Tax Return for Foreign Income

I'm a dual citizen of Germany and the United States of America, and to my eternal joy, that means that I get to file tax returns in both countries. I have yet to deal with the German one (keep forgetting), but the US one has been dealt with - and thank goodness I've already gone through it once and it'll all seem much simpler next time.

I hope.

This blog post is basically going to be about what I did to get this done, and I wanted to write it right after I filed my tax return so that I wouldn't forget any details, but... oops? Here we are, about three weeks later, and I've forgotten all the numbers of the various forms I had to fill out. However, I still have a LOT of tabs open as reminders! Joy.


So. Over the IRS website I chose the free online filing service taxactonline, and found that service extremely well-chosen. It takes you through the steps one by one, basically putting you through a questionnaire instead of making you fill out the dry forms yourself. Also, the customer service was very prompt, genial, and helpful - so, thank you, taxactonline!

The big, BIG point I struggled with was Form W-2. As in 2014 I was employed in Germany by a German institution, I did not receive a Form W-2 from my employer, and for a long time it seemed as though I couldn't file my return without one. After many struggles and internet searches and conversations with customer service at taxactonline, I realized I could indeed file my return without one.

I went through the Step-by-Step Guidance and simply skipped all the questions concerning the Form W-2. More interesting than this, however, is the feature "Forms & Topics" near the top of the page - which lets you find the precise forms you need. Let's see if I can get together which forms I needed, and why.

Form 1040, U.S. Individual Income Tax Review - the basic form that everyone has to fill out.

Form 2555, Foreign Earned Income Exclusion. I had to fill this out because I earned all my income in a foreign country. IMPORTANT: You'll need to enter all your earnings in US dollars, and you have to use the yearly average currency exchange rate. Find it on the IRS website here, and figure out all your sums up-front!

Form 1116, Foreign Tax Credit - this was the important one for showing that I was taxed for my foreign income!

FinCEN Form 114, Report of Foreign Bank and Financial Accounts - for the obvious reason.

There are a few forms I think I was led through as part of the quiz that ended up being unimportant, such as Form 5405 (Repayment of the First-Time Homebuyer Credit), Form 6251 (Alternative Minimum Tax), and Form 8960 (Net Investment Income Tax). I did, however, have to fill out Schedules B and D (Interest and Ordinary Dividends, Capital Gains and Losses) because of the stock I have in the US. Those were easily dealt with - my investment management company, Vanguard, sent me the information up-front and I just had to enter the sums. Easy!


I think those are all the forms I had to fill out - but you wouldn't believe how difficult it was to figure that out! Seriously, check out all these links I went through before somehow figuring out what I needed. (And there were many more; those are just the ones I still have open. *sigh*)

Hopefully, though, this can help others with the same problem - I certainly wished, while dealing with it, that there was one simple blog post explaining it! So, here it is.

Oh! One last thing - deadlines. The general deadline is April 15th, but according to the IRS website, "If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension.  For a calendar year return, the automatic 2-month extension is to June 15." Handy!

Let me know if you have any questions, and I'll do my best to help. I don't anticipate this being a problem till next year, though! Good luck.