRS facility at your port of departure.

If, when requested, you cannot present some or any of the items listed above prior to departing the country, some or all of your claim may be rejected.

Tax Invoice Summary

Tax Invoice s . Total:

Estimated Refund (subject to approval)

Terms and Conditions

Privacy statement.

The Department of Home Affairs (Home Affairs) is collecting and using your personal information for the purpose of assessing and refunding the Goods and Services (GST) and Wine Equalisation Tax (WET) in accordance with section 168 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). Home Affairs may disclose this information to the Australian Taxation Office and any retailers from whom you have attached invoices for the purposes of assessing and determining your eligibility for a GST/WET refund. If a tax refund is due to be paid to you, your personal information will be disclosed to a contracted commercial agency to facilitate the processing of that refund.

Failure to complete this application or provide this information may result in Home Affairs being unable to process your tax refund using this application.

Personal information will be collected, used, stored and disclosed by Home Affairs in accordance with the Australian Privacy Principles in Schedule 1 of the Privacy Act 1988 (Cth).

Further information regarding how Home Affairs handles personal information can be found in Home Affairs' privacy policy .

Warning: The TRS claim code generated by this app is not encrypted and can be read by any device capable of reading a QR code. You bear sole responsibility for the security of the code and its data.

Conditions on the use of this application, the eligibility rules for making a TRS claim, and the process for making a claim are detailed on the TRS information page .

Legal Statement

Making a false or misleading statement to an officer, including by presenting false documents, may result in the application of penalties.

Any goods subject to this TRS claim must be declared if they are brought back into Australia. You may be required to repay the GST/WET refunded under the TRS plus any additional customs duties and taxes payable on the ENTIRE VALUE of ALL the general goods you are importing.

Failure to declare imported goods may also result in the application of penalties (see the TRS Information page).

Invoice Details

What can i claim.

You can claim on most goods provided you can present a valid tax invoice.

You cannot claim against:

• GST-free goods
• Services, such as car hire and accommodation
• Beer, spirits, tobacco and tobacco products
• Goods consumed in Australia
• Dangerous goods (goods you can't take out with you on the aircraft)
• Goods which are not accompanying you on departure including goods you have freighted or posted out of Australia.

For more information refer to the TRS Information page .

Invoice Items:

* Please describe OTHER goods below. Your claim will be rejected if these goods do not meet the TRS requirements.

Amount Paid for Claimable Goods, including GST/WET

This Travel Hack Can Help You Save Hundreds of Dollars While Shopping Abroad

Go ahead . . . buy that expensive european designer bag. you may get some cash back thanks to this handy travel tip..

• Copy Link copied

When it comes to VAT refunds, the more you spend, the more you can get back.

Photo by AboutLife/Shutterstock

If you’ve never heard of the VAT refund, get ready to see some serious financial returns the next time you go shopping abroad. If you’re looking for the best price on a high-end item, you might be able to save thousands of dollars by waiting to buy it overseas. (Discount luxury shopping: It’s not an oxymoron.) Here’s the breakdown on how to save money with VAT.

What is VAT?

VAT—sometimes redundantly called VAT tax—stands for value-added tax. This tax is associated with shopping in the European Union, though more than 160 countries around the world use value-added taxation. It’s a sales tax paid by consumers (not businesses), and it doesn’t exist in the United States. Only visitors—including U.S. tourists—are able to qualify for a VAT refund.

Keep in mind, VAT is often factored into the price of a product (so a €100 dress with a 20 percent VAT rate might have a price tag of €120). Other times, it is listed on the receipt. Ask a sales associate wherever you’re shopping if it’s unclear.

The rate of VAT in Europe varies depending on where you’re visiting and shopping, and it ranges from 7.7 percent in Switzerland (technically not an E.U. country, and it’s set to increase its VAT to 8.1 percent in 2024) to 27 percent in Hungary. The average VAT rate in the E.U. is 21.3 percent , and the minimum in the E.U. is 15 percent. Deloitte provides a very useful country-by-country breakdown .

But rates can also vary depending on what you’re buying. For example, food and pharmaceutical products are typically taxed at a lower rate than leather goods like shoes and handbags.

Can you get a VAT refund in the U.K.?

It depends: Travelers were allowed to do so throughout the U.K. up until December 31, 2020, but Brexit put an end to VAT refunds. Currently, the only country in the region that offers VAT refunds to overseas visitors is Northern Ireland.

If you’re hoping to buy luxury goods in Europe—good news. You could qualify for a VAT refund.

Courtesy of Ira Komornik/Unsplash

What qualifies for a refund?

Almost all luxury goods—including clothes, shoes, cosmetics and skincare, jewelry, handbags, leather goods, and art—will have a value-added tax. Many items qualify for a VAT refund, but it’s important to note that only new goods (not used) can be claimed. Each transaction also has to be over a certain threshold, and this threshold varies by country. For instance, you have to spend over €100 per transaction in France to qualify for a VAT refund. This means you can buy several products at one store for a total of more than €100, but if you spread those same items out over multiple stores, you would not get to claim the refund. You can also make a single large purchase over €100 at many different stores and claim for each transaction.

Your items are supposed to be unused when you declare them. That said, you can typically get away with using your new handbag or coat. But you may want to hold off on breaking in those new leather slingbacks before you present them to customs. You also will want to ensure that items you are declaring are recent purchases because you must make your claim within three months of leaving the European Union.

Items that do not qualify for a VAT refund

• Vintage items —Those vintage Chanel clip-on earrings you bought from the Marché aux Puces de Saint-Ouen? The (probably very good) price you paid is final. No refunds here.
• Goods purchased in the tax-free zones of airports —because there is nothing to refund
• Transactions that do not meet the minimum threshold
• Services —including hotel stays, restaurant meals, and tour guide fees—because these are experienced abroad and not brought home
• Anything you aren’t bringing back to the United States . The goods have to come home with you.
• Cars — unless the vehicle is being used exclusively for business purposes, in which case you can get up to 50 percent back on your VAT
• Alcohol and tobacco
• Counterfeit items —This may seem obvious, but a faux Dior tote does not qualify for VAT (and in France, purchasing a counterfeit is a criminal offense).

Keep in mind: Vintage items are not eligible for VAT refunds.

Photo by Kamil Macniak/Shutterstock

What you need to do while shopping

• Make sure you have your passport with you before you start shopping —you’ll have to provide proof that you are a visitor . If you’re shopping specifically to get a discount, ask the shop if it participates in VAT refunds and if it has a specific purchase-amount threshold. On occasion, smaller shops and boutiques do not participate, therefore you will not be able to get a VAT refund on that purchase. It’s best to know before you start shopping.
• Ask for paperwork at each place you shop —the sales assistant, cashier, or store manager should have information. Occasionally, stores can process a refund for you on site (called “instant refund”), but most use Global Blue, Premier TaxFree, or another third-party to handle the refund process. [Author’s note: I shopped at some of the largest stores in Paris—Le Bon Marché, Liberty, Louis Vuitton, Chanel—and was unable to get the instant refund at any of them.]
• Don’t leave the store without signed, official documents. Many department stores have a VAT office, such as Galeries Lafayette Haussmann in Paris. These offices will help you get your paperwork sorted. Staple your receipts to your forms, and keep them in a safe place so you can access them when you’re claiming your refund.
• Ask for a second receipt. You may want this for U.S. customs upon your arrival home.
• Try to group purchases at boutiques into one transaction , because you may get a higher rate of return. Don’t buy a bag at Hermès and then come back later to get a scarf. If you can, buy them both at the same time.

The VAT refund should be processed at your final port of departure when you’re leaving the E.U.

Courtesy of Unsplash/Getty Images

How to collect your refund

When you’re ready leave the E.U.—your last port of departure—make sure you have your goods ready to declare and your paperwork completed, then head to the airport well in advance of your flight. Keep in mind, if you’re traveling around multiple European countries, you do not go through this process each time you leave and go somewhere new within the continent (even if you’re going to a non-E.U. country, like Norway or Switzerland).

The refund process is completed on your final departure when you’re headed home. Your forms should have instructions on what steps to take (and where to go), but here’s what to do.

• Find a VAT counter. You’ll want to identify your options in advance of your flight so tracking them down is easier on the day of your travel— Moneycorp , Planet , and Global Blue are fairly common. Check your individual airport’s website for more information; some will have detailed instructions specific to their location.
• Some airports may offer a dropbox when there’s no one there to check your paperwork. This is relatively rare, but you may run into a situation where there’s no one at the counter to take your paperwork. Look for a drop box where you can take your completed paperwork for processing. The downside here is that it can add time to the process if anything is filled out incorrectly or information is missing. So make sure to double-check everything before making the drop.
• Once you’ve arrived at the counter, present your completed forms and paperwork alongside your passport and boarding pass to the employee. You may need to present certain purchased goods, particularly if they’re over €1,000. At this point, if you do have a larger purchase, you will likely be sent to the local customs office to have an officer see your goods and give you a customs stamp. If that step doesn’t apply to you, an employee will stamp your documents at the refund counter and either mail them off or hand them to you to drop into a mailbox.
• Choose your refund delivery method. You receive your refund either in cash or as a direct credit back on your credit card. Cash refunds are faster but typically have a higher fee. Credit card refunds can be slower but usually get more money back. Sometimes the refund is instant, sometimes it takes five days, sometimes it takes months. Keep your paperwork in case you have to track down your refund. If you haven’t received information in six weeks, it’s time to contact the agency.

Now for the less fun news: You do not get the full 15–20 percent VAT refunded. There are unavoidable processing fees that unfortunately cut into the final refund amount, but typically it’s a small charge. You can get an estimate on the Global Blue website of what your refund might be.

VAT is a value-added tax on goods purchased within the European Union.

Courtesy of Jacek Dylag/Unsplash

How this affects your travel home

• Consider adding at least two hours to your travel time when declaring your goods at an airport VAT counter.
• Repack your items into your checked bag after you present them for your refund.
• In addition, you have to declare your goods when you come back to the United States , and a customs officer may want to see your items if you’ve spent over $800. You may also have to pay duty, depending on the value of your purchase and the size of your party. The first $800 (per person) is tax free, the $1,000 after that is taxed at 3 percent, and beyond that the rate is variable.

Can I just go to the duty-free airport shops?

Yes, but often the products are only slightly discounted from what you’d see outside the terminal. You’ll save more money if you go through the VAT refund process.

Make sure to declare any goods purchased abroad that are worth over $800 to U.S. Customs.

Courtesy of Arturo Ray/Unsplash

How to maximize VAT savings

At this point you may be thinking that’s way too much effort for a few bucks. To that end, you’d be right—sometimes this is too much if the rate of return is small. The best way to maximize your VAT refund is on larger purchases like luxury items or a group of items at one store.

• Buy something made in the country you’re visiting. Purchasing a Louis Vuitton purse in France will save you a significant amount of money compared to buying the same purse in the United States.
• Travel with family. The United States allows $800 per person of duty-free goods. If you travel with a family of four, that’s $3,200 collectively of U.S. tax–free import.
• Don’t try to avoid U.S. customs tax authorities if your purchase is over $800. This is tax fraud, and you can be fined a major penalty and lose Global Entry status. Your VAT refund is connected to your passport number, so do yourself a favor and go through the process.
• Pay in euros or use a credit card with no foreign transaction fees so you don’t incur unnecessary charges.

Some travelers have managed to save substantial amounts on certain luxury goods. Others have had less success, despite following instructions to the letter. But if you’ve spent a lot on souvenirs in Europe, you’ll at least want to try to get that VAT back to offset the duty you’ll pay in the United States.

Is there any way to avoid paying the VAT?

Technically, yes. If a store offers home shipping services, you could opt to have your purchase sent directly to your place (thus saving precious packing space!). The shop won’t charge the VAT if you go this route. But there’s a catch: You’ll have to pay for the freight shipping, which can add up very quickly. So carefully weigh the pros and cons—what is the maximum shipping cost that will offset the inconvenience of dealing with the VAT refund paperwork?

This article originally appeared online in 2020; it was most recently updated on February 2, 2024 by Erika Owen, to include current information.

• 86-19138970032 (GMT+8 18:00~09:00)

• Beijing Xian Tours
• Shanghai Beijing Tours
• Hong Kong Guilin Tours
• Hangzhou Suzhou Tours
• Kunming Lijiang Tours
• Shanghai Yangtze Cruise Tours
• Chengdu Tibet Tours
• More Short Stay Tours
• China Tours in January
• China Tours in February
• China Tours in March
• China Tours in April
• China Tours in May
• China Tours in June
• China Tours in July
• China Tours in August
• China Tours in September
• China Tours in October
• China Tours in November
• China Tours in December

• High Speed Trains
• China Yangtze Cruise Tour
• Photography
• Desert Adventure
• Ethnic Villages
• Biking Tours
• Kung Fu Tours
• Heritage Sites Exploration
• China Spring Tours
• China Summer Tours
• China Autumn Tours
• China Winter Tours

• Best-value Yangtze Cruises
• Top Family-friendly Cruise Ships
• Top 3 Luxury Yangtze River Cruises
• Yangtze River Highlights
• Yangtze River Cruise Routes
• Upstream or Downstream?
• Dining & Drinking
• Accommodations
• On-board Activities
• Yangtze Cruise Booking Steps

• Inner Mongolia

• Fanjingshan
• How to Plan Your First China Tour
• How to Plan Beijing Tour
• How to Plan Xian Tour
• How to Plan Shanghai Tour
• How to Plan Guilin Tour
• How to Plan Sichuan Tour
• How to Plan Family Tour
• 2024 China Travel Ideas
• Best Time to Visit China
• What to Pack for Your China Journey
• Updated China Travel News
• Ultimate Chinese Visa Guide
• Chinese Visa Types
• Chinese Visa Requirements
• Do I Need a Visa for China
• Chinese Visa Application
• Chinese Visa Exemptions
• 144-hour Visa Free
• Shenzhen Visa on Arrival
• Hainan 30-day Visa Free
• Embassies & Consulates
• Invitation Letter
• Useful Visa FAQs & Tips
• Entry Regulations
• Baggage Allowance
• Customs Declaration
• Exit Regulation
• How to Book Train Tickets
• How to Collect Train Tickets
• How to Cancel & Alter Train Tickets
• How to Read Train Tickets
• China High Speed Train Types
• Seats Class & How to Choose
• Friendly Facilities on the Train
• The Train Station Departure Process
• Available Food and Drinks on the Train
• Western Toilets on the Train
• Luggage Racks & Baggage Allowance
• Beijing Train Stations
• Shanghai Train Stations
• Guilin Train Stations
• Xian Train Stations
• Chengdu Train Stations
• Hong Kong West Kowloon Railway Station
• Beijing - Xian
• Beijing - Shanghai
• Guangzhou - Shanghai
• Shenzhen - Shanghai
• Chengdu - Xian
• Shanghai - Hangzhou
• Shanghai - Xian
• Chengdu - Chongqing
• Kunming - Lijiang
• Beijing Capital International
• Beijing Daxing International
• Shanghai Pudong International
• Shanghai Hongqiao International
• Guangzhou Baiyun International
• Hangzhou Xiaoshan International
• Chengdu Tianfu International
• Chengdu Shuangliu International
• Xian Xianyang International
• Shanghai - Beijing
• Hong Kong - Shanghai
• Guangzhou - Beijing
• Chengdu - Lhasa
• Shanghai - Guilin
• Shanghai - Sanya
• Travel in Spring Season
• Travel in Summer Season
• Travel in Autumn Season
• Travel in Winter Season
• Weather in January
• Weather in February
• Weather in March
• Weather in April
• Weather in May
• Weather in June
• Weather in July
• Weather in August
• Weather in September
• Weather in October
• Weather in November
• Weather in December
• Top 10 China Destinations
• Top 15 Things to Do
• China World Heritage Sites
• Top 10 Best Natural Beauties
• Top 10 Museums in China
• Top 10 Old Towns & Villages
• Five Great Mountains in China
• Top 10 Monasteries & Temples
• Top 10 Ski Resorts
• Top 10 Beautiful Lakes in China
• 7 Best Beaches in Sanya
• Top 6 Beautiful Waterfalls
• Panda Volunteering
• Having fun on Ice and Snow Festival
• About Us Who We Are Our Team Why Travel with Us Feedback & Reviews Travel Stories Travelers' Gallery Payment Guide Customer Support Contact Us
• Tour Experiences

Destinations

• Travel Guide

The Tax Fefund policy refers to the regulations for providing tax refunds to foreign travelers and travelers from Hong Kong, Macau and Taiwan for items purchased at designated tax refund shops and carried out of the country. Travelers who wish to claim tax refunds for their purchased items upon exiting the country should voluntarily declare these items to customs. They need to submit the tax refund goods, the application form for tax refund on goods purchased by overseas travelers, the sales invoice for the tax refund items, and their valid identification documents. After customs verification, if the tax refund items presented by the traveler match those listed on the application form, customs will confirm and stamp the form. The form will then be given to the traveler to facilitate the tax refund process.

Who can Enjoy the Tax Refund Policy?

According to the announcement of the government, overseas, Hong Kong, Macau and Taiwan travelers, who stay in China no more than continuous 183 days, purchasing articles which satisfy the tax refund conditions and only for personal use in designated tax free stores, not including the articles prohibited and restricted by PRC from importing and exporting, can enjoy the tax refund policy when they leave China.

See more prohibited and restricted articles of importing and exporting in Entry Regulations and Exit Regulations.

Tax Refund Conditions

1.One traveler shall purchase over RMB500 commodities in one tax free store in one day.

2.The tax refund articles shall not be open and used.

3.The departure date and the purchase date of the articles shall not be over 90 days.

4.The purchased tax free articles shall be brought out of China with the traveler himself or be shipped as luggage.

Tax Refund Process

1.Purchase tax refund articles

After purchasing the tax free articles in tax free stores, overseas travelers need to ask for the tax refund form and sales invoice from the store. When fill in the tax refund form, traveler’s name, purchase amount, passport number and amount of refund tax need to be carefully filled.

2.Verification and confirmation by the Customs

When leaving China, overseas traveler need to present tax refund articles, tax refund form and sales invoice to the Customs on the departure port for verification and confirmation. After that, the Customs will stamp on the tax refund form.

Notice: travelers need to present tax refund form, valid identification document and tax refund articles to the Customs.

3.Get refund tax from the agency

The refund tax shall be return to the traveler by the tax refund agency in the departure port. Overseas traveler will present valid identification document, stamped tax refund form, sales invoice of the tax free articles to the tax refund agency. After verification and confirmation, the agency will return VAT to the traveler.

Notice: the agency will charge necessary commission fees.

There are two ways to refund: cash or bank transfer. If the refund value is less than 10,000, traveler can choose to receive the tax refund through cash or bank transfer. If the value is more than 10,000, bank transfer is the only refund way.

Tax Category and Currency

For the tax refund policy, China only refunds the Value Added Tax of the goods, and the refund money will be RMB.

Tax Rebate Amount

Based on the value-added tax (VAT) invoices (including VAT) of items eligible for tax refunds upon departure:

For items with a VAT rate of 13%, the refund rate is 11%.

For items with a VAT rate of 9%, the refund rate is 8%.

The calculation formula is as follows: Calculated VAT refund amount = Sales invoice amount (including VAT) of items eligible for tax refund upon departure × Refund rate; Actual VAT refund amount = Calculated VAT refund amount - Tax refund agency processing fee.

Designated Port for Tax Refund

In Beijing and Shanghai, overseas travelers can handle the tax refund process at Beijing Capital International Airport , Shanghai Pudong International Airport and Shanghai Hongqiao International Airport . Traveler can also enjoy the tax refund policy at Hainan, the first province to promote the tax refund policy. The designated ports in Hainan are Haikou Meilan International Airport and Sanya Phoenix International Airport .

Keep Reading

• Entry Regulation
• Embassy & Consulate

Recommended Tours

Top 3 tours chosen by most customers to explore in the best way. Check the detailed itinerary, or tailor your own trip now with us.

8 Days Best of China Tour (Flight/Bullet Train Covered)

Beijing / Xian / Shanghai

10 Days Classic China Tour from Shanghai

Shanghai / Guilin / Yangshuo / Guilin / Xian / Beijing

10 Days Chengdu Lhasa Everest Overland Tour

Chengdu / Lhasa / Shigatse / Mount Everest / Lhasa

Start planning your tailor-made holiday to China by contacting one of our specialists. Once inquired, you’ll get a response within 0.5~23.5 hours.

