U.S. TAX INFORMATION FOR STUDENTS

Credits

American Opportunity Credit

Under the American  Recovery and Reinvestment Act (ARRA), more parents and students qualify for a tax credit, the American opportunity credit, to pay for college expenses.

The American opportunity credit originally modified the existing Hope credit  for tax years 2009 and 2010, and was later extended for an additional two years –2011 and 2012, making the benefit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds  required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible qualify for the maximum annual credit of $2,500 per student.

Read more...

U.S. TAX INFORMATION FOR EXPATS

Americans living abroad are subject to the same U.S. income tax filing  requirements as those living in the United States. However their tax situation  is considerably more complex. In addition to complying with the tax laws of the  country in which they are resident they have a U.S. tax obligation.

Many expatriates aren't even aware of the fact that they have an obligation to file an income tax return until many years after they have been out of the country. Then….when they do realize that they should have been filing, it seems so overwhelming because it can be difficult to find someone to prepare old missing, unfiled tax returns here in the United States let alone when you're overseas. Expats must file a U.S. Income Tax Return and report their world-wide income from all sources, in any currency, unless it is below the minimum filing requirement. It  does not matter where earned, paid or received. They are required to file a  Form 1040 every year even if their foreign earned income is below the  excludable amount of $91,500 (for 2010). The earned income exclusion is not  automatic. It is an election and it can only be elected by filing a U.S. tax return with an attached Form 2555 (Foreign Earned Income).

Read more...

U.S. TAXES TIME LIMITS

LATE & PAST DUE RETURNS 

U.S. expats who have not been keeping current with their U.S. tax obligations for one reason or another are often quite surprised to learn that they owe little or no taxes, interest or penalties when their unfiled returns are finally prepared. Some are even more surprised to find they are entitled to tax refunds. Typically these expats are not aware of the tax rules that operate to their benefit and are only vaguely aware of their U.S. tax obligations.

The rules are very clear. All U.S. citizens regardless of where they reside are required to file an annual U.S. Income Tax Return and report their world-wide income, unless their income from all sources is below the minimum filing requirement. And the filing requirement applies even if earned income is below the foreign earned income exclusion of $91,500. 

Read more...

U.S. TAX INFORMATION FOR SELF-EMPLOYED

American citizens living abroad who operate their own business as sole  proprietors are subject to U.S. Income Tax on the net income  from that business. They must file a U.S. Income Tax Return if they have $400 or more net  earnings from self-employment even if that income is excludible as foreign  earned income. The income and expenses of the business are reported on Schedule  C (Profit or Loss from Business). This income will qualify for the foreign earned income exclusion of $91,500 if your business is located in a foreign country and you are either a bona fide resident or meet the physical presence 330 day test. (Form 2555).

Read more...

Search