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I'm a US citizen, living and working in China (for 5 mo. now), what do I need to know to file my taxes properly?

I am paid in yuan. I am single with no dependents. I am filing as an individual. I would like to file via e-file if possible.
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3 Replies
Fern
New Member

I'm a US citizen, living and working in China (for 5 mo. now), what do I need to know to file my taxes properly?

As  a US citizen, you are responsible for reporting your worldwide income on your US tax return.  You are required to file taxes on foreign income even if you pay taxes in the host countries.

You will report your income in US dollars. See https://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates for help with the translation rate.

Tax breaks you may qualify for include:

Foreign Earned Income Exclusion - An American living and working abroad can exclude foreign-earned income up to $100,800 as of 2015 from U.S. taxation. To qualify, you must have lived outside the United States for 330 days in 12 consecutive months.

Foreign tax credit - You are allowed a credit for taxes paid to a foreign country.  It is calculated by subtracting the lower tax rates (US or Foreign rate) from the higher.  You pay only the higher of the two tax rates, split between the two countries.

See https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/Filing-Taxes-While-Overseas/INF19130... and https://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad for more information.

You will report this income in the Foreign Income section of Turbo Tax.  You can select " a statement from my foreign employer (could be cash)" as the source of your income.

To report Foreign Income:

Select Federal Taxes
Select Wages and Income
Scroll down and select Show More at Less Common Income
Select Start at Foreign Earned Income and Exclusion

You currently do not meet the residency requirements for foreign income exclusion.  You should consider filing for an extension so you can meet the requirements for foreign income exclusion.  See https://www.irs.gov/Individuals/International-Taxpayers/Extension-to-Claim-Foreign-Earned-Income-Exc... for more information.

Depending on the extension, you may still be able to efile.  E-file for 2015 will end October 15, 2016.
Taxjinhe
Returning Member

I'm a US citizen, living and working in China (for 5 mo. now), what do I need to know to file my taxes properly?

Thanks. I followed these steps, but ended up taking partial credit and paying some tax on High-Tax Income from China which was taxed at 45%. How to fix this?

 

Thanks!  

JL

DaveF1006
Expert Alumni

I'm a US citizen, living and working in China (for 5 mo. now), what do I need to know to file my taxes properly?

To clarify, what do you mean by a partial credit? Was there some foreign income you excluded?

 

@Taxjinhe

 

 

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