Questions & Discussions

Following are latest questions and answers from our webusers and customers. You can learn many useful information from the discussion and cases. You can also join in the discussions or ask your own question. Our experts will help you ASAP.

Have a question? Get answers from our travel experts or guests

• Your Question:
• Your Email:
• Affordable and valuable price
• 100% tailor-made packages
• Highly rated customers reviews
• Efficient customer support

China Tours

• Top 10 China Tours
• Classic China Tours
• China Tours from Beijing
• China Tours from Shanghai
• China Tours from Hong Kong
• China Tours from Chengdu
• Short China Trips
• Customize China Tour
• China Panda Tours
• Family Tour with Kids
• High-Speed Train Tour
• Silk Road Travel
• Yangtze River Cruise
• Hiking & Trekking Tours
• Photography Tours
• China Minority Travel
• Beijing Shanghai Tours
• Shanghai Yangtze Tours
• Chengdu Jiuzhaigou Tours
• Chengdu Lhasa Tours
• Suzhou Hangzhou Tours
• Guilin & Yangshuo
• Zhangjiajie

“Very good experience”

“WONDERFUL 25 DAYS IN CHINA - PRIVATE TOUR”

“Awesome China tour from northeast to southwest”

Any questions, please email us at: [email protected] or call us at: 86-19138970032 (Monday-Friday 9 a.m. to 6 p.m. GMT+8)

• Terms & Condition
• Privacy Policy
• Customer Support

Copyright © 2011-2024. All rights reserved.

Cookie policy

We use cookies to give you the best experience on our website. Continue using our website means you agree with our cookie policy. For more info, please read here .

• Skip to navigation
• Skip to main content

Popular searches

Your previous searches.

• Integrated Cargo System (ICS)

Guide to VAT refund for visitors to the EU

If you are a visitor to the EU and are about to leave EU territory to go home or to some other place outside the EU, you may be able to buy goods free of VAT.

"Tax-free" shopping: who is a ‘visitor’?

What is vat.

Value added tax (VAT) is a multi-stage sales tax, the final burden of which is borne by the private consumer. VAT at the appropriate rate will be included in the price you pay for the goods you purchase. As a visitor to the EU who is returning home or going on to another non-EU country, you may be eligible to buy goods free of VAT in special shops.

Who is a ‘visitor’?

A ‘visitor’ is any person who permanently or habitually lives in a country outside the EU. Your address as shown in your passport or other identity document will be taken as the place where you permanently or habitually live.

Example: Eduardo lives and works in Brazil but spends three months every summer in Portugal, where he has a time-share in a villa. Eduardo’s permanent address is in Brazil, so he is a ‘visitor’ to the EU while in Portugal.

In some countries, you may also qualify as a ‘visitor’ if you are living in an EU country for a defined period of time for a specific purpose, but your permanent home is outside the EU and you are not intending to return to the EU in the immediate future. EU citizens permanently living in non-EU countries are also eligible for the VAT refund.

Example: Paul is a Belgian citizen but lives permanently in Canada. Once a year, he returns to Belgium to visit his parents. Paul is a ‘visitor’ and can apply for a refund on a basis of his Canadian residence card.

‘Tax-free’ shopping: how is the VAT refunded?

Can’t i just pay the vat-free price in the shop.

No. You must pay the full, VAT-inclusive price for the goods in the shop; you will get the VAT refunded once you have complied with the formalities and can show proof of export.

How do I go about this?

• When you are in the shop, ask the shop assistant in advance whether they provide this service.
• Ask the shop assistant what threshold applies to the purchase in order to be eligible for a refund.
• At the check-out, the shop assistant will ask you to provide proof that you are a visitor to the EU. You will need to show your passport or other identity document proving your residence outside the EU.
• The shop assistant will ask you to fill in a form with the necessary details. You may be asked to show your ticket as proof you are leaving the EU within the required time. The shop assistant will fill in the shop’s part of the form.
• Make sure you understand exactly what you need to do and how you receive the refund. In some cases, the shop itself will refund you. In other cases, the shop will use a third party to organise the refunds on its behalf.
• Make sure you understand whether the shop takes an administrative fee for this service (which will be later deducted from the refunded amount) and if so what is the fee.
• You will receive an invoice for the goods. You must show the invoice, the refund form, the goods and any other necessary documents to the customs officers of the last EU country you leave. The customs officers must stamp the form as proof of export. Without the stamp, you will not obtain the refund.
• You must then follow the steps explained at your refund document or by the shop assistant. You can claim your VAT refund in bigger airports immediately, otherwise you will have to send the refund form to the address given in the shop.

Attention! The precise details will depend on how that particular shop organises the refund procedure.

Example: John came from the US for a vacation in Europe. He bought a designer bag in Paris; some clothes and shoes in Milan and Budapest. In each shop, he got refund forms filed. Within a month, John leaves to US from Budapest. At the airport, he shows the purchased goods to the customs officer and gets the refund documents stamped. Some of the refund documents were provided by a refund intermediary- he finds their refund counter in the airport and gets the refund immediately. An administrative cost is deducted from the refund amount. The remaining stamped refund document he has to send back to the shop where he purchased the goods.

Will I get all the VAT refunded?

This is unlikely. In the great majority of cases, there will be an administrative charge for the service. Make sure you find out how much you will be charged when still in the shop.

Can someone else go to the shop for me?

No. You must be there in person in order to make a VAT-free purchase, although you do not have to pay for the goods yourself.

Will I have to wait until I am home to receive the refund?

Not necessarily. In some larger ports and airports, you may be able to obtain a refund straight away once the customs officers have stamped your form, provided the shop in which you bought the goods uses this facility.

Where can I complain if I did not receive the refund?

You can complain to the company in which you bought the goods because this company has a principal responsibility to give the refund. If however that company used an intermediary you may first apply to the intermediary. European Commission does not intervene in particular cases of VAT refund to foreign visitors. ‘Tax-free shopping’: tax-free shops and qualifying goods

Can I buy goods VAT-free from any shop?

No. Shops do not have to offer a VAT-free facility. Those that choose to do so must make the appropriate arrangements with the tax authorities.

How shall I know whether a shop is a VAT-free shop?

The shop will usually display a prominent sign in the window, advertising that it is a ‘tax-free’ or ‘VAT-free’ shop. This may of course be in the local language.

Can all goods be bought VAT-free?

No. There are some goods that do not qualify. The facility is intended for goods that could in principle be carried in personal luggage. Goods that have to be exported as freight, for example, and cars and yachts are excluded. Some countries may also exclude other categories of goods.

Is there a threshold on each purchase?

To avoid administrative burdens over small-value items, there is a minimum value of EUR 175 (or the equivalent in national currency outside the euro zone) for the total purchase, but EU countries may set lower thresholds. The threshold applies to the total amount of goods bought in a certain shop. Normally, you cannot cumulate purchases in different shops to reach the threshold. You will receive a separate form in each shop in which you buy goods. You can enquire national tax authorities on the thresholds applicable in a particular EU country. You will be able to find the contact addresses for all national tax administrations in the document " VAT in the European Union ".

How soon do the goods have to leave the EU?

The goods you buy VAT-free must leave the EU by the end of the third month after that in which you buy them.

Example Bruce, who lives in Canada, has been on holiday in Italy for two weeks. He buys a designer suit from a VAT-free shop on 10 September. The suit must leave EU territory no later than 31 December.

Do I need to take the goods with me when I leave the EU?

Yes. The goods must accompany you when you leave the EU. You cannot buy VAT-free goods if for any reason, you cannot or do not wish to take the goods with you when leaving the EU. Moreover, you have to be ready to demonstrate those goods to the customs officer who will stamp your VAT refund form.

Do I have to leave the EU straight away from the country where I purchased goods?

No. You can buy VAT-free goods even if you are going to be visiting other EU countries before you finally return home, as long as you actually leave the EU with the goods within the time limit. You have to get your documents stamped by a customs officer at the point of exit of the EU – not necessary in the same EU country where you bought it.

Be careful if you leave the EU by train!

You may be able to get the VAT refund documents stamped at certain train stations of the departure. However, you might as well need to get off the train at the last station within the EU to get this stamp. Other methods could also apply (e.g. a customs officer might be boarding the train) .

This depends on the trains’ route and the internal arrangements in each EU country.

We therefore strongly advise you to consult in advance the national authorities or your refund company on the arrangements applicable in our concrete route.

What if I did not get a stamp?

In principle, the stamped VAT refund document is obligatory for VAT refund. Contact the entity in which you bought goods for the information whether they would accept other documents as a proof that the goods were exported in a due time and give you a refund.

Whom should I contact for questions related to my refund?

Your primary contact is the supplier / VAT refund agent mentioned in your VAT refund documents. If you have questions on VAT refund rules applicable in a particular EU country, contact national tax authorities . For questions on customs arrangements at a particular border, contact national customs authorities . The European Commission does not provide advice on particular situations.

Share this page

• Personal Finance
• Today's Paper
• Partner Content
• Entertainment
• Social Viral
• Pro Kabaddi League

How to claim TCS refund when traveling abroad and filing a return

When filing a tax return, one must declare the remittance as income in the appropriate section, such as "income from other sources" or "exempt income.".

Photo: Bloomberg

Your credit card payments overseas will attract a 20% TCS from July 1

Explained: how you can minimise the impact of 20% tcs on foreign trips, can you avoid 20% tcs if you book foreign tours with a credit card, how you can lower your tcs burden for your upcoming overseas holiday, when and how can i claim a tcs refund on foreign remittance, health insurance for nris: check geographical coverage, sum insured, full list: top performing large-cap equity funds in the last 10 years, discounts, cashbacks galore: au small finance bank unveils festival offers, india's retirement system improved to some extent from last year: mcgpi.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Oct 19 2023 | 12:19 PM IST

Explore News

• Suzlon Energy Share Price Adani Enterprises Share Price Adani Power Share Price IRFC Share Price Tata Motors Share Price Tata Steel Share Price Yes Bank Share Price Infosys Share Price SBI Share Price Tata Power Share Price HDFC Bank Share Price
• Latest News Company News Market News India News Politics News Cricket News Personal Finance Technology News World News Industry News Education News Opinion Shows Economy News Lifestyle News Health News
• Today's Paper About Us T&C Privacy Policy Cookie Policy Disclaimer Investor Communication GST registration number List Compliance Contact Us Advertise with Us Sitemap Subscribe Careers BS Apps
• Budget 2024 Lok Sabha Election 2024 IPL 2024 Pro Kabaddi League IPL Points Table 2024

Retiring Abroad? What Expats Need to Know About Taxes

Living or retiring abroad doesn’t absolve you of your responsibility to file a U.S. tax return.

What Expats Need to Know About Taxes

Getty Images

In addition to tax obligations, you’ll need to navigate visa and residency requirements, find housing and maybe learn another language before moving.

Key Takeaways:

• The United States is one of only two countries in the world that taxes its citizens’ global income.
• Annual tax returns for expats are due on June 15, but payments must be made by April 15.
• Other countries vary widely in how they may tax an expat’s work or retirement income, if at all.
• The federal government offers some tax breaks for expats, but they may not always transfer to state tax forms.

Living or retiring abroad can be exciting, but it isn’t necessarily easy. You’ll need to navigate visa and residency requirements, find housing and maybe learn another language before moving. And once you’re there, that’s not the end of the challenges.

Expats must also understand their tax obligations as U.S. citizens as well as what their host country might require.

Here are some of the things every expat should know about taxes.

• U.S. citizens living abroad still need to file an annual tax return with the IRS.
• Tax returns aren’t due until June 15 for expats.
• You may have to file a tax return in your country of residence.
• Some countries may tax retirement income.
• The foreign tax credit is intended to avoid double taxation.
• The foreign earned income exclusion and foreign housing exclusion can reduce U.S. taxes.
• States have their own tax rules.
• Talk to an experienced tax professional before moving.

U.S. Citizens Living Abroad Must File an Annual Tax Return With the IRS

Leaving the country doesn’t mean the end of annual tax filings for American expats.

“The U.S. is one of the few countries that requires citizens living abroad to file taxes,” says Mike Wallace, CEO of Greenback Expat Tax Services, which specializes in tax preparation services for U.S. expats.

While most countries only tax income earned within their borders, the United States taxes the worldwide income of its citizens. That makes it one of only two countries in the world with a citizenship-based taxation system. The other country is Eritrea in East Africa.

Tax Returns Aren’t Due Until June 15 for Expats

While expats must file an annual tax return, they get an extra two months to do so. The tax deadline for U.S. citizens living and working abroad is June 15 of each year. Like U.S.-based taxpayers, they can also request an extension if they need more time to complete their return.

However, tax payments are still due by April 15, Wallace says. Failure to pay what you owe could result in tax penalties and interest charges.

You May Have to File a Tax Return in Your Country of Residence

Since most countries have residence-based tax systems, U.S. expats may also have to file a return in the country where they live.

“Most countries only have a short period of exclusion,” says Miklos Ringbauer, a certified public accountant and founder of MiklosCPA, which counts expats among its clients. In other words, you may not have to live in a country long before you are required to file taxes there.

Spain, for example, considers someone to be a tax resident if they spend more than 183 days in a calendar year in the country.

Some Countries May Tax Retirement Income

It isn’t just earned income that a foreign country may tax. If you retire overseas and receive money from investments and retirement accounts, that too may be subject to tax, depending on the nation’s laws.

However, some governments offer tax incentives to attract foreign expats and retirees.

Belize, for instance, has a Qualified Retirement Program, which is available to expats who are at least 40, have citizenship in a qualifying country and have a retirement income of at least $2,000 per month. Those who qualify don’t have to pay any taxes on income received from a source outside of Belize, such as Social Security or a U.S. pension .

Panama, Costa Rica and the Philippines are other countries that have favorable tax laws for U.S. expats and won’t tax retirement income .

The Foreign Tax Credit Is Intended to Avoid Double Taxation

The combination of the U.S. citizenship-based tax system and other countries’ residence-based systems isn’t ideal for expats.

“It does result in double taxation,” Wallace says. But the U.S. does have ways to compensate, he adds.

Chief among those is the foreign tax credit which can be applied to your U.S. tax liability. This is a dollar-for-dollar credit that is calculated based on a formula that takes into account your foreign income and your U.S. income for the year. If you are unable to use all your credit in one tax year, it can be carried back to the previous year or carried forward for up to 10 years.

The Foreign Earned Income Exclusion and Foreign Housing Exclusion

Expats also have two other options to reduce their U.S. taxes: the foreign earned income exclusion and the foreign housing exclusion.

The foreign earned income exclusion allows you to exclude income earned in a foreign country from your U.S. tax return. For the 2023 tax year, up to $120,000 in eligible foreign income could be excluded on a U.S. return. The foreign housing exclusion allows money spent on eligible and reasonable housing in a foreign country, up to a limit, to be deducted from U.S. federal taxes.

For both these tax incentives, you’ll need to be either a bona fide resident of the foreign country or have a physical presence in a country or countries for at least 330 days during 12 consecutive months.

You can’t use both the foreign tax credit and the exclusion together so carefully consider your tax rate in both countries to determine which option is best.

States Have Their Own Tax Rules

Understanding federal tax obligations is only half the battle for expats. If they are still maintaining a home in the U.S., they also need to be aware of their state tax liability.

While many states will honor federal credits and deductions, that isn’t always the case. For example, California doesn’t recognize the foreign earned income exclusion. That means if you have a home in California but work in another country, you could be taxed twice for more than six figures of income.

For that reason, if you plan to maintain a U.S. residence while living overseas, be smart about where you choose as your home base.

Talk to an Experienced Tax Professional Before Moving

Expats shouldn’t wait until they have established residency in another country to talk to an accountant.

“Before they buy their plane ticket and leave the country, do appropriate tax planning,” Ringbauer says.

Not only will this help you select a tax-friendly country, but it will also avoid expensive mistakes, according to Ringbauer. Opening a foreign brokerage account, buying an overseas rental property or earning self-employment income in another country could all trigger special tax situations.

Avoid a surprise bill by checking in with a professional before you decide to live or retire in paradise.

How to Retire in Canada

Rachel Hartman Sept. 29, 2023

Tags: retirement , Social Security , taxes , baby boomers , aging

The Best Financial Tools for You

Credit Cards

Find the Best Loan for You

Comparative assessments and other editorial opinions are those of U.S. News and have not been previously reviewed, approved or endorsed by any other entities, such as banks, credit card issuers or travel companies. The content on this page is accurate as of the posting date; however, some of our partner offers may have expired.

Subscribe to our daily newsletter to get investing advice, rankings and stock market news.

See a newsletter example .

You May Also Like

Roth vs. traditional ira.

Rachel Hartman and Maryalene LaPonsie April 16, 2024

Where Candidates Stand on Retirement

Maryalene LaPonsie April 15, 2024

Ask a CFP: Consider a Retirement Advisor

Brandon Renfro April 15, 2024

Self-Employed Retirement Planning

Kate Stalter April 12, 2024

Saving for Retirement After 50

Kate Stalter April 11, 2024

How to Buy Property Overseas

Kathleen Peddicord and Rachel Hartman April 10, 2024

How to Invest When Abroad

Brian O'Connell April 9, 2024

Is AARP Membership Right for You?

Rachel Hartman April 8, 2024

How to Create a Retirement Budget

Rachel Hartman April 4, 2024

Average Retirement Ages Around the World

Rachel Hartman April 1, 2024

10 Best U.S. Beach Towns for Retirees

Jessica Walrack , Emily Brandon and Emily Sherman March 29, 2024

Full Retirement Age for Social Security

Emily Brandon , Rachel Hartman and Maryalene LaPonsie March 29, 2024

CFP or CPA for Retirement Plan?

Kate Stalter March 28, 2024

Social Security Spousal Benefits

Mountain Towns for Retirement

Rachel Hartman March 27, 2024

Can Expats Get Social Security?

Maryalene LaPonsie March 27, 2024

Places to Retire on the Water

Rachel Hartman March 26, 2024

Avoid the IRA Procrastination Penalty

Kate Stalter March 25, 2024

Save If You Work Part-Time

Rachel Hartman March 22, 2024

Stable Value Funds in Retirement

Brian O'Connell March 21, 2024

An official website of the United States Government

• Kreyòl ayisyen
• Search Toggle search Search Include Historical Content - Any - No Include Historical Content - Any - No Search
• Menu Toggle menu
• INFORMATION FOR…
• Individuals
• Business & Self Employed
• Charities and Nonprofits
• International Taxpayers
• Federal State and Local Governments
• Indian Tribal Governments
• Tax Exempt Bonds
• FILING FOR INDIVIDUALS
• How to File
• When to File
• Where to File
• Update Your Information
• Get Your Tax Record
• Apply for an Employer ID Number (EIN)
• Check Your Amended Return Status
• Get an Identity Protection PIN (IP PIN)
• File Your Taxes for Free
• Bank Account (Direct Pay)
• Payment Plan (Installment Agreement)
• Electronic Federal Tax Payment System (EFTPS)
• Your Online Account
• Tax Withholding Estimator
• Estimated Taxes
• Where's My Refund
• What to Expect
• Direct Deposit
• Reduced Refunds
• Amend Return

Credits & Deductions

• INFORMATION FOR...
• Businesses & Self-Employed
• Earned Income Credit (EITC)
• Child Tax Credit
• Clean Energy and Vehicle Credits
• Standard Deduction
• Retirement Plans

Forms & Instructions

• POPULAR FORMS & INSTRUCTIONS
• Form 1040 Instructions
• Form 4506-T
• POPULAR FOR TAX PROS
• Form 1040-X
• Circular 230

Future Developments

Resident alien.

Filing information.

Withholding tax.

Self-employment tax.

Foreign earned income exclusion and housing exclusion and deduction.

Deductions and credits.

Tax treaty benefits.

How to get tax help.

Questions and answers.

Comments and suggestions.

Getting answers to your tax questions.

Getting tax forms, instructions, and publications.

Ordering tax forms, instructions, and publications.

• Topics - This chapter discusses:
• Useful Items - You may want to see:

Gross income.

Self-employed individuals.

65 or older.

Residents of U.S. territories.

Direct Pay option.

Foreign wire transfers.

Automatic 2-month extension.

Married taxpayers.

How to get the extension.

Automatic 6-month extension.

E-file options.

When to file.

