Yesterday I took a trip down to the IRS office at the American Embassy. Even though U.S. citizens living abroad get an automatic two month extension to file their taxes, I was the only one visiting the IRS and got to bypass the long lines of visa applicants. Also, having taken their advice to leave all bags and electronic devices at home, I got in with a wave of my Massachusetts driver's license and a quick duck through the metal detector.
On the website for the IRS office, it clearly says that they won't answer questions over the phone; you have to go down to the office in person. Maybe I misunderstood, but I swear there was a sign up in the office advising you to call to get your questions answered.
The people in the office were very friendly though and happy to just answer my questions on the spot. It doesn't seem like my situation should be
that unusual, but I read the relevant information, and it's not at all clear what I'm supposed to do. This one guy seemed very well versed in the technical details of the treaty which gives us the Foreign Earned Income exemption. This exemption says that if you live here in England for 330 days of a given year (starting at any time) then income earned here (under about $80,000) is exempt from U.S. taxes. The part that's unclear is that I haven't
yet lived here for a full year, but I plan on doing so, so that, after I've been here for a year,
then I can claim this exemption from the time I got here. But I'm supposed to file my taxes for 2006 now...
Unfortunately, as it turns out, this whole question is irrelevant to me. I had a secret fear that I didn't even want to mention, and it has been realized. Apparently Fred has betrayed me, because my stipend is not considered "earned income" at all. I don't work for my pay. It's
unearned income, so the U.S. government feels no compunction whatsoever in taxing the pittance on which I live. Worse, that money is converted into U.S. dollars before it's taxed. It's not so bad this year, because I've only been here for a few months, but next year it will look like a real salary, and they'll tax it that way.
On the bright side, they told me to just bring down all my information and they'd help me to fill out the necessary forms and file my taxes right there. "Really?!?" I asked, incredulous. In retrospect, it's probably easier and faster for them to help me fill out all the forms than for them to explain to me how it works, but I would have thought that I'd have to pay someone to do that for me.