Client in Japan

[Ranger]

This is a first for me. Client is a teacher (US Citizen) living in Japan. I have been provided a copy of his 2010 1040 with form 2555 attached. I am preparing 1040 for 2011 and 2012. His only income is wages.

It is my understanding that he must paper file with the Austin Texas service center and attach an equivalent of form W-2.

Can someone tell me if I am overlooking anything?
Thanks

[TaxMan60601]

As usual. Everyone is resident for tax purposes even someone who is living and working abroad is required to file and report his world-wide income - from US and Japan in this case. Form 2555 is to claim FEC exclusion. Ask for all income, in US and Japan - pension, social, trusts, if renting his US residence, even interest on his Japanese bank account are reportable and could be taxable.

Return can be e-filed or paper, depends on circumstances. Attach all US income statements but no Japan w-2 to the return.

Don't forget FBAR and FATCA.

[Mr. Pencil]

This is a first for me. Client is a teacher (US Citizen) living in Japan. I have been provided a copy of his 2010 1040 with for 2555 attached. I am preparing 1040 for 2011 and 2012. His only income is wages.

It is my understanding that he must paper file with the Austin Texas service center and attach an equivalent of form W-2.

Can someone tell me if I am overlooking anything?

Thanks

Don't rely on how he filed two years ago. Read the treaty documents on the IRS web site. It makes a difference who he works for, what dates he was in Japan, etc.

[joanmcq]

You use the FEC worksheet to enter the foreign wage info. And you can efile. I do it all the time.

[TaxCPANY]

Your client cannot e-file his 2011 return, Ranger, but must send it to Austin -- unless it costs less to send the hard copy to the IRS 'branch' in the US Embassy in Beijing. (I have a client in Denmark for whom it's cheaper to file his 1040 with the US Embassy in London, England.) If a 2012 extension had been filed (by June 15, 2013), he still could e-file 'this' year's return -- until December 16, 2013 -- as long as his AGI exceeds $0. (Zero AGI returns must be filed as hard copies -- Austin or Beijing or wherever.)

Don't forget, IRC Sec. 911 *also* entitles him to claim an exclusion from income for the cost of his housing -- above a certain threshold -- EVEN if he's not paid a housing subsidy. Do you know how much rent/mortgage + utilities + renter/home-owner insurance he pays? The *additional* housing exclusion is there in Form 2555 (page 3, I think), but not exactly obvious. I assume he'll file as a "bona fide resident"?

Which grade-level(s) does he teach? E.g., if he's a "primary-school" teacher, he's entitled to the $ 250 above-the-line deduction for out-of-pocket/unreimbursed expenses for school supplies.

Hope this helps, TaxCPANY

[joanmcq]

Why can he not efile 2011? I had no issues efiling for a client that worked out of the US.

[Jack from Ohio]

Any 2011 return that meets MEF requirements can be e-filed. When you create the e-file, it will tell you if it qualifies.

[TaxCPANY]

Why can he not efile 2011? I had no issues efiling for a client that worked out of the US.

My apology, joanmcq, Jack; I should have added one further word: "Your client cannot e-file his 2011 return [anymore], Ranger . . . ."

"Can I still e-file a 2011 or earlier year tax return?

Updated: 10/16/2012

Article ID: GEN12304

Individual Returns (Forms 1040, 1040A, and 1040EZ)

No. For individual (personal) tax returns, the e-filing "season" runs from mid-January to mid-October in the year immediately following the end of the tax year. This timeframe is determined by the IRS.

For example, the 2011 tax year ended on December 31, 2011, which means individual 2011 tax returns could only be e-filed from mid-January, 2012 through mid-October, 2012. After the October shutdown, individual 2011 returns must be paper-filed."

A solid answer -- albeit absent citations -- from Turbo-Tax, of all places.

[Jack from Ohio]

My apology, joanmcq, Jack; I should have added one further word: "Your client cannot e-file his 2011 return [anymore], Ranger . . . ."

"Can I still e-file a 2011 or earlier year tax return?

Updated: 10/16/2012

Article ID: GEN12304

Individual Returns (Forms 1040, 1040A, and 1040EZ)

No. For individual (personal) tax returns, the e-filing "season" runs from mid-January to mid-October in the year immediately following the end of the tax year. This timeframe is determined by the IRS.

For example, the 2011 tax year ended on December 31, 2011, which means individual 2011 tax returns could only be e-filed from mid-January, 2012 through mid-October, 2012. After the October shutdown, individual 2011 returns must be paper-filed."

A solid answer -- albeit absent citations -- from Turbo-Tax, of all places.

This answer is NOT COMPLETE. There is a total shutdown of e-filing at the end of every tax season, sometime in October.

However, on Jan 15, 2013, any MEF compliant 2011 tax return was able to be e-filed and currently can be until the annual shutdown. I have e-filed a dozen 2011 returns this year and 3 2010 returns. The IRS will support e-file for three years. Starting Jan. 15, 2014, any MEF compliant tax returns for tax years 2011, 2012 & 2013.

This is dependent, of course, on the actions or inactions of the Congress at the end of this year.

[joanmcq]

Maybe turbotax can't efile 2011 returns, but I've been filing them all throughout this season. They just have to be MEF compliant. Less forms were available in ATX 2011 than in 2012, but the 2555 isn't one of them. Now some of the other software out there may not be able to efile 2011, but ATX can. Some other providers were MEF compliant for 2010 too.