Previous 2-month extension.

Additional extension of time for taxpayers out of the country.

Extension of time to meet residency tests.

How to get an extension.

What if tests are not met.

Return filed before test is met.

Blocked Income

Paying U.S. tax in foreign currency.

Figuring actual tax.

Figuring estimated tax on nonconvertible foreign currency.

Deposit of foreign currency with disbursing officer.

Estimated tax installments.

Deposit receipt.

Resident of the U.S. Virgin Islands (USVI).

Non-USVI resident with USVI income.

Resident of Guam.

Resident of the Commonwealth of the Northern Mariana Islands (CNMI).

Individual taxpayer identification number (ITIN) renewal.

How To Make the Choice

Suspending the choice, ending the choice.

Foreign earned income exclusion.

FinCEN Form 114.

FinCEN Form 105.

Foreign tax credit.

Withholding from pension payments.

Check your withholding.

Social security benefits paid to residents.

American vessel or aircraft.

American employer.

Foreign affiliate.

Excludable meals and lodging.

Covered by United States only.

Covered by foreign country only.

Employed by a U.S. Church

Effect of exclusion, members of the clergy, income from u.s. territories, exemption from dual-country social security and medicare taxes, who qualifies for the exclusions and the deduction.

Waiver of minimum time requirements.

Service in a combat zone.

Temporary or Indefinite Assignment

Foreign country.

American Samoa.

Guam and the Commonwealth of the Northern Mariana Islands.

Puerto Rico.

Bona fide residence.

Determination.

Statement to foreign authorities.

Special agreements and treaties.

Effect of voting by absentee ballot.

Uninterrupted period including entire tax year.

Bona fide resident for part of a year.

Reassignment.

330 full days.

Passing over foreign country.

Change of location.

In United States while in transit.

How to figure the 12-month period.

Waiver of Time Requirements

U.s. travel restrictions.

Earned income.

Noncash income.

Allowances or reimbursements.

Source of Earned Income

Income from a sole proprietorship or partnership.

Capital a factor.

Capital not a factor.

Income from a corporation.

Stock options.

Pensions and annuities.

Rental income.

Professional fees.

Income of an artist.

Scholarships and fellowships.

Use of employer's property or facilities.

Reimbursement of employee expenses.

Accountable plan.

Reimbursement of moving expenses.

Move from United States to foreign country.

Move between foreign countries.

Move to United States.

Storage expense reimbursements.

American Institute in Taiwan.

Allowances.

More information.

Business premises of employer.

Convenience of employer.

Condition of employment.

Foreign camps.

Paid in year following work.

Year-end payroll period.

Income earned over more than 1 year.

Income received more than 1 year after it was earned.

Community income.

Part-year exclusion.

Physical presence test.

Filing after the above periods.

Foreign tax credit or deduction.

Additional child tax credit.

Earned income credit.

Figuring tax on income not excluded.

Revoking the Exclusion

Base housing amount.

U.S. Government allowance.

Housing expenses.

Limit on housing expenses.

Second foreign household.

Employer-provided amounts.

Choosing the exclusion.

Self-employed, no employer-provided amounts.

Self-employed and employer-provided amounts.

Housing exclusion.

One Household

Items related to excluded income.

Canadian, Mexican, and Israeli charities.

Contributions to Individual Retirement Arrangements

Foreign income taxes.

Foreign income taxes on U.S. return.

Foreign taxes paid on excluded income.

Exemption from limit.

Separate limit.

Figuring the limit.

Recapture of foreign losses.

Recapture of domestic losses.

Foreign tax credit carryback and carryover.

Deduction for Foreign Income Taxes

Deduction for other foreign taxes, how to report deductions.

Certification of U.S. residency.

Tax credit provisions.

More information on treaties.

Competent Authority Assistance

Obtaining copies of tax treaties.

Preparing and filing your tax return.

Free options for tax preparation.

Using online tools to help prepare your return.

Need someone to prepare your tax return?

Employers can register to use Business Services Online.

IRS social media.

Watching IRS videos.

Online tax information in other languages.

Free Over-the-Phone Interpreter (OPI) Service.

Accessibility Helpline available for taxpayers with disabilities.

Getting tax forms and publications.

Getting tax publications and instructions in eBook format.

Access your online account (individual taxpayers only).

Get a transcript of your return.

Tax Pro Account.

Using direct deposit.

Reporting and resolving your tax-related identity theft issues.

Ways to check on the status of your refund.

Making a tax payment.

What if I can’t pay now?

Filing an amended return.

Checking the status of your amended return.

Understanding an IRS notice or letter you’ve received.

Responding to an IRS notice or letter.

Contacting your local TAC.

What Is TAS?

How can you learn about your taxpayer rights, what can tas do for you, how can you reach tas, how else does tas help taxpayers, low income taxpayer clinics (litcs).

Taxpayer Advocate Service (TAS).

Publication 54 - Additional Material

Publication 54 (2023), tax guide for u.s. citizens and resident aliens abroad.

For use in preparing 2023 Returns

Publication 54 - Introductory Material

For the latest information about developments related to Pub. 54, such as legislation enacted after it was published, go to IRS.gov/Pub54 .

Termination of 1979 Tax Convention with Hungary. On July 15, 2022, the U.S. Department of the Treasury (Treasury) announced that Hungary was notified on July 8, 2022, that the United States would terminate the Convention between the Government of the Hungarian People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, in force since 1979. In accordance with the treaty’s provisions on termination, termination is effective on January 8, 2023. However, with respect to taxes withheld at source, the treaty ceases to have effect on January 1, 2024. In respect of other taxes, the treaty ceases to have effect with respect to taxable periods beginning on or after January 1, 2024.

Standard deduction amount increased. For 2023, the standard deduction amount has been increased for all filers. The amounts are:

Single or Married filing separately—$13,850;

Married filing jointly or Qualifying surviving spouse—$27,700; and

Head of household—$20,800.

Exclusion amount. The maximum foreign earned income exclusion is adjusted annually for inflation. For 2023, the maximum exclusion has increased to $120,000. See Limit on Excludable Amount under Foreign Earned Income Exclusion in chapter 4.

Housing expenses—maximum amount. Generally, the maximum amount of housing, housing expenses is limited to $36,000 for 2023. For such computation, you need to determine your base housing amount (line 32 of Form 2555 ) which is $56.60 per day ($19,200 per year) for 2023, multiplied by the number of days in your qualifying period that fall within your tax year. For more details, see Housing Amount under Foreign Housing Exclusion and Deduction in chapter 4.

Housing expenses—maximum amount continued. The amount of qualified housing expenses eligible for the housing exclusion and housing deduction may be higher for your foreign geographic location. See Limit on housing expenses under Foreign Housing Exclusion and Deduction in chapter 4.

Self-employment tax rate. For 2023, the maximum amount of net earnings from self-employment that is subject to the social security part of the self-employment tax has increased to $160,200. All net earnings are subject to the Medicare part of the tax. For more information, see chapter 3 .

IRA limitations. You may be able to take an IRA deduction if you were covered by a retirement plan and your 2023 modified adjusted gross income (MAGI) is less than $83,000 ($136,000 if married filing jointly or a qualifying surviving spouse). If your spouse was covered by a retirement plan, but you were not, you may be able to take an IRA deduction if your MAGI is less than $228,000. See the Instructions for Form 1040 for details and exceptions.

Denial or revocation of U.S. passport. The IRS is required to notify the State Department of taxpayers certified as owing a seriously delinquent tax debt. The State Department is generally prohibited from issuing or renewing a passport to a taxpayer with seriously delinquent tax debt. If you currently have a valid passport, the State Department may revoke your passport or limit your ability to travel. Additional information on passport certification is available at IRS.gov/Passports .

Individual taxpayer identification number (ITIN) renewal. An ITIN for a nonresident alien spouse or dependent used on a prior-year income tax return may require renewal. For more information, go to IRS.gov/ITIN .

Figuring tax on income not excluded. If you claim the foreign earned income exclusion, the housing exclusion, or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040 or 1040-SR, line 16. If you must attach Form 6251 , Alternative Minimum Tax—Individuals, to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251 .

Moving expenses suspended. The deduction for moving expenses is suspended unless you are a member of the U.S. Armed Forces who moves pursuant to a military order and incident to a permanent change of station.

Tax home for individuals serving in a combat zone. New rules apply for certain individuals serving in a combat zone in support of the U.S. Armed Forces. For more information, see Tax Home in chapter 4.

Form 8938. If you had foreign financial assets, you may have to file Form 8938 with your return. See Form 8938 in chapter 1.

Photographs of missing children. The IRS is a proud partner with the National Center for Missing & Exploited Children® (NCMEC) . Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Introduction

This publication discusses special tax rules for U.S. citizens and resident aliens who work abroad or who have income earned in foreign countries.

If you are a U.S. citizen or resident alien, your worldwide income is generally subject to U.S. income tax, regardless of where you are living. Also, you are subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States. Expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their residency. These provisions are discussed in chapter 4 of Pub. 519 .

A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.

Green card test. You are a U.S. resident if you were a lawful permanent resident of the United States at any time during the calendar year. This is known as the green card test because resident aliens hold immigrant visas (also known as green cards).

Substantial presence test. You are considered a U.S. resident if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

31 days during the current calendar year; and

A total of 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1 / 3 the number of days of presence in the first preceding year, and only 1 / 6 the number of days in the second preceding year.

You were physically present in the United States for 120 days in each of the years 2021, 2022, and 2023. To determine if you meet the substantial presence test for 2023, count the full 120 days of presence in 2023, 40 days in 2022 ( 1 / 3 of 120), and 20 days in 2021 ( 1 / 6 of 120). Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2023.

Even if you do not meet either of these tests, you may be able to choose to be treated as a U.S. resident for part of the year under the first-year choice test, discussed in Pub. 519.

For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Pub. 519 .

Chapter 1 contains general filing information, such as:

Whether you must file a U.S. tax return,

When and where to file your return,

How to report your income if it is paid in foreign currency,

How to treat a nonresident alien spouse as a U.S. resident, and

Whether you must pay estimated tax.

Chapter 2 discusses the withholding of income, social security, and Medicare taxes from the pay of U.S. citizens and resident aliens.

Chapter 3 discusses who must pay self-employment tax.

Chapter 4 discusses income tax benefits that apply if you meet certain requirements while living abroad. You may qualify to treat up to $120,000 of your income as not taxable by the United States. You may also be able to either deduct part of your housing expenses from your income or treat a limited amount of income used for housing expenses as not taxable by the United States. These benefits are called the foreign earned income exclusion and the foreign housing deduction and exclusion.

To qualify for either of the exclusions or the deduction, you must have a tax home in a foreign country and earn income from personal services performed in a foreign country. These rules are explained in chapter 4 .

If you are going to exclude or deduct your income as discussed above, you must file Form 2555.

Chapter 5 discusses deductions and credits you may be able to claim on your return. These are generally the same as if you were living in the United States. However, if you choose to exclude foreign earned income or housing amounts, you can’t deduct or exclude any item or take a credit for any item that is related to the amounts you exclude. Among the topics discussed in chapter 5 are:

Contributions to foreign organizations,

Contributions to individual retirement arrangements (IRAs), and

Foreign taxes.

Chapter 6 discusses some benefits that are common to most tax treaties and explains how to get help if you think you are not receiving a treaty benefit to which you are entitled. It also explains how to get copies of tax treaties.

Chapter 7 is an explanation of how to get information and assistance from the IRS.

Frequently asked questions and answers to those questions are presented in the back of the publication.

We welcome your comments about this publication and suggestions for future editions.

You can send us comments through IRS.gov/FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.

If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

1. Filing Information

Whether you have to file a return,

When to file your return and pay any tax due,

How to treat foreign currency,

How to file electronically,

Where to file your return,

When you can treat your nonresident alien spouse as a resident, and

When you may have to make estimated tax payments.

Useful Items

Publication

3 Armed Forces' Tax Guide

501 Dependents, Standard Deduction, and Filing Information

505 Tax Withholding and Estimated Tax

519 U.S. Tax Guide for Aliens

970 Tax Benefits for Education

Form (and Instructions)

1040-ES Estimated Tax for Individuals

1040-X Amended U.S. Individual Income Tax Return

2350 Application for Extension of Time To File U.S. Income Tax Return

2555 Foreign Earned Income

4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return

8822 Change of Address

All of these forms, instructions, and publications can be downloaded from IRS.gov . See chapter 7 for information about getting these publications and forms.

Filing Requirements

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.

Your income, filing status, and age generally determine whether you must file an income tax return. Generally, you must file a return for 2023 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table.

If you are married and entitled to file jointly, use the married filing jointly threshold unless your spouse has filed a separate return or another taxpayer claims your spouse as a dependent.

This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax.

For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount.

If you are self-employed, your gross income includes the amount on Part I, line 7, of Schedule C (Form 1040) .

If your net earnings from self-employment are $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Net earnings from self-employment are defined in Pub. 334 .

You are considered to be age 65 on the day before your 65th birthday. For example, if your 65th birthday is on January 1, 2024, you are considered 65 for 2023.

If you are (or were) a bona fide resident of a U.S. territory, you may be required to file Form 8898. See the instructions for the form, available at IRS.gov/Form8898 for more information.

When To File and Pay

If you file on a calendar-year basis, the due date for filing your return is April 15 of the following year. If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return.

When the due date for doing any act for tax purposes—filing a return, paying taxes, etc.— falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day.

You can pay online with a direct transfer from your bank account using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or by debit or credit card. You can also pay by phone using EFTPS or by debit or credit card. For more information, go to IRS.gov/Payments .

If you have a U.S. bank account, you can use:

Federal Tax Collection Service (same-day wire transfer).

For more information, visit EFTPS.gov . Also, see the International Guide for Paying Federal Taxes Electronically, available at download.EFTPS.gov/International_Taxpayer_Fact_Sheet_1010.pdf .

You can get an extension of time to file your return. In some circumstances, you can also get an extension of time to file and pay any tax due.

However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid.

This publication discusses four extensions: an automatic 2-month extension, an automatic 6-month extension, an additional extension for taxpayers out of the country, and an extension of time to meet residency tests. If you served in a combat zone or qualified hazardous duty area, see Pub. 3 for a discussion of extensions of deadlines.

You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U.S. citizen or resident alien, and on the regular due date of your return:

You are living outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or

You are in military or naval service on duty outside the United States and Puerto Rico.

If you use a calendar year, the regular due date of your return is April 15. Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return.

If you file a joint return, either you or your spouse can qualify for the automatic extension. If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it.

To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

If you are not able to file your return by the due date, you can generally get an automatic 6-month extension of time to file (but not of time to pay). To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). For more information about filing electronically, see E-file options , later.

The form must show your properly estimated tax liability based on the information available to you.

You want the IRS to figure your tax, or

You are under a court order to file by the regular due date.

You can use e-file to get an extension of time to file. You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card or direct transfer. You can do this by phone or over the Internet. You don’t file Form 4868.

First, complete Form 4868 to use as a worksheet. If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due.

Then, do one of the following.

E-file Form 4868. You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. You will need to provide certain information from your tax return for 2022. If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. If you e-file Form 4868, do not also send a paper Form 4868 unless you also mail a check or money order for your tax payment.

E-file and pay by credit or debit card. You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. You can do this by phone or over the Internet. If you do this, you do not file Form 4868. For more information, see the instructions for your tax return.

Generally, you must request the 6-month extension by the regular due date of your return.

If you cannot file your return within the automatic 2-month extension period, you can generally get an additional 4 months to file your return, for a total of 6 months. The 2-month period and the 6-month period start at the same time. You have to request the additional 4 months by the new due date allowed by the 2-month extension.

The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. You must make an accurate estimate of your tax based on the information available to you. If you find you cannot pay the full amount due with Form 4868, you can still get the extension. You will owe interest on the unpaid amount from the original due date of the return.

You may also be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar-year taxpayers).

In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers).

To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:

You will not receive any notification from the IRS unless your request is denied.

The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 , discussed next.

You cannot generally get an extension of more than 6 months. However, if you are outside the United States and meet certain requirements, you may be able to get a longer extension.

You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. The tests, the exclusions, and the deduction are explained in chapter 4 .

You should request an extension if all three of the following apply.

You are a U.S. citizen or resident alien.

You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due.

Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.

If you are granted an extension, it will generally be to 30 days beyond the date on which you can reasonably expect to qualify for an exclusion or deduction under either the bona fide residence test or the physical presence test.

To obtain an extension, file Form 2350 either by giving it to a local IRS representative or other IRS employee or by mailing it to:

You must file Form 2350 by the due date for filing your return. Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15.

If you obtain an extension and unforeseen events make it impossible for you to meet either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted).

If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U.S. and foreign sources and pay the tax on that income. If you later meet either of the tests, you can claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction on Form 1040-X .

Foreign Currency

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income, or pay some or all of your expenses, in foreign currency, you must translate the foreign currency into U.S. dollars. How you do this depends on your functional currency. Your functional currency is generally the U.S. dollar unless you are required to use the currency of a foreign country.

You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records.

Even if you have a QBU, your functional currency is the dollar if any of the following apply.

You conduct the business in U.S. dollars.

The principal place of business is located in the United States.

You choose to or are required to use the U.S. dollar as your functional currency.

The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted.

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into U.S. dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item. You can generally get exchange rates from banks and U.S. Embassies. You may also need to recognize foreign currency gain or loss on certain foreign currency transactions. See section 988 and the regulations thereunder.

If you have a QBU with a functional currency that is not the U.S. dollar, make all income determinations in the QBU's functional currency, and, where appropriate, translate such income or loss at the appropriate exchange rate.

You must generally report your foreign income in terms of U.S. dollars and, with one exception (see Fulbright Grant , later), you must pay taxes due on it in U.S. dollars.

If, because of restrictions in a foreign country, your income is not readily convertible into U.S. dollars or into other money or property that is readily convertible into U.S. dollars, your income is “blocked” or “deferrable” income. You can report this income in one of the following two ways.

Report the income and pay your federal income tax with U.S. dollars that you have in the United States or in some other country.

Postpone the reporting of the income until it becomes unblocked.

If you choose to postpone the reporting of the income, you must file an information return with your tax return. For this information return, you should use another Form 1040 or 1040-SR labeled “Report of Deferrable Foreign Income, pursuant to Rev. Rul. 74-351.” You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. You must also state that you waive any right to claim that the deferrable income was includible in your income for any earlier year. For detailed information see Rev. Rul. 74-351, 1974-2 C.B. 144.

You must report your income on your information return using the foreign currency in which you received that income. If you have blocked income from more than one foreign country, include a separate information return for each country.

Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into U.S. dollars or into other money or property that is convertible into U.S. currency. Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable.

If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked.

If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. To apply for permission, file Form 3115, Application for Change in Accounting Method . You must also request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. See the Instructions for Form 3115 for information on changing your accounting method.

Fulbright Grant

All income must be reported in U.S. dollars. In most cases, the tax must also be paid in U.S. dollars. If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U.S. tax that is based on the blocked income.

To qualify for this method of payment, you must prepare a statement that shows the following information.

You were a Fulbright grantee and were paid in nonconvertible foreign currency.

The total grant you received during the year and the amount you received in nonconvertible foreign currency.

At least 70% of the grant was paid in nonconvertible foreign currency.

You should prepare at least two copies of this statement. Attach one copy to your Form 1040 or 1040-SR and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency.

When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula.

You must attach all of the following to the return.

A copy of the certified statement discussed earlier.

A detailed statement showing the allocation of tax from amounts received in foreign currency and the rates of exchange used in determining your tax liability in U.S. dollars.

The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency.

If you are liable for estimated tax (discussed later), figure the amount you can pay to the IRS in nonconvertible foreign currency using the following formula.

If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income.

Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located.

You can either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. See Estimated Tax Payments , later.

Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U.S. dollars) should be attached to your Form 1040 or 1040-SR or payment voucher from Form 1040-ES . Keep the copy for your records.

Does My Return Have To Be on Paper?

IRS e-file offers accurate, safe, and fast alternatives to filing on paper. IRS computers quickly and automatically check for errors or other missing information.

Returns with a foreign address can be e-filed.

Use your personal computer.

Use a volunteer. Many programs offering free tax help can e-file your return.

Use a tax professional. Most tax professionals can e-file your return.

Where To File

If any of the following situations apply to you, do not file your return with the service center listed for your home state.

You claim the foreign earned income exclusion.

