Basics: Tax Terms Simplified
Tax Guides: First Year | Second to Fifth Year WIP
|First Year||8822 Change of Address||4868 Extension|
|All Years||1040 Tax Form
|2555EZ Foreign Earned Income
- My parents claimed me as a dependent. How will this affect the way I file? Will I still be a candidate for the foreign earned income exclusion?
- Is there any sort of confirmation from the IRS that they received the 8822 form? What about other forms?
- Are figures to be written in yen on the tax forms (2555ez, 1040, 4868)?
- Do we factor in how much we paid for social insurance (from the gensen choshuhyo) when we list our Japanese income?
- Does the gensen choshuhyo we submit have to be the original?
- Do I have to file state taxes if I didn’t work in the US last year?
- Do I have to enter exact amounts (dollars and cents) on the tax forms? Is it okay to round?
- Can I fill out the 1040ez instead of the 1040?
- I didn’t make ANY money in the US last year. Do I still need to file?
- I told my parents not to file a tax return for me, but they did. I have not filed my 2555EZ yet…
- Is gross income the wages from my W-2 from my previous job, plus what I earned in Japan?
- Does this need to be postmarked by the 15th, or AT the IRS by October 15th?
- Do we need to file the 8822 Change of Address Form in order to receive the automatic extension until June 15th?
- Do you recommend certain types of envelopes to use when sending the forms?
Q. My parents claimed me as a dependent. How will this affect the way I file? Will I still be a candidate for the foreign earned income exclusion?
A. You will still need to file the same forms (8822, 4868, 2555ez and 1040), and yes, you will still be eligible for the foreign earned income exclusion (see 2555ez). The main differences in the way you file will arise on the 1040, Lines 6a, 6d and 42. If someone else claimed you as a dependent, then you cannot check the box on Line 6a. This means that the total number of exemptions you claim on Line 6d will be different from the 1040 example we provided. Line 42 will also vary depending upon the number of exemptions you claim on Line 6d.
Q. Is there any sort of confirmation from the IRS that they received the 8822 form? What about other forms?
A. You will not receive any confirmation from the IRS regarding receipt of the 8822 or any other tax forms. You may receive a notice if the information is incorrect or insufficient.
Q. Are figures to be written in yen on the tax forms (2555ez, 1040, 4868)?
A. No. All figures entered on US tax forms should be in US dollars. Change the yen amounts to dollars using the Federal Reserve’s annual foreign exchange rates: http://www.federalreserve.gov/Releases/G5A/Current/
Q. Do we factor in how much we paid for social insurance (from the gensen choshuhyo) when we list our Japanese income?
A. No, it is sufficient to just list your net salary.
Q. Does the gensen choshuhyo we submit have to be the original?
A. No, a copy of the original will be sufficient.
Q. Do I have to file state taxes if I didn’t work in the US last year?
A. This will vary depending upon your state. Try contacting the state’s tax agency if you’re having trouble finding information about a specific state. Most state tax agencies have email inquiry services through which you can ask questions.
Q. Do I have to enter exact amounts (dollars and cents) on the tax forms? Is it okay to round?
A. Yes, round away! According to the 1040 instructions, “You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.” (1040 Instructions, page 21 Rounding Off to Whole Dollars)
Q. Can I fill out the 1040ez instead of the 1040?
A. Sorry, you have to fill out the regular 1040 in order to get the tax exclusion on your foreign earned income. Passing the Physical Presence Test on the 2555ez is what gets you the foreign earned income exclusion, which keeps your Japanese income untaxed; however according to the 2555ez Instructions, you cannot file a 2555ez together with a 1040ez. You will need to file a regular 1040 in order to file the 2555ez. And if you don’t file the 2555ez, then you will have to pay US taxes on your Japanese income.
Q. I didn’t make ANY money in the US last year. Do I still need to file?
A. Yes. You need to file and report your foreign-earned income. The numbers on your 1040 may differ from examples if this is the case. The main difference will be on Line 7, where you will report only your Japanese income, which is the same number you put on Line 21. These two numbers will cancel each other out and give you a total income of “0” on Line 22.
