IRS Issues Updated US Expatriate Tax Guide

The Internal Revenue Service (IRS) has released the 2015 update to Publication 54, which provides guidance on the special tax compliance rules for US citizens and resident aliens who work abroad or receive income from foreign countries.

The worldwide income of US citizens or resident aliens is generally subject to US income tax, regardless of where they are living. They are subject to the same income tax filing requirements that apply to US citizens or resident aliens living in the United States. Expat tax provisions apply to US citizens who have renounced their citizenship and long-term residents who have ended their residency.

Noting updates since the 2014 edition, the IRS said that the maximum foreign earned income exclusion, which is adjusted annually for inflation, increased to USD100,800 for 2015. In addition, the base housing amount is USD44.19 per day (USD16,128 per year).

For 2015, 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 USD118,500, and an individual retirement account deduction may be taken if the taxpayer was covered by a retirement plan and had 2015 modified adjusted gross income of less than USD71,000 (USD118,000 if married and filing jointly or a qualifying widow(er)).

The publication also reminds taxpayers that if they claim the foreign earned income exclusion or the housing exclusion (or both), they must calculate the tax on their non-excluded income using the tax rates that would have applied had they not claimed the exclusions.