You claim the foreign housing exclusion or deduction.

You live in a foreign country.

Instead, use one of the following special addresses. If you are not enclosing a check or money order, file your return with:

If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the appropriate address listed above.

However, you should not file with the addresses listed above if you are a bona fide resident of the U.S. Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year.

If you are a bona fide resident of the USVI during your entire tax year, you are generally not required to file a U.S. return. However, you must file a return with the USVI.

If you are a U.S. citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. File the original return with the United States and file a signed copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue.

You must complete Form 8689 and attach a copy to both your U.S. return and your USVI return. You should file your U.S. return with the address listed under Where To File , earlier.

See Pub. 570 for information about filing U.S. Virgin Islands returns.

If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam.

However, if you have income from sources within Guam and you are a U.S. citizen or resident alien, but not a bona fide resident of Guam during the entire tax year, you should file a return with the United States. Send your return to the address listed under Where To File , earlier.

See Pub. 570 for information about filing Guam returns.

If you are a bona fide resident of the CNMI during your entire tax year, you should file a return with the CNMI.

However, if you have income from sources within the CNMI and you are a U.S. citizen or resident alien, but not a bona fide resident of the CNMI during the entire tax year, you should file a return with the United States. Send your return to the address listed under Where To File , earlier.

See Pub. 570 for information about filing CNMI returns.

Puerto Rico and American Samoa have their own separate and independent tax systems. Although their tax laws are modeled on the U.S. Internal Revenue Code, there are certain differences in law and tax rates. See Pub. 570 for information about tax obligations in Puerto Rico and American Samoa.

Nonresident Alien Spouse Treated as a Resident

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This election includes situations in which one of you is a nonresident alien at the beginning of the tax year and a resident alien at the end of the year and the other is a nonresident alien at the end of the year.

If you make this choice, the following two rules apply.

You and your spouse are treated, for income tax purposes and purposes of wage withholding, as U.S. residents for the tax year in which the election is made and all future tax years until the election is terminated or suspended because neither spouse is a citizen or resident of the United States at any time during a year.

You must file a joint income tax return for the year you make the choice and attach a statement as described under How To Make the Choice , later.

Pat Smith, a U.S. citizen, is married to Norman, a nonresident alien. Pat and Norman make the choice to treat Norman as a resident alien by attaching a statement to their joint return. Pat and Norman must report their worldwide income for the year they make the choice and for all later years unless the choice is ended or suspended. Although Pat and Norman must file a joint return for the year they make the choice, they can file either joint or separate returns for later years.

When Bob and Sharon Williams got married, both were nonresident aliens. In June of last year, Bob became a resident alien and remained a resident for the rest of the year. Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return for last year. Bob and Sharon must report their worldwide income for last year and all later years unless the choice is ended or suspended. Bob and Sharon must file a joint return for last year, but they can file either joint or separate returns for later years.

Social Security Number (SSN)

If you choose to treat your nonresident alien spouse as a U.S. resident, your spouse must have either an SSN or an individual taxpayer identification number (ITIN).

To get an SSN for a nonresident alien spouse, apply at an office of the U.S. Social Security Administration (SSA) or U.S. consulate. For more information go to SSA.gov or call 800-772-1213.

If the nonresident alien spouse is not eligible to get an SSN, the spouse can file Form W-7 with the IRS to apply for an ITIN when you timely file the joint return on which you choose to treat your nonresident alien spouse as a U.S. resident. Follow the Instructions for Form W-7 to submit your Form W-7 and file your return.

Your spouse may need to renew the ITIN. For more information, go to IRS.gov/ITIN .

Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following.

A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year and that you choose to be treated as U.S. residents for the entire tax year.

The name, address, and SSN (or ITIN) of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)

You generally make this choice when you file your joint return. However, you can also make the choice by filing a joint amended return on Form 1040-X. Attach Form 1040 or 1040-SR and enter “Amended” across the top of the amended return. If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice.

You must generally file the amended joint return within 3 years from the date you filed your original U.S. income tax return or 2 years from the date you paid your income tax for that year, whichever is later.

Table 1-1. Options for Ending the Choice To Treat Nonresident Alien Spouse as a Resident

The choice to be treated as a resident alien does not apply to any later tax year if neither of you is a U.S. citizen or resident alien at any time during the later tax year.

Dick Brown was a resident alien on December 31, 2020, and married to Judy, a nonresident alien. They chose to treat Judy as a resident alien and filed joint income tax returns for 2020 and 2021. On January 10, 2022, Dick became a nonresident alien. Judy had remained a nonresident alien. Because Dick was a resident alien during part of 2022, Dick and Judy can file joint or separate returns for that year. Neither Dick nor Judy was a resident alien at any time during 2023 and their choice is suspended for that year. For 2023, both are treated as nonresident aliens. If Dick becomes a resident alien again in 2024, their choice is no longer suspended and both are treated as resident aliens.

Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier) or ended in one of the ways shown in Table 1-1 .

If the choice is ended for any of the reasons listed in Table 1-1, neither spouse can make a choice in any later tax year.

Estimated Tax Payments

The requirements for determining who must pay estimated tax are the same for a U.S. citizen or resident abroad as for a taxpayer in the United States.

In general, you don’t have to make estimated tax payments if you expect that your 2024 Form 1040 or 1040-SR will show a tax refund or a tax balance due of less than $1,000. For more information on whether you are required to make estimated tax payments see Form 1040-ES and Estimated Tax for 2023 in Pub. 505 (2024).

When figuring your estimated gross income, subtract amounts you expect to exclude under the foreign earned income exclusion and the foreign housing exclusion. In addition, you can reduce your income by your estimated foreign housing deduction. However, you must estimate tax on your nonexcluded income using the tax rates that will apply had you not excluded the income. If the actual amount of the exclusion or deduction is less than you estimate, you may have to pay a penalty for underpayment of estimated tax.

For more information, see the Instructions for Form 2555 .

Other Forms You May Have To File

You must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), if you had any financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country. You do not need to file the report if the assets are with a U.S. military banking facility operated by a financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year.

FinCEN Form 114 is filed electronically with the Financial Crimes Enforcement Network (FinCEN). The due date for FBAR filings is April 15. FinCEN will grant an automatic extension to October 15 if you are unable to meet the FBAR annual due date of April 15. The FBAR due date for foreign financial accounts maintained during calendar year 2023 is April 15, 2024, to coincide with the filing date for the 2023 Form 1040 or 1040-SR. For more information, go to irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar.l .

You must file FinCEN Form 105, Report of International Transportation of Currency or Monetary Instruments, if you physically transport, mail, ship, or cause to be physically transported, mailed, or shipped, into or out of the United States, currency or other monetary instruments totaling more than $10,000 at one time. Certain recipients of currency or monetary instruments must also file FinCEN Form 105.

More information about the filing of FinCEN Form 105 can be found in the instructions on the back of the form, available at fincen.gov/sites/default/files/shared/fin105_cmir.pdf .

You must file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (the “reporting threshold”). The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse. Specified foreign financial assets include any financial account maintained by a foreign financial institution and, to the extent held for investment, any stock, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U.S. person.

You may have to pay penalties if you are required to file Form 8938 and fail to do so, or if you have an understatement of tax due to any transaction involving an undisclosed foreign financial asset.

More information about the filing of Form 8938 can be found in the separate Instructions for Form 8938 .

2. Withholding Tax

Withholding income tax from the pay of U.S. citizens,

Withholding tax at a flat rate, and

Social security and Medicare taxes.

673 Statement for Claiming Exemption From Withholding on Foreign Earned Income Eligible for the Exclusion Provided by Section 911

W-4 Employee's Withholding Allowance Certificate

W-9 Request for Taxpayer Identification Number and Certification

See chapter 7 for information about getting this publication and these forms.

Income Tax Withholding

U.S. employers must generally withhold U.S. income tax from the pay of U.S. citizens working abroad unless the employer is required by foreign law to withhold foreign income tax.

Your employer does not have to withhold U.S. income taxes from wages you earn abroad if it is reasonable to believe that you will exclude them from income under the foreign earned income exclusion or the foreign housing exclusion.

Your employer should withhold taxes from any wages you earn for working in the United States.

You can give a statement to your employer indicating that you expect to qualify for the foreign earned income exclusion under either the bona fide residence test or the physical presence test and indicating your estimated housing cost exclusion.

Form 673 is an acceptable statement. You can use Form 673 only if you are a U.S. citizen. You do not have to use the form and can prepare your own statement. For more information, go to IRS.gov/Form 673 .

Generally, your employer can stop the withholding once you submit the statement that includes a declaration that the statement is made under penalties of perjury. However, if your employer has reason to believe that you will not qualify for either the foreign earned income or the foreign housing exclusion, your employer must continue to withhold.

Your employer must consider any information about pay you received from any other source outside the United States in determining whether your foreign earned income is more than the limit on either the foreign earned income exclusion or the foreign housing exclusion.

If you plan to take a foreign tax credit, you may be able to adjust your withholding on Form W-4. You can take these additional tax credits only for foreign tax credits attributable to taxable salary or wage income. For more information, see the instructions for Step 3 of Form W-4.

U.S. payers of benefits from employer-deferred compensation plans, individual retirement plans, and commercial annuities must generally withhold income tax from payments delivered outside of the United States. You can choose exemption from withholding if you:

Provide the payer of the benefits with a residence address in the United States or a U.S. territory, or

Certify to the payer that you are not a U.S. citizen or resident alien or someone who left the United States to avoid tax.

Before you report U.S. income tax withholding on your tax return, you should carefully review all information documents, such as Form W-2 and the Form 1099 information returns. Compare other records, such as final pay records or bank statements, with Form W-2 or Form 1099 to verify the withholding on these forms. Check your U.S. income tax withholding even if you pay someone else to prepare your tax return. You may be assessed penalties and interest if you claim more than your correct amount of withholding allowances.

30% Flat Rate Withholding

Generally, U.S. source gross income that is not effectively connected to a U.S. trade or business, such as U.S. source dividends and royalties, is subject to withholding tax at a flat 30% (or lower treaty) rate if paid to nonresident aliens. If you are a U.S. citizen or resident alien and this tax is withheld in error from payments to you because you have a foreign address, you should notify the payer of the income to stop the withholding. Use Form W-9 to notify the payer.

You can claim the tax withheld in error as a withholding credit on your tax return if the amount isn’t adjusted by the payer. See the Instructions for Form 1040 for how to claim the credit.

If you are a lawful permanent resident (green card holder) and a flat 30% tax was withheld in error on your social security benefits, you must file a Form 1040 or 1040-SR with the Internal Revenue Service Center at the address listed under Where To File , earlier, to determine if you are entitled to a refund. The following information must be submitted with your Form 1040 or 1040-SR.

A copy of Form SSA-1042S, Social Security Benefit Statement.

A copy of your “green card.”

A signed declaration that includes the following statements. “I am a U.S. lawful permanent resident and my green card has been neither revoked nor administratively or judicially determined to have been abandoned. I am filing a U.S. income tax return for the tax year as a resident alien reporting all of my worldwide income. I have not claimed benefits for the tax year under an income tax treaty as a nonresident alien.”

Social Security and Medicare Taxes

Social security and Medicare taxes may apply to wages paid to an employee regardless of where the services are performed.

General Information

In general, U.S. social security and Medicare taxes do not apply to wages for services you perform as an employee outside the United States unless one of the following exceptions applies.

You perform the services on or in connection with an American vessel or aircraft (defined later) and either:

You entered into your employment contract within the United States, or

The vessel or aircraft touches at a U.S. port while you are employed on it.

The service is designated as employment for U.S. social security and Medicare tax purposes under a bilateral social security (totalization) agreement (discussed later).

You are working for an American employer (defined later).

You are working for a foreign affiliate (defined later) of an American employer under a voluntary agreement entered into between the American employer and the U.S. Department of the Treasury.

An American vessel is any vessel documented or numbered under the laws of the United States and any other vessel whose crew is employed solely by one or more U.S. citizens, residents, or corporations. An American aircraft is an aircraft registered under the laws of the United States.

An American employer includes any of the following.

The U.S. Government or any of its instrumentalities.

An individual who is a resident of the United States.

A partnership of which at least two-thirds of the partners are U.S. residents.

A trust of which all the trustees are U.S. residents.

A corporation organized under the laws of the United States, any U.S. state, or the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, or American Samoa.

An American employer also includes any foreign person with an employee who is performing services in connection with a contract between the U.S. Government (or any instrumentality thereof) and a member of a domestically controlled group of entities which includes such foreign person.

A foreign affiliate of an American employer is any foreign entity in which the American employer has at least a 10% interest, directly or through one or more entities. For a corporation, the 10% interest must be in its voting stock. For any other entity, the 10% interest must be in its profits.

Form 2032 is used by American employers to extend social security coverage to U.S. citizens and resident aliens working abroad for foreign affiliates of American employers. Once you enter into an agreement, coverage cannot be terminated.

Social security tax doesn’t apply to the value of meals and lodging provided to you for the convenience of your employer if it is reasonable to believe that you will be able to exclude the value from your income.

Bilateral Social Security (Totalization) Agreements

The United States has entered into agreements with some foreign countries to coordinate social security coverage and taxation of workers who are employed in those countries. These agreements are commonly referred to as “totalization agreements.” Under these agreements, dual coverage and dual contributions (taxes) for the same work are eliminated. The agreements generally make sure that you pay social security taxes to only one country.

Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. However, if you are temporarily sent to work in a foreign country and your pay would otherwise be subject to social security taxes in both the United States and that country, you can generally remain covered only by U.S. social security.

You can get more information on specific agreements at SSA.gov/International/ Agreement and IRS.gov/TotalizationAgreements .

If your pay in a foreign country is subject only to U.S. social security tax and is exempt from foreign social security tax, your employer should get a certificate of coverage from the SSA’s Office of Earnings and International Operations. Employers can request a certificate of coverage online at SSA.gov/international/CoC_link.html .

If you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U.S. social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country.

If the authorities of the foreign country will not issue such a statement, either you or your employer should get a statement from the U.S. SSA’s Office of Earnings and International Operations at the website listed earlier. The statement should indicate that your wages aren’t covered by the U.S. social security system.

This statement should be kept by your employer because it establishes that your pay is exempt from U.S. social security tax.

Only wages paid on or after the effective date of the totalization agreement can be exempt from U.S. social security tax.

3. Self-Employment Tax

Who must pay self-employment tax,

Who is exempt from self-employment tax,

Who can defer self-employment tax payments, and

Which self-employed individuals can take the refundable income tax credits for sick and family leave.

334 Tax Guide for Small Business

517 Social Security and Other Information for Members of the Clergy and Religious Workers

Formulario 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia

Form 1040-SS U.S. Self-Employment Tax Return

Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners

Schedule SE (Form 1040) Self-Employment Tax

See chapter 7 for information about getting these publications and forms.

Who Must Pay Self-Employment Tax?

If you are a self-employed U.S. citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad.

The self-employment tax is a social security and Medicare tax on net earnings from self-employment. You must pay self-employment tax if your net earnings from self-employment are at least $400.

For 2023, the maximum amount of net earnings from self-employment that is subject to the social security portion of the tax is $160,200. All net earnings are subject to the Medicare portion of the tax. Additional Medicare Tax may apply to you if your net earnings from self-employment exceed a threshold amount (based on your filing status).

If you were employed by a U.S. church or a qualified church-controlled organization that chose exemption from social security and Medicare taxes and you received wages of $108.28 or more from the organization, the amounts paid to you are subject to self-employment tax. However, you can choose to be exempt from social security and Medicare taxes if you are a member of a recognized religious sect. See Pub. 517 for more information about church employees and self-employment tax.

You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that is exempt from income tax because of the foreign earned income exclusion.

You are in business abroad as a consultant and qualify for the foreign earned income exclusion. Your foreign earned income is $95,000, your business deductions total $27,000, and your net profit is $68,000. You must pay self-employment tax on your net profit of $68,000, even though you are qualified for the foreign earned income exclusion.

If you are a member of the clergy, you are treated as self-employed for self-employment tax purposes. Your U.S. self-employment tax is based upon net earnings from self-employment figured without regard to the foreign earned income exclusion or the foreign housing exclusion.

You can receive exemption from coverage for your ministerial duties if you conscientiously oppose public insurance due to religious reasons or if you oppose it due to the religious principles of your denomination. You must file Form 4361 to apply for this exemption.

This subject is discussed in further detail in Pub. 517 .

If you are a U.S. citizen or resident alien and you own and operate a business in a U.S. territory (Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U.S. Virgin Islands), you must pay tax on your net earnings from self-employment (if they are $400 or more) from those sources. You must pay the self-employment tax whether or not the income is exempt from U.S. income taxes (or whether or not you must otherwise file a U.S. income tax return). Unless your situation is described below, attach Schedule SE (Form 1040) to your U.S. income tax return.

If you do not have to file Form 1040 or 1040-SR with the United States and you are a resident of any of the U.S. territories listed in the preceding paragraph, figure your self-employment tax on Form 1040-SS. Residents of Puerto Rico may file the Spanish-language Formulario 1040-PR.

If you are not enclosing a check or money order, file your return with:

If you are enclosing a check or money order, file your return with:

The United States may reach agreements with foreign countries to eliminate dual coverage and dual contributions (taxes) to social security systems for the same work. See Bilateral Social Security (Totalization) Agreements in chapter 2 under Social Security and Medicare Taxes. As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. For more information on how a specific agreement affects self-employed persons, see Bilateral Social Security (Totalization) Agreements in chapter 2.

If your self-employment earnings should be exempt from foreign social security tax and subject only to U.S. self-employment tax, you should request a certificate of coverage from the U.S. SSA’s Office of Earnings and International Operations. The certificate will establish your exemption from the foreign social security tax.

You can request a certificate of coverage online at SSA.gov/international/CoC_link.html .

4. Foreign Earned Income and Housing: Exclusion – Deduction

Who qualifies for the foreign earned income exclusion and the foreign housing exclusion or the foreign housing deduction;

The requirements that must be met to claim either of the exclusions or the deduction;

How to determine the amount of the foreign earned income exclusion; and

How to determine the amount of foreign housing exclusion and the foreign housing deduction.

570 Tax Guide for Individuals With Income From U.S. Possessions

596 Earned Income Credit (EIC)

If you meet certain requirements, you may qualify for the foreign earned income exclusion and foreign housing exclusion or the foreign housing deduction.

If you are a U.S. citizen or resident alien and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $120,000 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction , later.

You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. See Exclusion of Meals and Lodging , later.

Requirements

To claim the foreign earned income exclusion and the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements:

Your tax home must be in a foreign country.

You must have foreign earned income.

You must be one of the following.

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.

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.

A U.S. citizen or a 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.

See Pub. 519 to find out if you are a U.S. resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad.

If you are a nonresident alien married to a U.S. citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident .

The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. This is fully explained under Waiver of Time Requirements , later.

See Figure 4-A and information in this chapter to determine if you are eligible to claim either one of the exclusions or the deduction.

Tax Home in Foreign Country

To qualify for the foreign earned income exclusion and the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. See Bona Fide Residence Test and Physical Presence Test , later.

Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location doesn’t necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

You aren’t considered to have a tax home in a foreign country for any period in which your abode is in the United States, unless you are serving in support of the U.S. Armed Forces in an area designated as a combat zone. See Service in a combat zone , later. Otherwise, if your abode is in the United States, you will not meet the tax home test and cannot claim the foreign earned income exclusion.

The location of your abode is based on where you maintain your family, economic, and personal ties. Your abode is not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Your abode is also not necessarily in the United States while you are temporarily in the United States; however, these factors can contribute to your having an abode in the United States.

You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and don’t satisfy the tax home test in the foreign country. You can’t claim either of the exclusions or the housing deduction.

For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Before you left, you distributed business cards showing your business and home addresses in London. You kept ownership of your home in Toledo but rented it to another family. You placed your car in storage. In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London.

Shortly after moving, you leased a car and you and your spouse got British driver’s licenses. Your entire family got library cards for the local public library. You and your spouse opened bank accounts with a London bank and secured consumer credit. You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Your abode is in London for the time you live there. You satisfy the tax home test in the foreign country.

U.S. citizens or residents serving in an area designated by the President of the United States by Executive Order as a combat zone for purposes of section 112 in support of the U.S. Armed Forces can qualify as having a tax home in a foreign country, even if they have an abode within the United States. For a list of IRS-recognized combat zones, go to IRS.gov/Newsroom/Combat-Zones .

