IRS Publication 516
IRS Publication 516 is a document published by the Internal Revenue Service (IRS) that details the income tax requirements for United States citizens working for the government in a foreign country. Those working in territories considered U.S. possessions — Puerto Rico, American Samoa, the Virgin Islands, and the Commonwealth of the Northern Mariana Islands — are not subject to the guidelines in IRS Publication 516, and should use IRS Publication 570 (Tax Guide for Individuals with Income from U.S. Possessions). If you are a U.S. citizen working for the U.S. Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. This publication explains: Many of the allowances, reimbursements, and property sales you are likely to have, and whether you must report them as income on your tax return, and Many of the expenses you are likely to have, such as moving expenses and foreign taxes, and whether you can deduct them on your tax return. Only Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses can deduct certain expenses such as travel expenses, and other expenses connected to your employment. IRS Publication 516 is a document published by the Internal Revenue Service (IRS) that details the income tax requirements for United States citizens working for the government in a foreign country.
What Is IRS Publication 516?
IRS Publication 516 is a document published by the Internal Revenue Service (IRS) that details the income tax requirements for United States citizens working for the government in a foreign country. Tax rules applying to U.S. citizens working abroad are fairly similar to those followed by citizens working at home, though some expenses are treated differently.
The usual filing date for a U.S. tax return is April 15th.
Understanding IRS Publication 516 (U.S. Government Civilian Employees Stationed Abroad)
U.S. citizens are taxed on their worldwide income. Those working in territories considered U.S. possessions — Puerto Rico, American Samoa, the Virgin Islands, and the Commonwealth of the Northern Mariana Islands — are not subject to the guidelines in IRS Publication 516, and should use IRS Publication 570 (Tax Guide for Individuals with Income from U.S. Possessions).
If you are a U.S. citizen working for the U.S. Government, including the foreign service, and you are stationed abroad, your income tax filing requirements are generally the same as those for citizens and residents living in the United States. You are taxed on your worldwide income, even though you live and work abroad.
However, you may receive certain allowances and have certain expenses that you generally do not have while living in the United States. This publication explains:
Note that If you have or had foreign financial assets, you may have to file IRS Form 8938 with your return.
Recent Changes to Publication 516
Publication 516 is revised from time to time as tax laws and regulations change. The latest such revision was made in November of 2018, which included the following modifications:
No Miscellaneous Itemized Deductions Allowed
You can no longer claim any miscellaneous itemized deductions, including the deduction for unreimbursed job expenses. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-adjusted-gross-income limitation.
Unreimbursed Employee Expenses
Only Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses can deduct certain expenses such as travel expenses, and other expenses connected to your employment. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories cannot deduct employee business expenses.
Moving Expense Deduction Suspended, Except for Certain Armed Forces Members
Beginning in 2018, as part of a provision contained in the Tax Cuts and Jobs Act (TCJA) of 2017, the moving expense deduction for tax years after 2017, and before Jan. 1, 2026, is temporarily suspended, except if you are a member of the Armed Forces on active duty and, due to a military order, you move because of a permanent change of station.
Related terms:
183-Day Rule
The 183-day rule is one criteria used to determine if a non-citizen is considered a resident for tax purposes. read more
Adjusted Gross Income (AGI)
Adjusted gross income (AGI) equals your gross income minus certain adjustments. The IRS uses the AGI to determine how much income tax you owe. read more
Dual-Status Taxpayer
A dual-status taxpayer is a foreign national who spends a substantial portion of the year, but not the entire year, in the U.S. read more
Expatriate
An expatriate is somebody who leaves their country of origin to live or work. Read how to become an expat, the taxes you might owe, and the pros and cons. read more
Federal Income Tax
In the U.S., the federal income tax is the tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities. read more
Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act is a tax law that compels US citizens at home and abroad to file annual reports on foreign account holdings. read more
What Is the Internal Revenue Service (IRS)?
The Internal Revenue Service (IRS) is the U.S. federal agency that oversees the collection of taxes—primarily income taxes—and the enforcement of tax laws. read more