This article is an attempt to clarify how to file United States taxes on foreign earned income. The IRS has never specialized in clarity and intelligibility; in fact, I sometimes wonder if they get some perverse delight in obscuring rules. To be able to use these instructions, you'll need to have made less than $70,000 in a year and spent a tax year (or 330 consecutive days), in foreign countries. Oh, and don't panic! Working overseas you automatically have a two-month extension for filing, so June 15 is your deadline. 

Let me make a disclaimer early on: this article is a product of my filing for 1996 taxes. Any questions on strange exemptions should be referred to the IRS or their materials. I have tried to verify all my information, but please feel free to double-check it yourself. My major was in psychology and theater, not tax law.

 Most filers will need Form 1040 (to file basic taxes), Form 2555-EZ (to file foreign earned income), and possibly Form 2350 (to get an extension of your filing date). When I called the embassy and asked for tax information they sent me Publication 54, which doesn't contain a 1040 but an estimated 1040, which isn't what most of us want. You'll have to request all three forms by number.

 Publication 54 has two basic elements: The Foreign Housing Exclusion-Deduction (FHE-D) and the Foreign Earned Income Exclusion (FEIE). The FHE-D allows you to deduct money you've spent on housing from your total earnings. So if you've earned $75,000, but can deduct or exempt $7,000 for payments on housing utilities or the like, then you can qualify for the FEIE. I have yet to meet an expatriate making this kind of salary, so there's no point in filling out the FHE-D. Proceed straight to your 2555-EZ.

 To qualify for the Foreign Earned Income Exclusion (FEIE), you'll need to have been out of the US for an entire tax year (January to December), or have been out for any period of 330 days. Travel days don't count, so it's from when you arrived in the foreign country. My foreign tax year is from July 13, 1996 (the day I arrived in Korea), to June 7, 1997 (330 days from when I entered the country). On Form 2555-EZ you'll determine how many days you've been out of the US in 1996, and divide that number by 366. Now you know the percentage of the time you were out of the country. Multiply this percentage by $70,000, and you have your total allowable deduction. Unless you're making more than $5,833 dollars a month from taxable income you'll receive the FEIE. You won't need to file a 2555 (as opposed to a 2555-EZ), unless you're claiming housing deductions or exemptions. The 1040 Form is simple to fill out. Income earned in the US goes on line 7. Income earned in foreign countries that's tax exempt goes in parenthesis on line 21. Note to the side to see Form 2555-EZ. You cannot use the 1040-EZ Form, since there's no space available to list your Foreign Earned Income Exclusion.

 Now, according to the IRS, I wouldn't file my 1996 taxes until I've passed the 330-day residency requirement. That means I won't file my taxes until June. Someone who arrived in Korea in November of 1996 won't file until September of 1997. That person will have to file for an extension of time to file using Form 2350. Remember that you have an additional 2 months automatically extended, so you don't have to file until June 15. 

There's a lot of information available on the WWW. You can download forms from the IRS's web site. Their address is .

 You can also ask questions by e-mailing to , 
but make sure to include your e-mail address.

 This address is for general tax questions, not for questions about your specific return.

 The US Consulate in Pusan can be reached by telephone at (051) 246-7791 or by fax at (051) 246-8859.
They have all the appropriate tax forms, but they prefer people to come in and get them.
They've mailed them to me when I've asked nicely (but firmly), though they're a little resistant to doing so. Unfortunately there won't be someone coming from Japan to assist with our taxes; this service has been cut due to budget cuts. 

Best of luck (and clear reasoning), as you file your taxes.
Next month will bring information for my Canadian comrades.
May 1997 prove to be a profitable year, and may you be exempt from any taxes on those profits.