Figure 4–A Can I Claim the Exclusion or Deduction?

Figure 4-A. Can I Claim the Exclusion or Deduction?

Summary: This flowchart is used to determine if the taxpayer can claim any foreign exclusions or deductions.

This is the starting of the flowchart.

Decision (1)

Do you have foreign earned income?

Decision (2)

Is your tax home in a foreign country?

Decision (3)

Are you a United States citizen?

Decision (4)

Are you a United States resident alien?

Decision (5)

Are you a citizen or national of a country with which the United States has an income tax treaty in effect?

Decision (6)

Were you a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year?

Decision (7)

Were you physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months?

Process (a)

You CANNOT claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

Process (b)

You CAN claim the foreign earned income exclusion and the foreign housing exclusion or the foreign housing deduction.

Footnote: Foreign housing exclusion applies only to employees. Foreign housing deduction applies only to the self-employed.

This is the ending of the flowchart.

Please click here for the text description of the image.

The location of your tax home often depends on whether your assignment is temporary or indefinite. If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you wouldn’t qualify for the foreign earned income exclusion. If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you wouldn’t be able to deduct any of the related expenses that you have in the general area of this new work assignment. If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion.

If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise.

If you expect it to last for more than 1 year, it is indefinite.

If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Once your expectation changes, it is indefinite.

To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. A foreign country includes any territory under the sovereignty of a government other than that of the United States.

The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources.

The term “foreign country” doesn’t include Antarctica or U.S. territories such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and American Samoa. For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence.

American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands

Residence or presence in a U.S. territory doesn’t qualify you for the foreign earned income exclusion. You may, however, qualify for an exclusion of your territory income on your U.S. return.

There is a territory exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Gross income from sources within American Samoa may be eligible for this exclusion. Income that is effectively connected with the conduct of a trade or business within American Samoa may also be eligible for this exclusion. Use Form 4563 to figure the exclusion.

An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those territories.

For more information, see Pub. 570 .

Puerto Rico and the U.S. Virgin Islands

Residents of Puerto Rico and the U.S. Virgin Islands can’t claim the foreign earned income exclusion or the foreign housing exclusion.

Generally, if you are a U.S. citizen who is a bona fide resident of Puerto Rico for the entire tax year, you aren’t subject to U.S. tax on income from Puerto Rican sources. This doesn’t include amounts paid for services performed as an employee of the United States. However, you are subject to U.S. tax on your income from sources outside Puerto Rico. In figuring your U.S. tax, you can’t deduct expenses allocable to income not subject to tax.

Bona Fide Residence Test

You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either:

A U.S. citizen, or

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.

You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. If you go to a foreign country to work on a particular job for a specified period of time, you won’t ordinarily be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test.

To meet the bona fide residence test, you must have established a bona fide residence in a foreign country.

Your bona fide residence isn’t necessarily the same as your domicile. Your domicile is your permanent home, the place to which you always return or intend to return.

You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland.

The fact that you go to Scotland does not automatically make Scotland your bona fide residence. If you go there as a tourist, or on a short business trip, and return to the United States, you haven’t established bona fide residence in Scotland. But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you have probably established a bona fide residence in a foreign country, even though you intend to return eventually to the United States.

You are clearly not a resident of Scotland in the first instance. However, in the second, you are a resident because your stay in Scotland appears to be permanent. If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence.

Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad.

To meet the bona fide residence test, you must show the IRS that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. The IRS cannot make this determination until you file Form 2555.

You aren’t considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you aren’t a resident of that country, and the authorities:

Hold that you aren’t subject to their income tax laws as a resident, or

Haven’t made a final decision on your status.

An income tax exemption provided in a treaty or other international agreement won’t in itself prevent you from being a bona fide resident of a foreign country. Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities.

You are a U.S. citizen employed in the United Kingdom by a U.S. employer under contract with the U.S. Armed Forces. You aren’t subject to the North Atlantic Treaty Status of Forces Agreement. You may be a bona fide resident of the United Kingdom.

You are a U.S. citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. You aren’t a bona fide resident of the United Kingdom.

You are a U.S. citizen employed in Japan by a U.S. employer under contract with the U.S. Armed Forces. You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Being subject to the agreement doesn’t make you a bona fide resident of Japan.

You are a U.S. citizen employed as an “official” by the United Nations in Switzerland. You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. This doesn’t prevent you from being a bona fide resident of Switzerland.

If you are a U.S. citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country.

However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but won’t necessarily be conclusive.

To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar-year basis.

During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country.

You arrived with your family in Lisbon, Portugal, on November 1, 2022. Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. You immediately established residence there. You spent April of 2023 at a business conference in the United States. Your family stayed in Lisbon. Immediately following the conference, you returned to Lisbon and continued living there. On January 1, 2024, you completed an uninterrupted period of residence for a full tax year (2023), and you meet the bona fide residence test.

Assume the same facts as in Example 1 , except that you transferred back to the United States on December 13, 2023. You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, didn’t include a full tax year. You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later).

Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years.

You were a bona fide resident of Singapore from March 1, 2021, through September 14, 2023. On September 15, 2023, you returned to the United States. Since you were a bona fide resident of a foreign country for all of 2022, you were also a bona fide resident of a foreign country from March 1, 2021, through the end of 2021 and from January 1, 2023, through September 14, 2023.

If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances.

You were a resident of Pakistan from October 1, 2022, through November 30, 2023. On December 1, 2023, you and your family returned to the United States to wait for an assignment to another foreign country. Your household goods were also returned to the United States.

Your foreign residence ended on November 30, 2023, and did not begin again until after you were assigned to another foreign country and physically entered that country. Since you weren’t a bona fide resident of a foreign country for the entire tax year of 2022 or 2023, you don’t meet the bona fide residence test in either year. You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction discussed under Physical Presence Test , later.

Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. On December 1, 2023, you and your family returned to the United States for a month's vacation. On January 2, 2024, you arrived in Turkey for your new assignment. Because you didn’t interrupt your bona fide residence abroad, you meet the bona fide residence test.

Physical Presence Test

You meet the physical presence test if you are physically present in a foreign country or countries for 330 full days during a period of 12 consecutive months. The 330 days don’t have to be consecutive. Any U.S. citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction.

The physical presence test is based only on how long you stay in a foreign country or countries. This test doesn’t depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad.

Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. You can count days you spent abroad for any reason. You don’t have to be in a foreign country only for employment purposes. You can be on vacation.

You don’t meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time.

You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. See Waiver of Time Requirements , later.

A full day is a period of 24 consecutive hours, beginning at midnight.

When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters doesn’t count toward the 330-day total.

You leave the United States for France by air on June 10. You arrive in France at 9:00 a.m. on June 11. Your first full day of physical presence in France is June 12.

If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States.

You leave the United States by air at 9:30 a.m. on June 10 to travel to Kenya. You pass over western Africa at 11:00 p.m. on June 10 and arrive in Kenya at 12:30 a.m. on June 11. Your first full day in a foreign country is June 11.

You can move about from one place to another in a foreign country or to another foreign country without losing full days. If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel.

You leave Ireland by air at 11:00 p.m. on July 6 and arrive in Sweden at 3:00 a.m. on July 7. Your trip takes less than 24 hours and you lose no full days.

You leave Norway by ship at 10:00 p.m. on July 6 and arrive in Portugal at 6:00 a.m. on July 8. Since your travel isn’t within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. If you remain in Portugal, your next full day in a foreign country is July 9.

If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you aren’t treated as present in the United States during the transit. You are treated as traveling over areas not within any foreign country.

Figure 4-B. How To Figure Overlapping 12-Month Periods

Summary: This figure illustrates Example 2 under "How to figure the 12-month period" in the text.

There are four rules you should know when figuring the 12-month period.

Your 12-month period can begin with any day of the month. It ends the day before the same calendar day, 12 months later.

Your 12-month period must be made up of consecutive months. Any 12-month period can be used if the 330 days in a foreign country fall within that period.

You don’t have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. You can choose the 12-month period that gives you the greatest exclusion.

In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another.

You are a construction worker who works on and off in a foreign country over a 20-month period. You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States.

You work in New Zealand for a 20-month period from January 1, 2022, through August 31, 2023, except that you spend 28 days in February 2022 and 28 days in February 2023 on vacation in the United States. You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2022–December 31, 2022, and September 1, 2022–August 31, 2023. By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. See Figure 4-B .

Both the bona fide residence test and the physical presence test contain minimum time requirements. The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. You must be able to show that you could have reasonably expected to meet the minimum time requirements if not for the adverse conditions. To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver.

Early in 2024, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2023 and the effective dates. If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2023 without meeting the minimum time requirement. However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country.

If you are present in a foreign country in violation of U.S. law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount.

At the time this publication was released, the only country to which travel restrictions applied during 2023 was Cuba. However, individuals working at the U.S. Naval Base at Guantanamo Bay in Cuba are not in violation of U.S. law. Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion, provided the other requirements are met.

Foreign Earned Income

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income.

Foreign earned income is generally income you receive for services you perform during a period in which you meet both of the following requirements.

Your tax home is in a foreign country.

You meet either the bona fide residence test or the physical presence test.

Foreign earned income does not include the following amounts.

The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer.

Pension or annuity payments you receive, including social security benefits (see Pensions and annuities , later).

Pay you receive as an employee of the U.S. Government. (See U.S. Government Employees , later.)

Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract.

Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income.

This is pay for personal services performed, such as wages, salaries, or professional fees. The list that follows classifies many types of income into three categories. The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. For more information on earned and unearned income, see Earned and Unearned Income , later.

In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income.

The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income.

Earned income includes allowances or reimbursements you receive, such as the following amounts.

Cost-of-living allowances.

Overseas differential.

Family allowance.

Reimbursement for education or education allowance.

Home leave allowance.

Quarters allowance.

Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income ).

The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for working in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City.

You are a U.S. citizen, a bona fide resident of Canada, and working as a mining engineer. Your salary is $76,800 per year. You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Your total income is $88,800. You work a 5-day week, Monday through Friday. After subtracting your vacation, you have a total of 240 workdays in the year. You worked in the United States during the year for 6 weeks (30 workdays). The following shows how to figure the part of your income that is for work done in Canada during the year.

Your foreign source earned income is $77,700.

Earned and Unearned Income

Earned income was defined earlier as pay for personal services performed. Some types of income are not easily identified as earned or unearned income. Some of these types of income are further explained here.

Income from a business in which capital investment is an important part of producing the income may be unearned income. If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income.

If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income.

If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Because you do not have a net profit, the 30% limit does not apply.

You are a U.S. citizen and meet the bona fide residence test. You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. You perform no services for the partnership. At the end of the tax year, your share of the net profits is $80,000. The entire $80,000 is unearned income.

Assume that in Example 1 you spend time operating the business. Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000.

If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. The entire amount of business income is earned income.

You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Because capital is not an income-producing factor, all the income from the partnership is considered earned income.

The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Any amount over what is considered a reasonable salary is unearned income.

You are a U.S. citizen and an officer and stockholder of a corporation in Honduras. You perform no work or service of any kind for the corporation. During the tax year, you receive a $10,000 “salary” from the corporation. The $10,000 clearly is not for personal services and is unearned income.

You are a U.S. citizen and work full time as secretary-treasurer of your corporation. During the tax year, you receive $100,000 as salary from the corporation. If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income.

You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan.

If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income.

However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Any part of the earned income that is due to work you did outside the United States is foreign earned income.

See Pub. 525 , Taxable and Nontaxable Income, for a discussion of the treatment of stock options.

For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income.

Royalties from the leasing of oil and mineral lands and patents are generally a form of rent or dividends and are unearned income.

Royalties received by a writer are earned income if they are received:

For the transfer of property rights of the writer in the writer's product, or

Under a contract to write a book or series of articles.

Generally, rental income is unearned income. If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income.

Larry Smith, a U.S. citizen living in Australia, owns and operates a rooming house in Sydney. If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. It is all unearned income.

If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income.

Income you receive from the sale of paintings you created is earned income.

Any portion of a scholarship or fellowship grant that is paid to you for teaching, research, or other services is considered earned income if you must include it in your gross income. If the payer of the grant is required to provide you with a Form W-2, these amounts will be listed as wages.

If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts.

You are privately employed and live in Japan all year. You are paid a salary of $6,000 a month. You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. The house is not provided for your employer's convenience. You report on the calendar-year, cash basis. You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income.

If you are reimbursed under an accountable plan (defined later) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income.

The expenses for which you are reimbursed are not considered allocable (related) to your earned income. If expenses and reimbursement are equal, there is nothing to allocate to excluded income. If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income. (See chapter 5 .) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income.

These rules do not apply to the following individuals.

Straight-commission salespersons.

Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses.

An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules.

The expenses covered under the plan must have a business connection.

The employee must adequately account to the employer for these expenses within a reasonable period of time.

The employee must return any excess reimbursement or allowance within a reasonable period of time.

For tax years beginning after 2017, you can no longer deduct moving expenses. If you received a reimbursement of moving expenses, please note that, in most cases, reimbursement of moving expenses will be earned income. This section discusses reimbursements that must be included in earned income.

The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed.

Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year.

If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year.

If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move.

The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. The part earned in each year is figured as shown in the following example.

You are a U.S. citizen working in the United States. You were told in October 2022 that you were being transferred to a foreign country. You arrived in the foreign country on December 15, 2022, and you are a bona fide resident for the remainder of 2022 and all of 2023. Your employer reimbursed you $2,000 in January 2023 for your moving expense. Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2022 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2022 and 2023.

You figure the part of the reimbursement for services performed in the foreign country in 2022 by multiplying the total reimbursement by a fraction. The fraction is the number of days during which you were a bona fide resident in 2022 (the year of the move) divided by 365. The remaining part of the reimbursement is for services performed in the foreign country in 2023.

This computation is used only to determine when the reimbursement is considered earned. You would include the amount of the reimbursement in income in 2023, the year you received it.

If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move.

If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U.S. source income.

However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move.

See the discussion under Move from United States to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move.

You are a U.S. citizen employed in a foreign country. You retired from employment with your employer on March 31, 2023, and returned to the United States on the same day, after having been a bona fide resident of the foreign country for several years. A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States.

In April 2023, your former employer reimbursed you $4,000 for the cost of your move back to the United States. Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2023 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2023 and 2022.

You figure the part of the moving expense reimbursement for services performed in the foreign country for 2023 by multiplying the total includible reimbursement by a fraction. The fraction is the number of days of foreign residence during the year (90) (January 1 to March 31, 2023, equals 90 days) divided by the number of days in the year (365). The remaining part of the includible reimbursement is for services performed in the foreign country in 2022. You report the amount of the includible reimbursement in 2023, the year you received it.

If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred.

U.S. Government Employees

For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. This includes amounts paid from both appropriated and nonappropriated funds.

The following organizations (and other organizations similarly organized and operated under U.S. Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States.

U.S. Armed Forces exchanges.

Commissioned and noncommissioned officers' messes.

Armed Forces motion picture services.

Kindergartens on foreign Armed Forces installations.

Amounts paid by the United States or its agencies to persons who aren’t their employees may qualify for exclusion or deduction.

If you are a U.S. Government employee paid by a U.S. agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U.S. Government and doesn’t qualify for exclusion or deduction.

If you have questions about whether you are an employee or an independent contractor, get Pub. 15-A .

Amounts paid by the American Institute in Taiwan aren’t foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U.S. tax up to the amount that equals tax-exempt allowances received by civilian employees of the U.S. Government.

Cost-of-living and foreign-area allowances paid under certain acts of Congress to U.S. civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid.

Pub. 516 has more information for U.S. Government employees abroad.

Exclusion of Meals and Lodging

You don’t include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met.

The meals are furnished:

On the business premises of your employer, and

For the convenience of your employer.

The lodging is furnished:

On the business premises of your employer,

For the convenience of your employer, and

As a condition of your employment.

If these conditions are met, don’t include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation.

Amounts you don’t include in income because of these rules aren’t foreign earned income.

If you receive a Form W-2, excludable amounts shouldn’t be included in the total reported in box 1 as wages.

Your family, for this purpose, includes only your spouse and your dependents.

The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in.

Generally, the business premises of your employer is wherever you work. For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer.

Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay.

On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they aren’t furnished for the convenience of your employer.

Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging wasn’t furnished.

If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. The camp must be:

Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing isn’t available to you on the open market within a reasonable commuting distance,

Located as close as reasonably possible in the area where you work, and

Provided in a common area or enclave that isn’t available to the general public for lodging or accommodations and that normally houses at least 10 employees.

Foreign Earned Income Exclusion

If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Foreign earned income was defined earlier in this chapter.

You can also choose to exclude from your income a foreign housing amount. This is explained later under Foreign Housing Exclusion . If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion.

If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. This includes any expenses, losses, and other normally deductible items allocable to the excluded income. For more information about deductions and credits, see chapter 5 .

Limit on Excludable Amount

You may be able to exclude up to $120,000 of your foreign earned income in 2023.

You cannot exclude more than the smaller of:

$120,000, or

Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later).

If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. You both don’t need to meet the same test. Together, you and your spouse can exclude as much as $240,000.

Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. If you report your income on a cash basis, you report the income on your return for the year you receive it. If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. For an exception to this general rule, see Year-end payroll period , later.

You were a bona fide resident of Brazil for all of 2022 and 2023. You report your income on the cash basis. In 2021, you were paid $87,900 for work you did in Brazil during that year. You excluded all of the $87,900 from your income in 2022.

In 2023, you were paid $124,300 for your work in Brazil. $23,800 was for work you did in 2022 and $100,500 was for work you did in 2023. You can exclude $20,800 of the $23,800 from your income in 2023. This is the $108,700 maximum exclusion in 2022 minus the $87,900 actually excluded that year. You must include the remaining $3,000 in income in 2023 because you could not have excluded that income in 2022 if you had received it that year. You can exclude all of the $100,500 you were paid for work you did in 2023 from your 2023 income.

Your total foreign earned income exclusion for 2023 is $121,300 ($20,800 for work you did in 2022 and $100,500 for work you did in 2022). You would include in your 2023 income $3,000 for the work you did in 2022.

There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply.

The period for which the payment is made is a normal payroll period of your employer that regularly applies to you.

The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis).

The payroll period is not longer than 16 days.

The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period.

You are paid twice a month. For the normal payroll period that begins on the 1st of the month and ends on the 15th of the month, you are paid on the 16th day of the month. For the normal payroll period that begins on the 16th of the month and ends on the last day of the month, you are paid on the 1st day of the following month. Because all of the above conditions are met, the pay you received on January 1, 2023, is considered earned in 2023.

Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. For example, a bonus may be based on work you did over several years. You determine the amount of the bonus that is considered earned in a particular year in two steps.

Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus.

Multiply the result of (1) by the number of months you did the work during the year. This is the amount that is subject to the exclusion limit for that tax year.

You can’t exclude income you receive after the end of the year following the year you do the work to earn it.

You were a bona fide resident of Sweden for 2021, 2022, and 2023. You report your income on the cash basis. In 2021, you were paid $69,000 for work you did in Sweden that year, and in 2022, you were paid $74,000 for that year's work in Sweden. You excluded all the income on your 2021 and 2022 returns.

In 2023, you were paid $92,000; $82,000 for your work in Sweden during 2023, and $10,000 for work you did in Sweden in 2021. You cannot exclude any of the $10,000 for work done in 2021 because you received it after the end of the year following the year in which you earned it. You must include the $10,000 in income. You can exclude all of the $82,000 received for work you did in 2023.

The maximum exclusion applies separately to the earnings of spouses. Ignore any community property laws when you figure your limit on the foreign earned income exclusion.

If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. The number of qualifying days is the number of days in the year within the period on which you both:

Have your tax home in a foreign country, and

Meet either the bona fide residence test or the physical presence test.

For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year.

You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2023. You can exclude a maximum of 75/365 of $120,000, or $24,658 of your foreign earned income for 2023. If you qualify under the bona fide residence test for all of 2024, you can exclude your foreign earned income up to the 2024 limit.

Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year.

See How to figure the 12-month period under Physical Presence Test , earlier, for the rules on figuring the 12-month period.

You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2022, through September 30, 2023, except for 16 days in December 2022 when you were on vacation in the United States. You figure the maximum exclusion for 2022 as follows.

