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melissa-vanduzer
New Member

Do I need to file US taxes if I am living in Germany and working for a German company?

I am not married, filing as Single. I pay German taxes.

9 Replies
DS30
New Member

Do I need to file US taxes if I am living in Germany and working for a German company?

It depends.

No - if you are a nonresident alien. However, if you are a nonresident alien and have US source income, you would need to file a Form 1040NR. Form 1040NR is not supported by TurboTax. Here is a link to the IRS website for Form 1040NR, U.S. Nonresident Alien Income Tax Return. Click this link for more information from the IRS on US Tax Guide for Aliens

Yes - if you are a US citizen or resident alien (or you elected to be treated as a US citizen for US tax purposes in a prior year and that election has not been revoked).

If you are a US citizen or resident alien, you are required to file a US federal income tax return to report Worldwide income (in USD). Use this IRS link for more information about US Citizens and Resident Aliens Living Abroad

The Internal Revenue Service has no official exchange rate. The IRS will normally accept any posted exchange rate that is used consistently. You can translate the foreign currency to U.S. dollars using the yearly average currency exchange rate for the tax year.  In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item. Please refer to the following IRS links for more information about Foreign Currency and Currency Exchange Rates and Yearly Average Currency Exchange Rates

Since you live outside the US, if you meet the Bona Fide Residence Test  or the Physical Presence Test , you will be able to claim an IRS - Foreign Earned Income Exclusion  that would exclude a portion of your foreign source income (up to $101,300 for 2016). You may also be able to take advantage of the foreign housing deduction .

To enter your foreign earned income in TurboTax, log into your tax return  (for TurboTax Online sign-in, click Here)and type "foreign earned income" in the search bar then select "jump to foreign earned income". (Alternatively you can get to this section under Federal Taxes> Wages and Income>I'll choose what I work on (or jump to full list or see more income)> Less Common Income (show more)> Foreign Earned Income and Exclusion). TurboTax will guide you on entering this information.

You will be allowed an automatic 2-month extension if you are a U.S. citizen or resident alien and on the regular due date of your return:

  • You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or
  • You are in military or naval service on duty outside the United States and Puerto Rico

The IRS notes that even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. So this 2-month extension only allows you to escape late filing penalties. You will need to attached a statement to your federal income tax return that states which of these 2 reasons you are claiming as your reason for the 2-month automatic extension

If the April 15th (April 18th for 2017) deadline is approaching and you feel that you will need more than 2 months or just to be on the safe side, you can always file a 6-month extension using form before the original tax return deadline.

Use this link for more information about Filing for a 6 month extension in TurboTax  

Having a US mailing address will not affect your claim for the automatic 2-month extension but it may have an effect on state tax issues if you maintain a residence in the US while you are abroad.

You can get an extension of time to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. The tests, the exclusions, and the deduction are explained in Foreign Earned Income Exclusion.

You should request an extension of time to file if all three of the following apply:

  • You are a U.S. citizen or resident alien,
  • You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due, and
  • Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.

Generally, if you are granted an extension, it will be to 30 days beyond the date on which you can reasonably expect to qualify under either the bona fide residence test or the physical presence test. However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension to 90 days beyond the close of the year following the year of first arrival in the foreign country. You may file Form 1040 any time before the extension expires.

How To Get An Extension

To obtain an extension, you should file Form 2350, Application for Extension of Time To File U.S. Income Tax Return, with the Internal Revenue Service office as specified in the instructions for Form 2350

Please note : If you have foreign bank accounts, you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) if are a US citizen or resident and::

  1. you had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

To be directed to the US Treasury Government Website to prepare a Report of Foreign Bank and Financial Accounts, click FBAR (TurboTax does not support this form)


feiwenw66563
Level 1

Do I need to file US taxes if I am living in Germany and working for a German company?

@DS30 This is very helpful.

I am US citizen and working for Germany company for entire year. I am paying all expenses by myself. Besides FEIE, any other expenses which I am able to deducted for the earnings which is over the FEIE limit? Thanks

ErnieS0
Expert Alumni

Do I need to file US taxes if I am living in Germany and working for a German company?

@feiwenw66563 You can claim a foreign tax credit or deduction on earnings over the foreign earned income exclusion limit.

 

You may be able to claim a foreign housing exclusion or deduction.

 

Related Reference:

feiwenw66563
Level 1

Do I need to file US taxes if I am living in Germany and working for a German company?

@DS30 @ErnieS0 currently my foreign employer contributed and matched the same amount which I contributed to the foreign retirement plan 2 times a year. Do I need to file form 3520 for the foreign retirement plan? Thanks

DaveF1006
Expert Alumni

Do I need to file US taxes if I am living in Germany and working for a German company?

According to the IRS instructions for form 3520, Tax Form 3520 is an informational form you use to report certain transactions with foreign trusts, ownerships of foreign trusts, or if you receive certain large gifts. This is not the case with your foreign employer contributions. 

 

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feiwenw66563
Level 1

Do I need to file US taxes if I am living in Germany and working for a German company?

@DaveF1006 Thanks it is helpful. I just want to confirm the pension that both my employer and myself are contributing to, does not require me to file the form 3520. Correct?

DaveF1006
Expert Alumni

Do I need to file US taxes if I am living in Germany and working for a German company?

Yes, this is correct because their contribution is not considered a gift.

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feiwenw66563
Level 1

Do I need to file US taxes if I am living in Germany and working for a German company?

I am employed by a Germany company and I am not retired yet. Each year I contribute to my Foreign pension and my employer also contribute/match the same amount. Does the employer contribution amount taxable in the US as part of my income? 

Thanks

DaveF1006
Expert Alumni

Do I need to file US taxes if I am living in Germany and working for a German company?

 Are you employed inside the US or in Germany?

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