If you are a U. S. citizen working for the US Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. You are taxed on your worldwide income, even though you live and work abroad. However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States. This page explains:
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Many of the allowances, reimbursements, and property sales you are likely to have, and whether or not you must report them as income on your tax return
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Many of the expenses you are likely to have, such as moving expenses and foreign taxes, and whether or not you can deduct them on your tax return
U.S. possessions. This page does not cover the rules that apply if you are stationed in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or Puerto Rico. That information may be found in Individuals Living in U.S. Possessions.
Foreign Income
If you are a US citizen or resident with income from sources outside the United States, you must report all that income on your U.S. tax return unless it is exempt by US law. This applies to earned income (such as wages) as well as unearned income (such as interest, dividends, and capital gains).
Foreign Earned Income Exclusion And Foreign Housing Exclusion And Deduction
Certain taxpayers can exclude or deduct income earned in foreign countries. However, the foreign earned income and housing exclusions and the foreign housing deduction do not apply to the income you receive as an employee of the US Government.
U.S. Agency Reimbursed By Foreign Country
If you are a US Government employee paid by a US agency to perform services in a foreign country, your pay is from the US Government and does not qualify for the exclusions or the deduction. This is true even if the US agency is reimbursed by the foreign government.
Employees Of Post Exchanges, etc.
If you are an employee of an Armed Forces post exchange, officers' and enlisted personnel club, embassy commissary, or similar instrumentality of the US Government, the earnings you receive are paid by the US Government. This is true whether they are paid from appropriated or nonappropriated funds. These earnings are not eligible for the foreign earned income and housing exclusions or the foreign housing deduction.
Other Employment
If you are a US citizen or resident employed abroad by the US Government and you also receive income from a private employer or self-employment, you may qualify to claim the exclusions or the deduction applicable to this other income. To qualify, you must meet either the bona fide residence test or the physical presence test. Your spouse who is a US citizen or resident alien may also qualify if he or she earns income in a foreign country that is paid by a private employer or is from self-employment. If you are not a U.S. government employee, amounts paid by the United States or its agencies to you may also qualify for the exclusions or the deduction. Refer to Foreign Earned Income Exclusion.
Allowances, Differentials, and Other Special Pay
Foreign Service
For more information on the foreign earned income and housing exclusions and foreign housing deduction, see Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad.
References/Related Topics
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