Beginning with June 1, 2022, count forward 330 full days. Do not count the 16 days you spent in the United States. The 330th day, May 12, 2023, is the last day of a 12-month period.

Count backward 12 months from May 12, 2023, to find the first day of this 12-month period, May 13, 2022. This 12-month period runs from May 13, 2022, through May 12, 2023.

Count the total days during 2022 that fall within this 12-month period. This is 233 days (May 13, 2022–December 31, 2022).

Multiply $108,700 (the maximum exclusion for 2022) by the fraction 233/365 to find your maximum exclusion for 2022 ($69,389).

You figure the maximum exclusion for 2023 in the opposite manner.

Beginning with your last full day, September 30, 2022, count backward 330 full days. Do not count the 16 days you spent in the United States. That day, October 19, 2022, is the first day of a 12-month period.

Count forward 12 months from October 19, 2022, to find the last day of this 12-month period, October 18, 2023. This 12-month period runs from October 19, 2022, through October 18, 2023.

Count the total days during 2023 that fall within this 12-month period. This is 291 days (January 1, 2023 – October 18, 2023).

Multiply $120,000, the maximum limit, by the fraction 291/365 to find your maximum exclusion for 2022 ($95,671).

Choosing the Exclusion

The foreign earned income exclusion is voluntary. You can choose the exclusion by completing the appropriate parts of Form 2555.

When You Can Choose the Exclusion

Your initial choice of the exclusion on Form 2555 must generally be made with one of the following returns.

A return filed by the due date (including any extensions).

A return amending a timely filed return. Amended returns must generally be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid.

A return filed within 1 year from the original due date of the return (determined without regard to any extensions).

You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 or 1040-SR, “Filed pursuant to section 1.911-7(a)(2)(i)(D).”

If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. You must request a private letter ruling under Regulations section 301.9100-3 and Revenue Procedure 2021-1, 2021-01 I.R.B. 1, available at IRS.gov/irb/2021-01_IRB#REV-PROC-2021-1 .

Effect of Choosing the Exclusion

Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it.

Once you choose to exclude foreign earned income, you can’t take a foreign tax credit or deduction for taxes on income you can exclude. If you do take a credit or deduction for any of those taxes in a later year, your election for the foreign earned income exclusion will be revoked beginning with that year. See Pub. 514 for more information.

You can’t take the additional child tax credit if you claim the foreign earned income exclusion.

If you claim the foreign earned income exclusion, you don’t qualify for the earned income credit for the year. For more information on this credit, see Pub. 596 .

If you claim the foreign earned income exclusion , the housing exclusion (discussed later), or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040 or 1040-SR, line 16. If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251 .

You can revoke your choice for any year. You do this by attaching a statement that you are revoking one or more previously made choices to the return or amended return for the first year that you do not wish to claim the exclusion(s). You must specify which choice(s) you are revoking. You must revoke separately a choice to exclude foreign earned income and a choice to exclude foreign housing amounts.

If you revoked a choice and within 5 years again wish to choose the same exclusion, you must apply for IRS approval. You do this by requesting a ruling from the IRS.

In deciding whether to give approval, the IRS will consider any facts and circumstances that may be relevant. These may include a period of residence in the United States, a move from one foreign country to another foreign country with different tax rates, a substantial change in the tax laws of the foreign country of residence or physical presence, and a change of employer. For more information go to IRS.gov/Individuals/International-Taxpayers/Revoking-Your-Choice-to-Exclude-Foreign-Earned-Income .

Foreign Housing Exclusion and Deduction

In addition to the foreign earned income exclusion, you can also claim an exclusion or a deduction from gross income for your housing amount if your tax home is in a foreign country and you qualify for the exclusions and deduction under either the bona fide residence test or the physical presence test.

The housing exclusion applies only to amounts considered paid for with employer-provided amounts. The housing deduction applies only to amounts paid for with self-employment earnings.

If you are married and you and your spouse each qualifies under one of the tests, see Married Couples , later.

Housing Amount

Your housing amount is the total of your housing expenses for the year minus the base housing amount.

The computation of the base housing amount (line 32 of Form 2555 ) is tied to the maximum foreign earned income exclusion. The amount is 16% of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your tax year.

For 2023, the maximum foreign earned income exclusion is $120,000 per year; 16% of this amount is $19,200, or $56.60 per day. To figure your base housing amount if you are a calendar-year taxpayer, multiply $56.60 by the number of your qualifying days during 2023. (See Part-year exclusion under Limit on Excludable Amount, earlier.) Subtract the result from your total housing expenses (up to the applicable limit) to find your housing amount.

Your qualifying period includes all of 2023. During the year, you spent $19,124 for your housing. This is below the limit for the location in which you incurred the expenses. Your housing amount is $20,404 minus $19,200, or $1,204.

You must reduce your housing amount by any U.S. Government allowance or similar nontaxable allowance intended to compensate you or your spouse for the expenses of housing during the period for which you claim a foreign housing exclusion or deduction.

Housing expenses include your reasonable expenses paid or incurred for housing in a foreign country for you and (if they live with you) for your spouse and dependents.

Consider only housing expenses for the part of the year that you qualify for the foreign earned income exclusion.

Housing expenses include:

The fair rental value of housing provided in kind by your employer,

Utilities (other than telephone charges),

Real and personal property insurance,

Nondeductible occupancy taxes,

Nonrefundable fees for securing a leasehold,

Rental of furniture and accessories, and

Residential parking.

Housing expenses do not include:

Expenses that are lavish or extravagant under the circumstances;

Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation);

The cost of buying property, including principal payments on a mortgage;

The cost of domestic labor (maids, gardeners, etc.);

Pay television subscriptions;

Improvements and other expenses that increase the value or appreciably prolong the life of property;

Purchased furniture or accessories; or

Depreciation or amortization of property or improvements.

The amount of qualified housing expenses eligible for the housing exclusion and housing deduction is limited. The limit is generally 30% of the maximum foreign earned income exclusion (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your tax year. For 2023, this is generally $98.63 per day ($36,000 per year). However, the limit will vary depending upon the location of your foreign tax home.

A qualified individual incurring housing expenses in a high-cost locality during 2023 can use housing expenses that total more than the standard limit on housing expenses ($36,000) to determine the housing amount. An individual who does not incur housing expenses in a high-cost locality is limited to maximum housing expenses of $98.63 per day ($36,000 per year).

The limits for high-cost localities are listed in the Instructions for Form 2555 .

Ordinarily, if you maintain two foreign households, your reasonable foreign housing expenses include only costs for the household that bears the closer relationship (not necessarily geographic) to your tax home. However, if you maintain a second, separate household outside the United States for your spouse or dependents because living conditions near your tax home are dangerous, unhealthful, or otherwise adverse, include the expenses for the second household in your reasonable foreign housing expenses. You can’t include expenses for more than one second foreign household at the same time.

If you maintain two households and you exclude the value of one because it is provided by your employer, you can still include the expenses for the second household in figuring a foreign housing exclusion or deduction.

Adverse living conditions include:

A state of warfare or civil insurrection in the general area of your tax home, and

Conditions under which it is not feasible to provide family housing (for example, if you must live on a construction site or drilling rig).

Foreign Housing Exclusion

If you do not have self-employment income, all of your earnings are employer-provided amounts and your entire housing amount is considered paid for with those employer-provided amounts. This means that you can exclude (up to the limits) your entire housing amount.

These include any amounts paid to you or paid or incurred on your behalf by your employer that are taxable foreign earned income (without regard to the foreign earned income exclusion) to you for the year. Employer-provided amounts include:

Your salary,

Any reimbursement for housing expenses,

Amounts your employer pays to a third party on your behalf,

The fair rental value of company-owned housing furnished to you unless that value is excluded under the rules explained earlier under Exclusion of Meals and Lodging ,

Amounts paid to you by your employer as part of a tax equalization plan, and

Amounts paid to you or a third party by your employer for the education of your dependents.

You can choose the housing exclusion by completing the appropriate parts of Form 2555. Rules about choosing the exclusion under Foreign Earned Income Exclusion , earlier, also apply to the foreign housing exclusion.

Your housing exclusion is the lesser of:

That part of your housing amount paid for with employer-provided amounts, or

Your foreign earned income.

If you claim the housing exclusion, the foreign earned income exclusion (discussed earlier), or both, you must figure the tax on your nonexcluded income using the tax rates that would have applied had you not claimed the exclusions. See the Instructions for Form 1040 and complete the Foreign Earned Income Tax Worksheet to figure the amount of tax to enter on Form 1040 or 1040-SR, line 16. If you must attach Form 6251 to your return, use the Foreign Earned Income Tax Worksheet provided in the Instructions for Form 6251.

Once you choose to exclude foreign housing amounts, you can’t take a foreign tax credit or deduction for taxes on income you can exclude. If you do take a credit or deduction for any of those taxes, your choice to exclude housing amounts may be considered revoked. See Pub. 514 for more information.

You can’t take the additional child tax credit if you claim the foreign housing exclusion.

If you claim the foreign housing exclusion, you don’t qualify for the earned income credit for the year.

Foreign Housing Deduction

If you don’t have self-employment income, you can’t take a foreign housing deduction.

How you figure your housing deduction depends on whether you have only self-employment income or both self-employment income and employer-provided income. In either case, the amount you can deduct is subject to the limit described later.

If none of your housing amount is considered paid for with employer-provided amounts, such as when all of your income is from self-employment, you can deduct your housing amount, subject to the limit described later.

Take the deduction by including it on line 24j of Schedule 1 (Form 1040).

If you are both an employee and a self-employed individual during the year, you can deduct part of your housing amount and exclude part of it. To find the part that you can exclude, multiply your housing amount by the employer-provided amounts (discussed earlier) and then divide the result by your foreign earned income. This is the amount you can use to figure your foreign housing exclusion. You can deduct the balance of the housing amount, subject to the limit described later.

Your housing amount for the year is $18,000. During the year, your total foreign earned income is $100,000, of which half ($50,000) is from self-employment and half is from your services as an employee. Half of your housing amount ($18,000 ÷ 2) is considered provided by your employer. You can exclude $9,000 as a housing exclusion. You can deduct the remaining $9,000 as a housing deduction subject to the following limit.

Your housing deduction cannot be more than your foreign earned income minus the total of:

Your foreign earned income exclusion, plus

Your housing exclusion.

You can carry over to the next year any part of your housing deduction that is not allowed because of the limit. You are allowed to carry over your excess housing deduction to the next year only. If you can’t deduct it in the next year, you can’t carry it over to any other year. You deduct the carryover in figuring adjusted gross income. The amount of carryover you can deduct is limited to your foreign earned income for the year of the carryover minus the total of your foreign earned income exclusion, housing exclusion, and housing deduction for that year.

You can’t take the additional child tax credit if you claim the foreign housing deduction.

Married Couples

If both you and your spouse qualify for the foreign housing exclusion or the foreign housing deduction, how you figure the benefits depends on whether you maintain separate households.

Separate Households

If you and your spouse live apart and maintain separate households, you both may be able to claim the foreign housing exclusion or the foreign housing deduction. You both can claim the exclusion or the deduction if both of the following conditions are met.

You and your spouse have different tax homes that aren’t within reasonable commuting distance of each other.

Neither spouse's residence is within reasonable commuting distance of the other spouse's tax home.

Each spouse claiming a housing exclusion must figure separately the part of the housing amount that is attributable to employer-provided amounts, based on the separate foreign earned income.

If you and your spouse lived in the same foreign household and file a joint return, you must figure your housing amounts jointly. If you file separate returns, only one spouse can claim the housing exclusion or deduction.

In figuring your housing amount jointly, you can combine your housing expenses and figure one base housing amount. Either spouse (but not both) can claim the housing exclusion or housing deduction. However, if you and your spouse have different periods of residence or presence and the one with the shorter period of residence or presence claims the exclusion or deduction, you can claim as housing expenses only the expenses for that shorter period.

Tom and Jane live together and file a joint return. Tom was a bona fide resident of and had his tax home in Ghana from August 17, 2023, through December 31, 2024. Jane was a bona fide resident of and had her tax home in Ghana from September 15, 2023, through December 31, 2024.

During 2023, Tom received $75,000 of foreign earned income and Jane received $50,000 of foreign earned income. Tom paid $10,000 for housing expenses, of which $7,500 was for expenses incurred from September 15 through the end of the year. Jane paid $3,000 for housing expenses in 2023, all of which were incurred during her period of residence in Ghana.

Tom and Jane figure their housing amount jointly. If Tom claims the housing exclusion, their housing expenses would be $13,000 ($10,000 + $3,000) and their base housing amount, using Tom's 2023 period of residence (August 17–December 31, 2023), would be $7,754 ($56.60 × 137 days). Tom's housing amount would be $5,246 ($13,000 – $7,754). If, instead, Jane claims the housing exclusion, their housing expenses would be limited to $10,500 ($7,500 + $3,000) and their base housing amount, using Jane's period of residence (September 15–December 31, 2023), would be $6,113 ($56.60 × 108 days). Jane's housing amount would be $4,387 ($10,500 – $6,113).

Use Form 2555 to claim the foreign earned income exclusion. You must file Form 2555 each year you are claiming the exclusion.

Also, use Form 2555 to claim either the foreign housing exclusion or the foreign housing deduction. Form 2555 shows how you meet the bona fide residence test or physical presence test, how much of your earned income is excluded, and how to figure the amount of your allowable housing exclusion or deduction.

Don’t submit Form 2555 by itself.

If you are a U.S. citizen or resident alien who is a citizen or national of a U.S. treaty country, you can claim the exclusion under the bona fide residence test. You should fill out Parts I, II, IV, and V of Form 2555. In filling out Part II, be sure to give your visa type and the period of your bona fide residence. Frequently, these items are overlooked.

U.S. citizens and all resident aliens can claim the exclusion under the physical presence test. You should fill out Parts I, III, IV, and V of Form 2555. When filling out Part III, be sure to insert the beginning and ending dates of your 12-month period and the dates of your arrivals and departures, as requested in the travel schedule.

You must fill out Part VI if you are claiming a foreign housing exclusion or deduction.

If you are claiming the foreign earned income exclusion, fill out Part VII.

If you are claiming the foreign earned income exclusion, the foreign housing exclusion, or both, fill out Part VIII.

Finally, fill out Part IX if you are claiming the foreign housing deduction.

If you and your spouse both qualify to claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you and your spouse must file separate Forms 2555 to claim these benefits. See the discussion earlier under Separate Households .

5. Deductions and Credits

The rules concerning items related to excluded income,

Contributions to foreign charitable organizations,

Contributions to individual retirement arrangements (IRAs),

Taxes of foreign countries and U.S. territories, and

How to report deductions.

514 Foreign Tax Credit for Individuals

523 Selling Your Home

590-A Contributions to Individual Retirement Arrangements (IRAs)

597 Information on the United States–Canada Income Tax Treaty

1116 Foreign Tax Credit

2106 Employee Business Expenses

Schedule A (Form 1040) Itemized Deductions

Schedule C (Form 1040) Profit or Loss From Business

SS-5 Application for a Social Security Card

W-7 Application for IRS Individual Taxpayer Identification Number

U.S. citizens and resident aliens living outside the United States are generally allowed the same deductions as citizens and residents living in the United States.

If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. You can deduct only those expenses connected with earning includible income.

These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that aren’t definitely related to any particular type of gross income. These rules don’t apply to items such as:

Qualified retirement contributions,

Alimony payments,

Charitable contributions,

Medical expenses,

Mortgage interest, or

Real estate taxes on your personal residence.

For purposes of these rules, your housing deduction isn’t treated as allocable to your excluded income, but the deduction for self-employment tax is.

If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions.

In 2022, you had $95,600 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. You did not have a housing exclusion. Because you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2022 return.

In 2023, you received a $18,000 bonus for work you did abroad in 2022. You can exclude $16,400 of the bonus because the limit on the foreign earned income exclusion for 2022 was $112,000 and you have already excluded $95,600. Since you must include $1,600 of the bonus ($18,000 − $16,400) for work you did in 2022 in income, you can file an amended return for 2021 to claim $133.80 ($9,500 x $1,600/$113,600) of the deductions. These are the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($1,600) and divided by the total foreign earned income for 2022 ($113,600).

Contributions to Foreign Charitable Organizations

If you make contributions directly to a foreign church or other foreign charitable organization, you generally cannot deduct them. Exceptions are explained under Canadian, Mexican, and Israeli charities , later.

You can deduct contributions to a U.S. organization that transfers funds to a charitable foreign organization if the U.S. organization controls the use of the funds by the foreign organization or if the foreign organization is just an administrative arm of the U.S. organization.

Under the income tax treaties with Canada, Mexico, and Israel, you may be able to deduct contributions to certain Canadian, Mexican, and Israeli charitable organizations. Generally, you must have income from sources in Canada, Mexico, or Israel, and the organization must meet certain requirements. See Pub. 597 and Pub. 526 , Charitable Contributions, for more information.

Contributions to your individual retirement arrangements (IRAs) that are traditional IRAs or Roth IRAs are generally limited to the lesser of $6,500 ($7,500 if 50 or older) or your compensation that is includible in your gross income for the tax year. In determining compensation for this purpose, don’t take into account amounts you exclude under either the foreign earned income exclusion or the foreign housing exclusion. Don’t reduce your compensation by the foreign housing deduction.

If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs is generally limited based on your modified adjusted gross income. This is your adjusted gross income figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Other modifications are also required. For more information on contributions to IRAs, see Pub. 590-A .

Taxes of Foreign Countries and U.S. Territories

You can take either a credit or a deduction for income taxes paid to a foreign country or a U.S. territory. Taken as a deduction, foreign income taxes reduce your taxable income. Taken as a credit, foreign income taxes reduce your tax liability. You must treat all foreign income taxes the same way. If you take a credit for any foreign income taxes, you cannot deduct any foreign income taxes. However, you may be able to deduct other foreign taxes. See Deduction for Other Foreign Taxes , later.

There is no rule to determine whether it is to your advantage to take a deduction or a credit for foreign income taxes. In most cases, it is to your advantage to take foreign income taxes as a tax credit, which you subtract directly from your U.S. tax liability, rather than as a deduction in figuring taxable income. However, if foreign income taxes were imposed at a high rate and the proportion of foreign income to U.S. income is small, a lower final tax may result from deducting the foreign income taxes. In any event, you should figure your tax liability both ways and then use the one that is better for you.

You can make or change your choice within 10 years from the due date for filing the tax return on which you are entitled to take either the deduction or the credit.

These are generally income taxes you pay to any foreign country or U.S. territory.

Foreign income taxes can only be taken as a credit on Schedule 3 (Form 1040), line 1, or as an itemized deduction on Schedule A (Form 1040). These amounts cannot be included as withheld income taxes on Form 1040 or 1040-SR, line 25.

You cannot take a credit or deduction for foreign income taxes paid on earnings you exclude from tax under any of the following.

Foreign housing exclusion.

Territory exclusion.

If only part of your wages is excluded, you can’t deduct or take a credit for the foreign income taxes allocable to the excluded part. You find the taxes allocable to your excluded wages by applying a fraction to the foreign taxes paid on foreign earned income received during the tax year. The numerator (top number) of the fraction is your excluded foreign earned income received during the tax year minus deductible expenses allocable to that income (not including the foreign housing deduction). The denominator (bottom number) of the fraction is your total foreign earned income received during the tax year minus all deductible expenses allocable to that income (including the foreign housing deduction).

If foreign law taxes both earned income and some other type of income and the taxes on the other type can’t be separated, the denominator of the fraction is the total amount of income subject to foreign tax minus deductible expenses allocable to that income.

Credit for Foreign Income Taxes

If you take the foreign tax credit, you may have to file Form 1116 with Form 1040 or 1040-SR. Form 1116 is used to figure the amount of foreign tax paid or accrued that can be claimed as a foreign tax credit. Don’t include the amount of foreign tax paid or accrued as withheld federal income taxes on Form 1040 or 1040-SR, line 25.

The foreign income tax for which you can claim a credit is the amount of legal and actual tax liability you pay or accrue during the year. The amount for which you can claim a credit is not necessarily the amount withheld by the foreign country. You can’t take a foreign tax credit for income tax you paid to a foreign country that would be refunded by the foreign country if you made a claim for refund.

