I have a tax question

[April]

One of the usual ones that plague mil. members and their families. Quite often, our legal and tax status is not clearly defined, therefore very confusing.

So here's the situation. I am working for a Canadian company, in Germany, and paid in Euros to a German bank account. No taxes are taken out, and I don't think the income is even reported to the US government. Should I even bother to claim this on federal income tax forms? I was told when hired that it was tax free for Americans. Not so for the Canadians.

Any help would be appreciated. Thank you.

 

[KillerMuffin]

Every US military base in the world offers free tax preperation service. They deal with things like this all the time. Check with them and don't prepare your taxes by yourself. Why? Because if they fuck it up they pay for it, not you. You'll just have to pay any taxes owed without penalty because it's not your fault.

 

[Weird Harold]

The first link is rules for armed forces personnel and the second is rules for foreign earnings.

http://www.irs.gov/pub/irs-pdf/p3.pdf

(From page 5)
"Foreign Source Income
If you are a U.S. citizen with income from sources outside
the United States (foreign income), you must report all of
that income on your tax return unless it is exempt by U.S. law.
This is true whether you reside inside or outside the
United States and whether or not you receive a Form W–2,
Wage and Tax Statement, or a Form 1099 statement from
the foreign payor. This applies to earned income (such as
wages and tips) as well as unearned income (such as
interest, dividends, capital gains, pensions, rents, and royalties)."

"Other foreign income earned by military personnel or their spouses may be eligible for foreign earned income exclusion. For more information the exclusion, get Publication 54."

http://www.irs.gov/pub/irs-pdf/p54.pdf

I didn't search out the exclusion rules in the second link. If I remember correctly, you need to file form 1040 instead of 1040a and report the foreign income which is promptly excluded.

The net effect is the income isn't taxable, but it is reportable.

 

[KillerMuffin]

Weird Harold is a genius, of course.

 

[Weird Harold]

Weird Harold is a genius, of course.

Not really, just unfortunately experienced in the quirks of the IRS/Military interface.

Out of 21 plus years in the USAF I spent nine of them overseas.

You made a very good point about the tax assistance office on base. Although they aren't liable for mistakes as you assume, they are thoroughly briefed on tax problems that are usual in that locale.

 

[April]

Errm. Thanks Weird Harold. Now I just have to figure out where they're hiding.

As people say around here, "It's in the green building, you can't miss it."

All the buildings are green.