Filing a US tax return

Finance, Taxes, Banking, Insurance and Retirement
21
If one is abroad more than a year(filed tax return with foreign address once), it is automatically extended to June 15th, don't need to file any form for that, is that right? Thanks.

22
It is not beneficial to take the foreign earned income exclusion (FEIE) if your foreign effective tax rate is higher than the US effective tax rate on the excluded income.

That being said, if you have previously taken the FEIE previously, and now choose not to take the FEIE (because by not taking it you lower your tax liability), this is considered an revocation of the election to take the FEIE.

When you choose to revoke the election, a statement needs to be attached to the return to indicate so.

On top of this, if you choose to revoke, you may not re-elect to take the FEIE for another 5 tax years following the year of the revocation.

http://www.irs.gov/businesses/small/...=97026,00.html

Revoking the FEIE is ideal if you are in a high tax jurisdiation (i.e. foreign effective tax rate on FEIE > US effective tax rate on FEIE), and have no plans to move to a low tax jurisdiction (Middle East, Hong Kong, Singapore, etc) in the forseeable 5 tax years.

At least in Switzerland, since different cantons apply different tax rates, it is generally not easy to determine a generic effective tax on the FEIE. Suffice to say, someone in Canton Geneva or Vaud will certainly pay more tax on the same income as compared to someone in Canton Schwyz or Zug. Just as a hypothetical example, someone in Vaud earning CHF 300,000 may want to revoke the FEIE, against someone in Schwyz who earns CHF 400,000 will not find it beneficial to revoke the FEIE. It is all in the effective tax rates.

Just out of my own curiosity, I did a check of the US effective tax rates on the FEIE which is $91,400 for tax year 2009:

Filing Single -

Tax on $91400 is $19,319, Effective Rate: 21.13%

Filing Married Filing Joint -

Tax on $91400 is $15,231, Effective Rate: 16.66%

Tax Tables: http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

23
Just write "Taxpayer Abroad" on the top of your Form 1040. It means you were abroad per the April 15 Filing deadline, and will qualify for the auto 2 month extension.

If you need more time beyond June 15, then file Form 4868 to extend it to October 15.

24
I've seen many expats mentioned efile using turbo tax, tax act, etc. for their 2555. Does anyone have any feed back on the Free File fillable forms offered on the irs website? ( http://www.irs.gov/efile/article/0,,id=118986,00.html )

25
Make life easy and don't even mention the income you earned in Switzerland. There is no way they will know, and believe me the IRS has much better things to do than chase after little fish.