I have a couple of questions regarding taxes if anyone can?

Background:

We are filing a 1040 joint return
1 x Citizen, 1 x Resident (Greencard)
Both worked in 2006 in US
I worked in the UK for 2 months at the beginning of 2006

1) Should I be filing a 2555EZ? The amount earned would be less than $82,400, but it says the amount of foreign earned income must be added to line 7. Is this correct?

2) Can I claim for interest on my UK student loan? Does it have to be taken out for attendance to a US university only?

Thanks in advance!

Yorkie

I do not know the definitive answer but logic would indicate that foreign interest is limited to the amount of foreign income being taxed. If foreign income is being excluded... then guess what... so would foreign deductions...

Just my $0.02

Anyone filing a 2555ez?

I arrived Sept 2004 so for that tax year filed married jointly we completed the 2555EZ. I created a simple spreadsheet to show my wages (Date - Wages- $ excgange rate ot from web for date paid - and $ total ) and attached this with my filing too. The amount effectively gets added and subtracted cancelling itself out. That first year we also included a letter srting that I wished to be treated as a resident for tax purposes signe dby us both.. Good luck

HI,

I just went through the nightmare of this. My understanding was that the 82400 exemption was based on the whole year and that you had to apportion it accordingly. Year one taxes are probably going to be the hardest you can do!

1) You cannot use the 2555EZ as you were not outside of the US for the entire year. You have to use Form 2555 to apportion the $82,400 for the time you were actually a non-resident of the US. A word of caution... Check out the Substantial Presence Test... Due to your time in the US in 2006, you as the USC may not meet this test if you spent a certain amount of time in the US in 2004 and 2005. If you meet the substantial presence test, you will not be able to exclude the amount that you made in the UK in 2006. However, you will be able to either take a Foreign Tax Credit on the tax that you paid to the UK or request a refund of your taxes paid in the UK in 2006 based on the provisions of the US/UK Tax Treaty and pay the taxes on that income to the US by April 17. I doubt that your spouse spent a significant amount of time in the US before her arrival to be with you, so I am assuming that this provisions does not apply to her.. She should be able to use the 2555 to exclude her income...

2) Student Loan Interest is only deductable if it was generated from a Post-Secondary Education Loan Program approved by the US Department of Education.