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Dear Tax Talk,
I am a U.S. citizen living and working in Hong Kong. I know I need to file a Form 1040 every year and 2555-EZ
to get foreign earned income exclusion. What else do I need to file?
I have a regular salary job with a Hong Kong-based employer. They don't send me a Form 1099 or
W-2. So when I mail my forms, do I have to send a copy of my income statement to prove what I have put down is
bona fide information? Or, is it not necessary if it's not a W-2 or 1099?
In addition, the Hong Kong fiscal
year is from April 1 to March 31. When I report
my 2007 income, do I not have to report the part
I earned from Jan. 1, 2008 to March 31, 2008 (which
is part of my 2007/2008 total income here)?
-- Chester
Dear Chester,
U.S. citizens and green card holders (i.e., resident aliens) have a continuing obligation to file U.S. tax returns
while living abroad. Whether these individuals have to pay U.S. taxes depends on the tax breaks under the law.
A U.S. citizen who takes up bona
fide residence in a foreign county can exclude
a certain amount of earned income. In 2007 the
exclusion was $85,700 and in 2008 will be $87,600,
as it is adjusted for inflation each year (note
it is not adjusted for the weakening dollar.)
To claim the exclusion, you should attach Form
2555 or 2555-EZ
(if applicable) to your Form
1040.
Individual taxpayers are required
to complete their Form 1040s on a calendar-year
basis. Accordingly, you will need to report your
wages on a different basis than that provided
by your employer.
Figure your wages from Jan. 1, 2007
through Dec. 31, 2007 when submitting your 2007
tax return. You do not need to attach a Form W-2
to prove your wages; generally Form W-2 is only
requested by the IRS to prove income-tax withholding,
which doesn't apply in your situation.
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