American citizen in France
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How do I report foreign wages for an American citizen who resides in France and Maryland?
Answer
American citizens report world wide income on Form1040, Many people use Form 2555 to take exclusions and deductions for foreign wages if they qualify and meet the tests..
Answer
You would complete a normal Form 1040 and related schedules to include the foreign income
Answer
Also keep in mind that if the taxpayer does not qualify for the exclusion, then a foreign tax credit can most likely be claimed. If he or she qualifies for both then choose the benefit that best fits the client's needs. This is not always the choice that provides the greatest tax benefit this year. For example, the election to take the FEI exclusion this year will remain in effect for this year and all subsequent years unless revoked with IRS approval and an unused FTC can be carried back 1 year and forward 10 years to offset any "excess limit in those years". See publication 514 and 54 and the instructions for form 2555.
It might also not be a bad idea to take a look at the tax treaty between the U.S. and France (http://www.irs.gov/pub/irs-trt... to determine if there are any special provisions.
I personally know very little about Maryland tax law, but I would certainly determine how and if taking a FEI exlcusion or FTC affects that return.
Comment
Peter, great answer, precise and to the point. I would give you many points, if I could.