If a foreign country returns your foreign tax payments to you in the form of a subsidy, you cannot claim a foreign tax credit based on these payments. This rule applies to a subsidy provided by any means that is determined, directly or indirectly, by reference to the amount of tax, or to the base used to figure the tax.

Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations. A credit is also not allowed if the subsidy is given to a person related to you, or persons who participated in a transaction or a related transaction with you.

The foreign tax credit is limited to the part of your total U.S. tax that is in proportion to your taxable income from sources outside the United States compared to your total taxable income. The allowable foreign tax credit can’t be more than your actual foreign tax liability.

You won’t be subject to this limit and won’t have to file Form 1116 if you meet all three of the following requirements.

Your only foreign source income for the year is passive income (dividends, interest, royalties, etc.) that is reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT).

Your foreign taxes for the year that qualify for the credit are not more than $300 ($600 if you are filing a joint return) and are reported on a payee statement.

You elect this procedure.

You must figure the limit on a separate basis with regard to “section 951A category income,”“foreign branch category income,” “passive category income,”“general category income,” “section 901(j) income,” “certain income re-sourced by treaty,” and any “lump-sum distributions” from an employer benefit plan for which the special averaging treatment is used to determine your tax (see the Instructions for Form 1116 ).

In figuring taxable income in each category, you take into account only the amount that you must include in income on your federal tax return. Don’t take any excluded amount into account.

To determine your taxable income in each category, deduct expenses and losses that are definitely related to that income.

Other expenses (such as itemized deductions or the standard deduction) not definitely related to specific items of income must be apportioned to the foreign income in each category by multiplying them by a fraction. The numerator (top number) of the fraction is your gross foreign income in the separate limit category. The denominator (bottom number) of the fraction is your gross income from all sources. For this purpose, gross income includes income that is excluded under the foreign earned income provisions but does not include any other exempt income. You must use special rules for deducting interest expenses. For more information on allocating and apportioning your deductions, see Pub. 514 .

If you have an overall foreign loss and the loss reduces your U.S. source income (resulting in a reduction of your U.S. tax liability with respect to U.S. source income), you must recapture the loss in later years when you have taxable income from foreign sources. This is done by treating a part of your taxable income from foreign sources in later years as U.S. source income. This reduces the numerator of the limiting fraction and the resulting foreign tax credit limit.

If you have an overall domestic loss and the loss reduces your foreign source income (resulting in a reduction in the amount of foreign tax credit you can claim for taxes paid during that year), you must recapture the loss in later years when you have U.S. source taxable income. This is done by treating a part of your taxable income from U.S. sources in later years as foreign source income. This increases the numerator of the limitation fraction and the resulting foreign tax credit limit.

The amount of foreign income tax not allowed as a credit because of the limit can be carried back 1 year and carried forward 10 years.

The Schedule B (Form 1116) is used to reconcile your prior year foreign tax carryover with your current year foreign tax carryover. The schedule replaces the previous attachment requirement for Part III, line 10 (Form 1116). For more information, see the Instructions for Schedule B (Form 1116) and the instructions for Form 1116, line 10, at IRS.gov/Form1116 .

Instead of taking the foreign tax credit, you can deduct foreign income taxes as an itemized deduction on Schedule A (Form 1040) .

You deduct only foreign income taxes paid on income that is subject to U.S. tax. You can’t deduct foreign taxes paid on earnings you exclude from tax under any of the following.

You are a U.S. citizen and qualify to exclude your foreign earned income. Your excluded wages in Country X are $70,000 on which you paid income tax of $10,000. You received dividends from Country X of $2,000 on which you paid income tax of $600.

You can deduct the $600 tax payment because the dividends relating to it are subject to U.S. tax. Because you exclude your wages, you cannot deduct the income tax of $10,000.

If you exclude only a part of your wages, see the earlier discussion under Foreign taxes paid on excluded income .

You cannot deduct other foreign taxes, such as real property or personal property taxes, unless you incurred the expenses in a trade or business or in the production of income.

On the other hand, you can generally deduct real property or personal property taxes when you pay them to U.S. territories. But if you claim the territory exclusion, see Pub. 570 .

The deduction for foreign taxes other than foreign income taxes isn’t related to the foreign tax credit. You can take deductions for these miscellaneous foreign taxes and also claim the foreign tax credit for income taxes imposed by a foreign country.

If you exclude foreign earned income or housing amounts, how you show your deductions on your tax return and how you figure the amount allocable to your excluded income depend on whether the expenses are used in figuring adjusted gross income (Form 1040 or 1040-SR, line 11) or are itemized deductions.

If you have deductions used in figuring adjusted gross income, enter the total amount for each of these items on the appropriate lines and schedules of Form 1040 or 1040-SR. Generally, you figure the amount of a deduction related to the excluded income by multiplying the deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Enter the amount of the deduction(s) related to excluded income on line 44 of Form 2555.

If you have itemized deductions related to excluded income, enter on Schedule A (Form 1040) only the part not related to excluded income. You figure that amount by subtracting from the total deduction the amount related to excluded income. Generally, you figure the amount that is related to the excluded income by multiplying the total deduction by a fraction, the numerator of which is your foreign earned income exclusion and the denominator of which is your foreign earned income. Attach a statement to your return showing how you figured the deductible amount.

You are a U.S. citizen employed as an accountant. Your tax home is in Germany for the entire tax year. You meet the physical presence test. Your foreign earned income for the year was $129,875 and your investment income was $8,890. After excluding $120,000, your adjusted gross income is $18,765.

Generally, mortgage interest is deductible on Schedule A (Form 1040). You paid mortgage interest on your foreign home of $15,000. Your mortgage is under $750,000. Reduce the $15,000 of your mortgage interest by 92.3% (0.923) ($13,845) because you excluded 92.3% (0.923) ($120,000/$129,875) of your foreign earned income.

The remaining mortgage interest of $1,155 can be deducted on line 8a or 8b of Schedule A (Form 1040).

You are a U.S. citizen, have a tax home in Spain, and meet the physical presence test. You are self-employed and personal services produce the business income. Your gross income was $121,842, business expenses were $67,695, and net income (profit) was $54,147. You choose the foreign earned income exclusion and exclude $120,000 of your gross income. Since your excluded income is 98.48% (0.9848) of your total income, 98.48% (0.9848) of your business expenses are not deductible. Report your total income and expenses on Schedule C (Form 1040). On Form 2555, you will show the following.

Line 20a, $121,842, gross income.

Lines 42 and 43, $120,000, foreign earned income exclusion.

Line 44, $66,666 (98.48% (0.9848) × $67,695), business expenses attributable to the exclusion.

Assume in Example 2 that both capital and personal services combine to produce the business income. No more than 30% of your net income or $16,244 ($54,147 x 30% (0.30)), assuming that this amount is a reasonable allowance for your services, is considered earned and can be excluded. Your exclusion of $16,244 is 13.33% of your gross income ($16,244 ÷ $121,842). Because you excluded 13.33% of your net income, $9,024 (13.33% (0.1333) x $67,695) of your business expenses is attributable to the excluded income and is not deductible.

You are a U.S. citizen, have a tax home in Brazil, and meet the physical presence test. You are self-employed and both capital and personal services combine to produce business income. Your gross income was $146,000, business expenses were $172,000, and your net loss was $26,000. A reasonable allowance for the services you performed for the business is $77,000. Because you incurred a net loss, the earned income limit of 30% of your net profit does not apply. The $77,000 is foreign earned income. If you choose to exclude the $77,000, you exclude 52.74% of your gross income ($77,000 ÷ $146,000), and 52.74% of your business expenses ($90,713) is attributable to that income and is not deductible. Show your total income and expenses on Schedule C (Form 1040). On Form 2555, exclude $77,000 and show $90,713 on line 44. Subtract line 44 from line 43, and enter the difference as a negative (in parentheses) on line 45. Because this amount is negative, enter it as a positive (no parentheses) on line 8d of Schedule 1 (Form 1040), and combine it with your other income to arrive at total income on line 9 of Schedule 1 (Form 1040).

You are a U.S. citizen, have a tax home in Panama, and meet the bona fide residence test. You have been performing services for clients as a partner in a firm that provides services exclusively in Panama. Capital investment is not material in producing the partnership's income. Under the terms of the partnership agreement, you are to receive 50% of the net profits. The partnership received gross income of $248,000 and incurred operating expenses of $102,250. Of the net profits of $145,750, you received $72,875 as your distributive share.

You choose to exclude $120,000 of your share of the gross income. Because you exclude 96.77% (0.9677) ($120,000 ÷ $124,000) of your share of the gross income, you cannot deduct $49,474, which is 96.77% (0.9677) of your share of the operating expenses (96.77% (0.9677) × $51,125). Report $72,875, your distributive share of the partnership net profit, on Schedule E (Form 1040). On Form 2555, show $120,000 on line 42 and show $49,474 on line 44. Your exclusion on Form 2555 is $70,521.

6. Tax Treaty Benefits

Some common tax treaty benefits,

How to get help in certain situations, and

How to get copies of tax treaties.

901 U.S. Tax Treaties

See chapter 7 for information about getting these publications.

Purpose of Tax Treaties

The United States has bilateral income tax treaties, also known as conventions, with many countries. See Table 3 under the list of tax treaty tables at IRS.gov/Individuals/International-Taxpayers/Tax-Treaty-Tables for a list of countries with which the United States has an income tax treaty in effect.

Under these treaties, citizens and residents of the United States who are subject to taxes imposed by the foreign countries are entitled to certain credits, deductions, exemptions, and reductions in the rate of taxes of those foreign countries. If a foreign country with which the United States has a treaty imposes a tax on you, you may be entitled to benefits under the treaty.

Treaty benefits are generally available to residents of the United States. They are generally not available to U.S. citizens who do not reside in the United States. However, certain treaty benefits and safeguards, such as the nondiscrimination provisions, are available to U.S. citizens residing in the treaty countries. U.S. citizens residing in a foreign country may also be entitled to benefits under that country's tax treaties with third countries.

Use Form 8802 to request certification of U.S. residency for purposes of claiming benefits under a tax treaty. Certification can be requested for the current and any prior calendar years.

For more information on tax treaties, go to IRS.gov/Individuals/International-Taxpayers/Tax-Treaties .

Common Benefits

Some common tax treaty benefits are explained below. The credits, deductions, exemptions, reductions in rate, and other benefits provided by tax treaties are subject to conditions and various restrictions. Benefits provided by certain treaties are not necessarily provided by others.

Personal service income. If you are a U.S. resident who is in a treaty country for a limited number of days in the tax year and you meet certain other requirements, the payment you receive for personal services performed in that country may be exempt from that country's income tax.

Professors and teachers. If you are a U.S. resident, the payment you receive for the first 2 or 3 years that you are teaching or doing research in a treaty country may be exempt from that country's income tax.

Students, trainees, and apprentices. If you are a U.S. resident, amounts you receive from the United States for study, research, or business, professional, and technical training in a treaty country may be exempt from a treaty country's income tax.

Some treaties exempt non-compensatory grants, allowances, and awards received from governmental and certain nonprofit organizations. Also, under certain circumstances, a limited amount of pay received by students, trainees, and apprentices for the performance of services in a treaty country may be exempt from the income tax of many treaty countries.

Pensions and annuities. If you are a U.S. resident, nongovernment pensions and annuities you receive may be exempt from the income tax of treaty countries.

Most treaties contain separate provisions for exempting government pensions and annuities from treaty country income tax, and some treaties provide exemption from the treaty country's income tax for social security payments.

Investment income. If you are a U.S. resident, investment income, such as interest and dividends, that you receive from sources in a treaty country may be exempt from that country's income tax or taxed at a reduced rate.

Several treaties provide exemption for capital gains (other than from sales of real property in most cases) if specified requirements are met.

If you are a U.S. resident who receives income from or owns capital in a foreign country, you may be taxed on that income or capital by both the United States and the treaty country.

Most treaties allow you to take a credit against or deduction from the treaty country's taxes based on the U.S. tax on the income.

Nondiscrimination provisions. Most U.S. tax treaties provide that the treaty country cannot discriminate by imposing more burdensome taxes on U.S. citizens who are residents of the treaty country than it imposes on its own citizens in the same circumstances.

Saving clauses. U.S. treaties contain saving clauses that provide that the treaties do not affect the U.S. taxation of its own citizens and residents. As a result, U.S. citizens and residents cannot generally use the treaty to reduce their U.S. tax liability.

However, most treaties provide exceptions to saving clauses that allow certain provisions of the treaty to be claimed by U.S. citizens or residents. It is important that you examine the applicable saving clause to determine if an exception applies.

Pub. 901 contains an explanation of treaty provisions that apply to amounts received by teachers, students, workers, and government employees and pensioners who are alien nonresidents or residents of the United States. Since treaty provisions are generally reciprocal, you can usually substitute “U.S.” for the name of the treaty country whenever it appears, and vice versa when “U.S.” appears in the treaty exemption discussions in Pub. 901 .

Pub. 597 contains an explanation of a number of frequently used provisions of the United States–Canada income tax treaty.

For additional information, go to IRS.gov/Individuals/International-Taxpayers/Tax-Treaties .

If you are a U.S. citizen or resident alien, you can request assistance from the U.S. competent authority if you think that the actions of the United States, a treaty country, or both, cause or will cause a tax situation not intended by the treaty between the two countries. You should read any treaty articles, including the mutual agreement procedure article, that apply in your situation.

The U.S. competent authority cannot consider requests involving countries with which the United States does not have a tax treaty.

Instructions for how to prepare and submit a request are available at IRS.gov/CompetentAuthority .

Your request for competent authority consideration should be addressed to:

You can get complete information about treaty provisions from the taxing authority in the country from which you receive income or from the treaty itself. You can obtain the text of most U.S. treaties at IRS.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties-A-to-Z .

If you have questions about a treaty, you can visit IRS.gov/Individuals/International-Taxpayers/Tax-Treaties .

7. How To Get Tax Help

If you are overseas and need tax help, see Taxpayer Assistance Outside the United States, later.

Taxpayer Assistance Inside the United States

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.

After receiving all your wage and earnings statements (Forms W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.

Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

Free File. This program lets you prepare and file your federal individual income tax return for free using software or Free File Fillable Forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.

VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/VITA , download the free IRS2Go app, or call 800-906-9887 for information on free tax return preparation.

TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE or download the free IRS2Go app for information on free tax return preparation.

MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource. For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax ).

Also, the IRS offers Free Fillable Forms, which can be completed online and then e-filed regardless of income.

Go to IRS.gov/Tools for the following.

The Earned Income Tax Credit Assistant ( IRS.gov/EITCAssistant ) determines if you’re eligible for the earned income credit (EIC).

The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.

The Tax Withholding Estimator ( IRS.gov/W4App ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

The First-Time Homebuyer Credit Account Look-up ( IRS.gov/HomeBuyer ) tool provides information on your repayments and account balance.

The Sales Tax Deduction Calculator ( IRS.gov/SalesTax ) figures the amount you can claim if you itemize deductions on Schedule A (Form 1040).

IRS.gov/Help : A variety of tools to help you get answers to some of the most common tax questions.

IRS.gov/ITA : The Interactive Tax Assistant, a tool that will ask you questions and, based on your input, provide answers on a number of tax law topics.

IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax changes and interactive links to help you find answers to your questions.

You may also be able to access tax law information in your electronic filing software.

There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:

Primarily responsible for the overall substantive accuracy of your return,

Required to sign the return, and

Required to include their preparer tax identification number (PTIN).

The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure online W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement, and Form W-2c, Corrected Wage and Tax Statement.

Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, Spanish, and ASL.

Youtube.com/irsvideos .

Youtube.com/irsvideosmultilingua .

Youtube.com/irsvideosASL .

The IRS Video portal ( IRSVideos.gov ) contains video and audio presentations for individuals, small businesses, and tax professionals.

You can find information on IRS.gov/MyLanguage if English isn’t your native language.

The IRS is committed to serving taxpayers with limited-English proficiency (LEP) by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), most IRS offices, and every VITA/TCE tax return site. The OPI Service is accessible in more than 350 languages.

Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/LetUsHelp .

Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to receive certain types of written correspondence in the following formats.

Standard Print.

Large Print.

Audio (MP3).

Plain Text File (TXT).

Braille Ready File (BRF).

Go to IRS.gov/DisasterRelief to review the available disaster tax relief.

Go to IRS.gov/Forms to view, download, or print all of the forms, instructions, and publications you may need. Or, you can go to IRS.gov/OrderForms to place an order.

Download and view most tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .

IRS eBooks have been tested using Apple's iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.

Go to IRS.gov/Account to securely access information about your federal tax account.

View the amount you owe and a breakdown by tax year.

See payment plan details or apply for a new payment plan.

Make a payment or view 5 years of payment history and any pending or scheduled payments.

Access your tax records, including key data from your most recent tax return, and transcripts.

View digital copies of select notices from the IRS.

Approve or reject authorization requests from tax professionals.

View your address on file or manage your communication preferences.

With an online account, you can access a variety of information to help you during the filing season. You can get a transcript, review your most recently filed tax return, and get your adjusted gross income. Create or access your online account at IRS.gov/Account .

This tool lets your tax professional submit an authorization request to access your individual taxpayer IRS online account. For more information, go to IRS.gov/TaxProAccount .

The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refunds. If you don’t have a bank account, go to IRS.gov/DirectDeposit for more information on where to find a bank or credit union that can open an account online.

Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.

The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.

Go to IRS.gov/IdentityTheft , the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.

Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .

Go to IRS.gov/Refunds .

Download the official IRS2Go app to your mobile device to check your refund status.

Call the automated refund hotline at 800-829-1954.

Payments of U.S. tax must be remitted to the IRS in U.S. dollars. Digital assets are not accepted. Go to IRS.gov/Payments for information on how to make a payment using any of the following options.

IRS Direct Pay : Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.

Debit Card, Credit Card, or Digital Wallet : Choose an approved payment processor to pay online or by phone.

Electronic Funds Withdrawal : Schedule a payment when filing your federal taxes using tax return preparation software or through a tax professional.

Electronic Federal Tax Payment System : Best option for businesses. Enrollment is required.

Check or Money Order : Mail your payment to the address listed on the notice or instructions.

Cash : You may be able to pay your taxes with cash at a participating retail store.

Same-Day Wire : You may be able to do same-day wire from your financial institution. Contact your financial institution for availability, cost, and time frames.

The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick, easy, and faster than mailing in a check or money order.

Go to IRS.gov/Payments for more information about your options.

Apply for an online payment agreement ( IRS.gov/OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.

Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .

Go to IRS.gov/Form1040X for information and updates.

Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.

Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

You can now upload responses to all notices and letters using the Document Upload Tool. For notices that require additional action, taxpayers will be redirected appropriately on IRS.gov to take further action. To learn more about the tool, go to IRS.gov/Upload .

You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that is scheduled to begin providing translations in 2023. You will continue to receive communications, including notices and letters, in English until they are translated to your preferred language.

Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

The Taxpayer Advocate Service (TAS) Is Here To Help You

TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. TAS strives to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights .

The Taxpayer Bill of Rights describes 10 basic rights that all taxpayers have when dealing with the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to you and how they apply. These are your rights. Know them. Use them.

TAS can help you resolve problems that you can’t resolve with the IRS. And their service is free. If you qualify for their assistance, you will be assigned to one advocate who will work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:

Your problem is causing financial difficulty for you, your family, or your business;

You face (or your business is facing) an immediate threat of adverse action; or

You’ve tried repeatedly to contact the IRS but no one has responded, or the IRS hasn’t responded by the date promised.

TAS has offices in every state, the District of Columbia, and Puerto Rico . To find your advocate’s number:

Go to TaxpayerAdvocate.IRS.gov/Contact-Us ;

Download Pub. 1546, The Taxpayer Advocate Service Is Your Voice at the IRS, available at IRS.gov/pub/irs-pdf/p1546.pdf ;

Call the IRS toll free at 800-TAX-FORM (800-829-3676) to order a copy of Pub. 1546;

Check your local directory; or

Call TAS toll free at 877-777-4778.

TAS works to resolve large-scale problems that affect many taxpayers. If you know of one of these broad issues, report it to them at IRS.gov/SAMS . Be sure to not include any personal taxpayer information.

LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, go to the LITC page at TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134, Low Income Taxpayer Clinic List , at IRS.gov/pub/irs-pdf/4134.pdf .

Taxpayer Assistance Outside the United States

Additional contacts for taxpayers who live outside the United States are available at IRS.gov/uac/Contact-My-Local-Office-Internationally .

