M
MGAP
I am filing for U.S. income taxes for year 2001.
I am a U.S. citizen who was a resident of a foreign country between 1993
and 2001.
In that year (end of June 2001), I was forced by the State Department to
return to the United States (to pay a legal debt), and became a resident
once again of the United States.
In the first half of 2001, I earned about $4950 in the foreign country,
paying $550 in foreign income tax (not total taxes, just tax called an
"income tax").
In the last half of 2001 as a U.S. resident, I earned only $1975 and paid
$25 in federal withholding and nothing in state withholding.
The question is whether I can use Form 2555 (or its variants) to exclude
the $4950. There are several tests that qualify a U.S. citizen taxpayer
for excluding this income.
One is the physical presence test. I don't think I meet that since I did
not live abroad more than 6 months.
The other is the bona fide residence test. For more than 8 years, I was
truly living abroad and earning all income abroad. Indeed, I only
visited the United States once (for about a month) in one year that I was
there. So for 2001, am I a bona fide resident of the foreign country, or
of the U.S.
The next test is the tax home test. If you change your tax homes in the
middle of a tax year, who has the larger claim?
I'd appreciate some opinions on this.
I can probably complete Form 1116, but that is a weaker claim to the
exclusion of income taxes paid, and does not acknowledge that I really
was a resident of a foreign country during the first half of the year,
and changed residence (or did I??) in the latter half.
I am a U.S. citizen who was a resident of a foreign country between 1993
and 2001.
In that year (end of June 2001), I was forced by the State Department to
return to the United States (to pay a legal debt), and became a resident
once again of the United States.
In the first half of 2001, I earned about $4950 in the foreign country,
paying $550 in foreign income tax (not total taxes, just tax called an
"income tax").
In the last half of 2001 as a U.S. resident, I earned only $1975 and paid
$25 in federal withholding and nothing in state withholding.
The question is whether I can use Form 2555 (or its variants) to exclude
the $4950. There are several tests that qualify a U.S. citizen taxpayer
for excluding this income.
One is the physical presence test. I don't think I meet that since I did
not live abroad more than 6 months.
The other is the bona fide residence test. For more than 8 years, I was
truly living abroad and earning all income abroad. Indeed, I only
visited the United States once (for about a month) in one year that I was
there. So for 2001, am I a bona fide resident of the foreign country, or
of the U.S.
The next test is the tax home test. If you change your tax homes in the
middle of a tax year, who has the larger claim?
I'd appreciate some opinions on this.
I can probably complete Form 1116, but that is a weaker claim to the
exclusion of income taxes paid, and does not acknowledge that I really
was a resident of a foreign country during the first half of the year,
and changed residence (or did I??) in the latter half.