Q. Despite all the times I told my parents not to file a tax return for me, they did. I have not filed my 2555EZ yet, and I was told by the IRS to file an Amended 1040 (Form 1040X). Since our Japanese income is excluded however, there is no net change in my adjusted gross income. I’m not sure how to represent my Japanese income on the 1040X?
A. It’s recommended you fill out a normal 1040 and 2555ez according to the advice above, and attach these with a brief typed explanation to your 1040X. This way you will be able to both show and explain the amended 1040. Consult with an accountant however if one is available to you.
Q. Is gross income the wages from my W-2 from my previous job, plus what I earned in Japan?
Yes, your gross income (or “total income” on the 1040) is the sum of your W-2 total income and your total income in Japan. This is entered on Line 22 of the 1040.
Q. Do you know if this needs to be post marked by the 15th or at the IRS by October 15th?
It is recommended that you send it to arrive at the IRS by October 15th, though it is likely that no penalties will be assessed unless you owe taxes (in which case interest will begin to accrue following the April 15th deadline).
Q. Do we need to file the 8822 Change of Address Form in order to receive the automatic extension until June 15th?
In order to receive the automatic two-month extension to June 15th (this is granted to citizens living abroad at the April 15th deadline), you must attach a statement to your 1040 filing stating and showing that you are living abroad. Submitting the 8822 Change of Address Form in advance sort of works as proof that you are residing abroad. You may be able to receive the two-month extension without submitting the 8822, but the IRS recommends that tax-payers who change their address submit the 8822 so that the IRS will have a correct address to send forms and such in the future.
Q. Do you recommend certain types of envelopes to use when sending the forms?
A regular manila envelope should be fine. Since the tax return does contain private information, though, it may be best to send it by non-standard post.
Q. I returned to the US on two occasions last year for more than 35 days total and don’t have enough days (330 needed) to qualify for the physical presence test. What can I do?
A. The cool thing about the 2555ez form is that the Physical Presence Test (the 330 day rule thingee) doesn’t have to be for the one year period from Jan 1 – Dec 31, 2013. The one year period just has to start or end during 2013. So when you enter the dates on Part I, 2(b), enter dates that will give you at least 330 days (in Japan) in a one year period that begins or ends in 2013. For example, you could take out a December trip home and list the dates something like Dec 1, 2012 – Nov 30, 2013. If this doesn’t give you 330 days, then you’ll have to try dates around your other trip home. This will give you fewer days in the qualifying period that fall within 2013 Part IV, Line 14. However, because the exclusion is for up to $92,900, as long as you have more than 180 days or so in the qualifying period for 2013, you should still get the full exclusion…sound confusing? Feel free to email or call with help on this one.
Q. On the 2555ez do I qualify for the exemption under the Bona Fide Resident Test or the Physical Presence Test?
A. You may qualify for the Bona Fide Resident Test, but the qualifications for this test are vague and difficult to understand. You will qualify for the Physical Presence Test like you did last year, so I recommend you use this qualification and not bother with the Bona Fide Resident Test.
Q. Should I be looking to get a Statement of Earnings from my BOE/school before I leave?
A. Yes, make sure you get a Statement of Earnings (Gensen Choshu Hyo) and take it home with you.
Q. I left Japan last year. Do I need to include my Japanese income when I file this year? If so, how do I do so? (Question from former JET)
A. Yes, you need to include all your income, both foreign and domestic-earned. You can include your Japanese income by using the 2555ez form again. You will still more than likely qualify for the Physical Presence Test and the foreign earned income exclusion. In order to qualify for this, you must have been “physically present in a foreign country or countries for at least 330 full days during (1) 2013 or (2) any other period of 12 months in a row starting or ending in 2013.” Set the dates on Line 2b so that they either start or end in 2011 and include 330 days that you were present in Japan. For example: August, 2012 to July 2013. You will need to attach a copy of your gensen choshuhyo (statement of earnings). Contact your former BOE/school if you no longer have this for the tax year in question.
You should also file the 8822 (Change of Address) form again to inform the IRS of your address change. This can be filed at any time during the year. You will not need to file the 4868 extension request form, though you may do so if you want an extension.
Many thanks to Kumamoto JET.