If you live outside the United States, you can call TAS at +15.15.56.46.827. Your call will be automatically routed to Hawaii or Puerto Rico depending on your location. If you select Spanish, your call will be routed to the Puerto Rico office for assistance. You can contact TAS at:

This section answers tax-related questions commonly asked by taxpayers living abroad.

Questions and Answers

•  Facebook
•  Twitter
•  Linkedin

Tax Refund For Foreigner In Vietnam

June 15, 2020

Table of Contents

When travelling overseas, besides inevitable documents such as passport, visa, criminal record, foreigners are advised to know some regulations related to their benefits. A tax refund is a term that foreigners should keep in mind. So what is a tax refund? What should you know about tax refund in Vietnam?

This article will provide you with useful information about tax refunds in Vietnam regarding locations of paying tax, procedures of a tax refund, and necessary documents.

What is a tax refund for foreigners?

Tax refund for tourists permits travellers (foreign passport holders) to claim back Value Added Tax (VAT) on items purchased in any stores registered as a “Tax Refund for tourists” participants. 

Who will follow the VAT refund?

According to Article 1 of the Circular No 72/2014/ TT-BTC issued on 30 May 2014 , two subjects of VAT refund are “foreigners and overseas Vietnamese, except for members of the flight crew in accordance with the Aviation Law, member of sailor crew in accordance with the Maritime Law (hereinafter referred to as foreigners) whose passports or entry/exit documents are issued by foreign authorities and valid for entering and exiting Vietnam, purchasing and bringing goods overseas through ports of entry/exit where VAT refund is available”. 

Locations of tax refund declaration

Two locations that tourists should keep in mind are locations for physical inspection of goods, checking VAT refund declaration, and location for VAT refund payment. 

When foreign travelers arrive at Noi Bai or Tan Son Nhat airport, the location for physical inspection of goods, checking VAT refund declaration is located at the baggage check-in counters and/ or boarding-pass checking areas in order for physical inspection of refunded goods sent by luggage; at the isolated areas in order for physical inspection of refunded portable goods. 

Besides, to receive the tax refund, VAT refund counters at international seaports, which have separate counters (kiosks) and are qualified for cash management and accounting documents in accordance with laws. 

Process of VAT refund

The process of VAT refund goes through three stages.   

Stage 1: Foreigners purchasing goods at enterprises selected for selling VAT refund goods (as published on the website of General Department of Tax www.gdt.gov.vn) shall be noticed to check the information in invoice cum tax refund declaration (date of issuing invoice; full name, passport number of buyers…).

If the information is not correct and completed, foreigners shall request for correction; but if it is correct and complete, they shall sign in the invoice cum tax refund declaration.

Stage 2: Foreigners shall be requested to submit invoice cum tax refund declaration and present refunded goods to the customs authority. In Noi Bai and Tan Son Nhat International Airport, foreigners shall submit invoice cum tax refund declaration and present goods to the customs authority at invoice cum tax refund declaration checking counters outside of the restricted areas in order for customs officers to check before conducting procedures for sending baggage.

After customs authority checks invoice cum tax refund declaration and goods, foreigners shall continue to conduct procedures for sending goods and take their boarding-pass.

In case foreigners request for refund payment to their hand luggage, after coming into the restricted areas, they shall submit invoice cum tax refund declaration and present refunded goods as requested. Customs Authority shall check invoice cum tax refund declaration and goods (if necessary) and calculate the VAT amount refunded to foreigners.

In the other places of a tax refund, refunded hand goods or baggage shall be subjected to customs inspection outside the restricted areas (in international airports) and in the refund areas (in international seaports).

Stage 3: Foreigners shall present their boarding-pass card and invoice cum tax refund declaration checked by Customs Authority in terms of identifying kinds of goods and calculating VAT amount refunded to foreigners, and stamp at tax refund counters in restricted areas.

Necessary documents for tax refund

In order to fulfill the procedure of checking and submitting VAT refund, foreign tourists should pay attention to two kinds of documents consisting of documents for checking invoice cum tax refund declaration and goods and documents for VAT refund payments to the foreigner on exit. 

In terms of necessary documents for checking invoice cum tax refund declaration and goods, foreigners shall present to the customs officials at the invoices cum tax refund declaration and goods checking counter the following documents: passports or exit and entry permits; invoice cum tax refund declaration and goods. 

With regard to necessary documents for VAT refund payments to the foreigner on exit, foreigners should prepare boarding pass and invoices cum VAT refund declaration. After the customs inspection on invoices cum VAT refund declaration and goods has been completed, foreign passengers shall present to the commercial banks at the refunding counter with the documents mentioned previously. 

Goods subjected to VAT refund

According to Article 11 of Circular No 72/2014/TT-BTC dated 30 May 2014 , VAT refund is applied to objects that meet the following requirements: 

“ – Goods are not included in the list of goods prohibited from exportation; the list of export goods under permits of the Ministry of Trade (now the Ministry of Industry and Trade) or export list subject to specialized management according to the Decree No 187/2013/NĐ-CP dated 20/11/2013 of the Government and the guidelines thereof.

– Goods are subjected to VAT as stipulated in Article 3 of the VAT Tax Law No 13/2008/QH12 dated 3/6/2008 and the guidelines thereof.

– Goods are not in the list of goods prohibited in airplanes as stipulated in Article 12 of the Vietnam Civil Aviation Law dated 29/6/2006 and the guidelines thereof.

– Goods are not subjected to VAT refund of foreigners according to Circular 08/2003/TT-BTC dated 15/1/2003 of the Ministry of Finance which guides VAT refund for diplomatic missions, consular posts, and representative offices of international organizations in Vietnam.

– Goods purchased in Vietnam with invoice cum tax refund declaration which is issued within a maximum 60 days before the date of departure of foreign passengers from Vietnam.

– The minimum value of goods in the invoice cum tax refund declaration purchased at the same seller on the same day (including accumulation of many same-day invoices from the same seller) is at least 02 million VND.”

Some difficulties about tax refund system for foreigners in Vietnam

Currently, the procedure of inspecting VAT refund still depends much on paperwork. The customs agencies, established by the General Development of Vietnam Customs, check invoices by paper presented by passengers without electronic invoices. Besides, the process also faces some limitations when tourists have to make the declaration with hand-writing paper. 

According to the Hanoi Custome Department, the Noi Bai Customs Brach reported that some cases caused difficulties for the Customs office to calculate the VAT refund such as clothes with general brands, missing labels, badges, missing red marks on invoices or inaccurate contact number. 

Meanwhile, the Da Nang Customs Department, through the implementation VAT refund of goods for overseas tourists and Vietnamese expat on exit, reported that the office had difficulties in determining the sales companies’ tax refunds when checking invoices and VAT declaration. Therefore, it takes much time for the office to collect the refunded VAT with invoices made by these sales companies. 

Solutions to improve the quality of the VAT refund system

This part is adapted from the article published on Customs News. With a view to building a more efficient system, authorities and organizations should coordinate with each other. It is advised that VAT refunding businesses work with the General Department of Taxation so, the management is tight and more convenient.

Furthermore, enterprises involving in sales tax refund should have clearly defined rights and obligations as well as sanctions for cases where enterprises do not update the information to the Customs office to handle in advance.

The Hanoi Customs Office suggested that tighter regulations on VAT refund conditions should also be applied for new or second-hand goods. The actual inspection of goods which are of great value from high-end brands namely Rolex Watches, Cartier, Hermes, Chanel is difficult to determine whether they are real or fake goods. 

The application of technology in the VAT refund system should be implemented. It will create higher productivity and ensure transparent information between the Customs, banks, and VAT refund businesses. 

All in all, a VAT refund is significant for foreign tourists entering and exiting Vietnam to ensure their benefits when traveling overseas. Foreigners should prepare in advance necessary documents to declare their VAT refund and follow the instruction of the Customs Office. The VAT refund system in Vietnam still has difficulties in creating a smooth workflow between relevant enterprises.

Therefore, it is an important point for the authority to upgrade the procedure of VAT refund. Hope that the article is helpful to you and if you have any problems relating to law, please contact Viettonkin , we will support you by our hearts. 

Related posts

Public holidays in asean countries (part 1 – vietnam), from october 1: a minor change, but banks are concerned about its potential impact, the politburo issues resolution on the fourth industrial revolution, how to get a legal representative for a company in vietnam, download our latest ebook about real estate and property.

Tải cuốn ebook mới nhất về nền kinh tế số Việt Nam!

The digital economy of Vietnam has been fueled and accelerated by the global digital trends and the pandemic Covid-19. The movement of digital transformation is underway in every corner of Vietnamese life, strongly influencing the way people do things. Digital economy is the future of the Vietnam economy. Realizing the potential of the digital economy, the Vietnam government has issued policies, guidelines and created legal frameworks to support and further enhance this economy. In this ebook edition, the digital economy is looked at from different angles. Perspectives from the key elements comprising Vietnam digital economy are examined and discovered.

Our Happy Clients

Subscribe to our insights to look at the critical issue that your business is facing and stay ahead of the competition in a rapidly changing world.

• Terms of service

Your tax refund check just arrived. What should you do with it?

Your refund check has arrived. You’ve already spent it, or saved it, several times over, but only in your head. Now, you must decide what to actually do with the money.

An income tax refund isn’t like a regular paycheck. It’s a one-time windfall. For many of us, it’s the biggest paycheck of the year .

The average refund check issued by the IRS so far this year is $3,182, as of March 1.

As welcome as the cash may be, a refund isn’t necessarily a good thing.

“It means you withheld more taxes than you owed throughout the year, effectively giving the IRS an interest-free loan,” said Randy Bruns , a certified financial planner in Naperville, Illinois.

Protect your assets: Best high-yield savings accounts of 2023

Yet, “from an emotional standpoint, nearly everyone loves a tax refund,” Bruns concedes.

Inflation is up. Credit card debt is surging. If you are in a position to choose how to spend your refund, count yourself lucky.

“For most Americans, that refund is spent before they receive it,” said Jeff Jones , CEO of H&R Block. “They know they have bills to pay, and that’s the priority.”

Save your refund check? How? Or spend it? On what?

If you don’t have urgent bills to pay, then you must decide the fate of your refund check: Save it? How? Spend it? On what? Or a little of both?

On the save-or-spend question, some financial experts focus on the appealing logic of comparing interest rates.

Let’s say you have credit card debt with a sky-high interest rate of 20% or more. You also have a high-yield savings account with an enviable interest rate of 5%.

One of those rates is undeniably higher. To some experts, it’s a no-brainer: Spend your refund paying down the high-interest debt. The savings account comes second.

“Arguably, the first two priorities for additional funds should be paying off high-interest debt, such as credit card balances or personal loans, which can save you money on interest payments in the long run, and establishing an emergency fund to cover unexpected expenses like medical bills or car repairs,” said Laura Mattia , a certified financial planner in Sarasota, Florida. 

If paying off high-interest debt is your top priority, you’d still be wise to save at least some of the money, said Liz Windisch , a certified financial planner in Denver.

“There are very few people who have an appropriate amount of emergency savings and are maxing out their retirement savings,” she said. “Always try to save some of the refund.”

Some experts say we should prioritize saving our refund over spending it.

“Invest it, in yourself or the markets,” said Catherine Valega , a certified financial planner in Boston. “Don’t spend it.”

'There is not a better time to save'

Saving rates are down. Meanwhile, interest rates on a range of savings products are the highest they’ve been in years.

“There is not a better time to save if you look at where interest rates are and the diverse options that people have,” said Arijit Roy, head of consumer segment and solutions at U.S. Bank.

As a rule of thumb, financial advisers suggest most Americans should aim to amass emergency savings to cover three to six months of expenses if not more.

“Start with padding your emergency fund, if you don’t already have six to 12 months' expenses saved,” Valega said.

That’s a lot of money, and not all of us manage to save that much . But, hey, it’s a goal.

If you choose to save, get creative. Certificates of deposit, money market funds and high-yield savings accounts all offer competitive rates.

“I would say that the worst thing you can do is leave your refund in your checking account,” Windisch said.

'High-yield savings' is no longer an oxymoron

Financial planners recommend high-yield savings accounts because that term is no longer an oxymoron. Banks are offering savings accounts that pay serious interest , often in the 4% to 5% range.

CD rates , too, are the highest they’ve been in a while . And money market funds can bring considerable rewards .

Once you’ve covered your emergency savings, consider maxing out your retirement savings.

In 2024, that means saving $23,000 in a 401(k) account , this year’s contribution limit. If you’re 50 or older, you can save an extra $7,500.

With an IRA, the type of retirement plan you manage on your own, the current annual limit is $7,000, or $8,000 for people 50 or older.

Even if you can’t max out your retirement savings, “consider using the refund to jumpstart your retirement savings,” Mattia said.

More: Is the government going to take my 401(k)? Some economists say accounts aren't worth it

If you spend your refund check, make it count

OK. You’ve paid off your high-interest debt and shored up your savings. If you still have refund dollars left, how best to spend them?

A tax refund is often a considerable sum. If you choose to spend it, experts say, make it count. Consider using the money to pay for an important project you’ve been putting off for cost reasons: Replace your roof or your furnace. Repair your car. Or, take a class and build some new skills.

“Some ideas might be to use the refund to make necessary repairs or improvements to your home, which can increase its value, or put toward furthering your education, which can improve your earning potential in the future,” Mattia said. “Both investments in your home and your human capital are smart investments since they both contribute to your financial security.”

Published: April 9, 2024   |   Last Updated: April 9, 2024

U.s. servicemembers overseas: don’t miss the irs’s “marching orders” regarding filing your tax returns.

Are you a U.S. servicemember stationed overseas? If so, you need to be familiar with your U.S. tax filing requirements.

U.S. citizens and residents abroad are generally required to file income tax returns reporting their worldwide income in the same way as taxpayers residing in the United States. This includes U.S. military personnel serving overseas. I recently highlighted filing information and difficulties encountered by U.S. taxpayers living abroad, including IRS service deficiencies , in two of my blogs. This blog highlights information specific to taxpayers serving in the U.S. military.

As a servicemember stationed abroad, some payments and benefits you receive from the government are not taxable. These include combat pay, the housing and cost-of-living allowances abroad paid by the U.S. government or by a foreign government, the Overseas Housing Allowance, moving allowances, veterans’ education benefits, and travel allowances, including leave between consecutive overseas tours, among others. Other tax benefits that you may be able to claim include but are not limited to the Earned Income Tax Credit, education credits , the Child Tax Credit , and the Child and Dependent Care Credit . Note that you can count your combat pay as income when calculating the Earned Income Tax Credit , which could increase your credit even though combat pay is not taxable.

How to Get Help

If you need assistance, keep these helpful resources in mind:

• MilTax is a DOD program that servicemembers, including those abroad, can use to electronically file their returns and get tax preparation assistance targeted toward the circumstances of military personnel and their families. The services are free, without regard to income or rank, and available 24/7. Examples of individuals eligible to use MilTax include active-duty servicemembers and their spouses and dependents as well as a family member who is managing the affairs of a deployed servicemember. If you need assistance, you can schedule a consultation by phone (800-342-9647) or via chat services .
• In-person services. Military members serving abroad have limited access to the Volunteer Income Tax Assistance (VITA) program that assists low-income taxpayers, with the services available on installations in England and Japan according to the DOD website .
• Access to online accounts. It may be helpful to sign up for an IRS online account to access tax records, make and view payments, view your accounts and balances, create and view payment plans, obtain transcripts, and more. My recent blog on online accounts explains how to sign up.
• Paid preparers. If you determine you need to hire someone for assistance, I have recently identified some important things to consider when hiring a preparer. Also, the IRS provides a Directory of Federal Tax Return Preparers With Credentials and Select Qualifications that may be helpful. You can search for preparers by country. Depending on where you live, you may find there are few private tax return preparers to assist you, and some may come with substantial cost.

When to File

If you are a U.S. citizen or resident, and on the regular due date of your return you are on military or naval service outside the United States and Puerto Rico, you are allowed an automatic two-month extension of time to file your income tax return and pay income tax. This means that if you meet the criteria, and your return is normally due on April 15, 2024, you are allowed until June 17, 2024 (since June 15 is a Saturday), to file. To take advantage of the automatic two-month extension, you must attach a statement to your return explaining that this situation applies to you. Note that you still must pay interest on any tax not paid by the regular due date of your return even if you qualify for the extension.

You can also file Form 4868 to request an automatic six-month extension of time to file your return. This six-month extension runs concurrently with the automatic two-month extension. Therefore, if you qualify for the automatic two-month extension, you will only receive an additional four months. To qualify for the six-month extension, you must file the request by the return’s original due date or the extended due date if you qualified for the automatic two-month extension. You also may be able to request an additional two-month extension to December 15, which is discretionary and must be approved by the IRS. These extensions are not an extension of time to pay your tax. Therefore, you owe interest on any unpaid tax and may owe penalties.

If you are serving in a combat zone , you are eligible for an automatic extension of time to file your return, pay tax, claim a refund, and take other actions with the IRS. This extension is for the period you serve in the combat zone plus 180 days and the number of days that were left for you to take the action when you entered the combat zone ( e.g. , if you entered the combat zone on March 1, you add 46 days, which is the number of days between March 1 and the April 15 deadline, to your extension period). During this extension period, assessment and collection deadlines will also be extended, and you will not be charged interest or penalties attributable to the period. The extensions also apply if you are directly supporting those in a combat zone , serving in a contingency operation as designated by the Secretary of Defense, or are hospitalized as a result of injury sustained in a combat zone (limited to a period of five years if hospitalized in the United States). The deadline extensions will apply to your spouse with some limitations . Your command will notify the IRS of your deployment, but you can also write “COMBAT ZONE” in red on top of your return or email the IRS at [email protected] with your name, stateside address, birth date, and date of deployment to the combat zone, along with documentation of service (do not include your Social Security number).

How to File

As mentioned above, MilTax is a DOD program that active duty servicemembers can use to e-file their returns for free. Other alternatives for e-filing that might be available, depending on your circumstances, include the Free File program , the Free File Fillable Forms , the Direct File pilot program , and commercial software providers. Be aware that a return will need to be e-filed through an electronic return transmitter ( e.g. , software provider or platform) before midnight of the due date, including any extensions of time, to be considered timely. If the IRS rejects an e-filed return before processing, it will not be considered timely filed if it is subsequently accepted after the filing deadline. This can cause challenges for taxpayers who file at or near the due date for their return.

You always have the option to mail your return to the IRS (and some forms, including international information returns , must be filed on paper). The IRS will accept a tax return mailed from a foreign country as timely filed if it bears an official postmark dated on or before midnight of the due date, including any extension of time for such filing. If you choose to use a private delivery service, you must similarly give your return to a designated international private delivery service before midnight on the due date, including any extensions of time. If you have an APO or FPO address, you should send your return to the IRS center listed in the Form 1040 Instructions for an APO or FPO address.

You can grant a power of attorney to an agent to file and sign your return on your behalf. You do this by filing Form 2848 and attaching it to the tax return. Or, if you are married and unable to sign a joint return due to serving in a combat zone, your spouse can sign the return for you even without a power of attorney. Your spouse should attach a signed statement explaining that you are serving in a combat zone.

How to Pay Tax

You can pay your federal taxes by making an electronic payment from a U.S. bank account, mailing a paper check to the IRS, or paying via a credit card. The IRS cannot currently accept e-payments from foreign bank accounts so you can only make an e-payment through a U.S. financial institution or corresponding bank . Similarly, you can only make international wire transfers , which can be expensive, from certain banks. If you are entitled to a refund, that refund will almost certainly be paid by a paper check mailed to you unless you have it direct deposited into a U.S. bank account.

This blog provides an overview of information that U.S. servicemembers stationed abroad need to know to successfully meet their U.S. tax obligations for this filing season. Of course, there are many other forms, publications, regulations, and statutes that might be applicable to your situation, as listed in the Resources section.

• Resources for Military Personnel and Their Families
• Publication 3, Armed Forces’ Tax Guide
• Publication 4940, Tax Information for Active Duty Military and Reserve Personnel
• Publication 5801-A, Tips & Resources for Military Spouse Entrepreneurs
• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• U.S. Citizens and Resident Aliens Abroad
• Extension of Deadlines – Combat Zone Service

Read the past NTA Blogs

The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

Subscribe to the NTA Blog