With Backpack

One World in One Lifetime


First a declaimer.

I am not a tax specialist. I just file my own taxes every year. This is how I do, because this is how the guy at the IRS office I called one year told me to do it.

You should call an IRS guy yourself to make sure everything I say is correct. The toll-free number is 1-800-829-1040. If you’re not in the states there is no toll-free number, but here the international number to call; 1-267-941-1055. If you are lucky enough to live in certain cities there is a local number there for you to call. Here is the link.

The example here is for working in 2010 and filing in 2011. I’m not going to re-do everything every year. I will only update things if the laws or procedures change. So, please mentally add the appropriate amount of years to the example you need for this year. But, the links to the form are fine, because the IRS updates them to the current year.

Here is what I do each year as an ESL teacher.

Step 1: File for the part of the year I worked in the states.

If I haven’t worked at all in the states, then I can skip this step.

But, let’s say my job in Asiaopolis started in August 2010 and I worked at Coffebucks in Amaricaville until July 2010. I will file my taxes, using Form 1040 for tax year 2010 and state that it will cover from January 2010 to July 2010 then get an extension for the rest of the year.

I will file everything like I would normally, but with the January to July time frame. I will choose to leave all the information about investment income and student loan refunds until I file again later in the year, since neither the income nor the refund are very high and it would just make everything confusing. Then I will print out this form, sign it, and mail it in to the address that is appropriate for my state.

Of course I will keep a copy of everything I mail for my own records.

Step 2: Change my address

If the IRS doesn’t already have my new foreign address, I will need to fill out Form 8822. If they do because I’ve filed from overseas last year then I can skip this step.

Normally filling my taxes would inform the IRS of any address change, but I cannot do that since I have either changed countries in the middle of the tax year, or since my last filing.

I will mail this to the address given on the form appropriate for my new address and/ or ex-state.

Of course I will keep a copy of everything I mail for my own records.

Step 3: Get an extension.

On this form above I will tell the IRS that my 1-year contract started on August 1, 2010 and will end on Aug 1, 2011. If everything goes well, I will receive a letter in the mail with the stamp and signature of an IRS agent telling me that I have 3 months after August 1, 2011 to file for my contract year.

I will then fill out another 1040, along with other forms I will talk about later.

For my next year living in Asiaopolis, filing in 2012, I will need to ask for another extension. My 2011 tax year will begin on August 1, 2011 and end on August, 1 2012.

Here’s what I do:

  • Print out form 4868. I will fill in out then print it. I will use the instructions to fill out the form. I only need to print the first page. The rest are instructions.
  • The IRS e-file may or may not work for you.
  • If I need more help, I will use these additional instructions.
  • Write in the dates. At the top of the form near the year, I will put in the tax year as my contract defines it. (ie Aug 1, 2010 – Aug 1, 2011).

Step 4: Filing for my contract year

Now I will get together all the items on the list below.

  1. All my pay stubs for my contract year of working abroad.
  2. The extension approval that was mailed back to me.
  3. a copy of my partial year that was filed in step 1 of this blog if I did step 1.
  4. All the tax forms that I got from your bank, student loan company, and investment firms.
  5. My passport and or alien registration card

I don’t really need to have #2 and #3, but I like to send in a copy of these forms, with the word “copy” written across the page in red ink, just to make things work more smoothly.

Then I fill out Form 2555. To calculate my foreign income, I have to use my pay stubs. I will take all the money I earned, before local taxes, health care, and pension are taken out. Then I have to convert that into U.S. dollars on the day I was paid. I use an online currency converter with a historical look up.

I will do this 12 times, once for each pay sub. Then add all of that together for the total. You do not have to mail in your pay stubs. But you might want to keep a copy of them in case you get audited. Though, if you are an ESL teacher you are not making enough money to warrant an audit. But, better safe than sorry.

Somewhere in the Form 2555 it asks for a copy of the visa which you use to work in the foreign country. It may also ask for a copy of your alien registration card too.

Then I fill out Form 1040. The Form 1040 is the same form I filled out in step 1, if I did step 1, but it is a new blank form. This one will cover the dates August 1, 2010 to August 1, 2011.

Assuming you didn’t make more that $91,500 in foreign eared income, you will only be taxed on interest you earned from money you have sitting in your US bank accounts and other types of US income you may have, if they are high enough to be taxed.

Print all this stuff out, sign it, keep a copy of everything, and mail off the originals to the address given on the form.

That’s it!


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