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Taxes & refunds FAQ
Taxes & refunds FAQ
Kirsten Simmons avatar
Written by Kirsten Simmons
Updated over a week ago

Table of contents:

Q: I received a stimulus check but could not cash it from Australia. Can I send the check back and ask for direct deposit into the bank account only in my name?

A: No, IRS won't be able to re-process it. But if you already have a US bank account, you can likely download their app on your phone and deposit it through the app (take pictures, etc.). If you have no US bank account yet, then you can try to open one first.

Q: My son and I have a Green Card. I have a house in La Jolla (with no mortgage) with a market value of $3 million and a cost base for capital gains purpose of $1.4 million. Can I gift my house to my son, tax-free, using the Lifetime Gift Allowance of $12 million?

A: Yes, you may use a lifetime gift allowance.

Q: How much, if any, is my maximum contribution to US IRA working abroad?

A: It depends. Any income excluded from taxation due to either foreign earned income exclusion or foreign housing exclusion, these tax breaks can not be contributed to an individual retirement account (IRA). Income not excluded from income tax can be contributed to an IRA. The maximum possible amount is 6000 for those under 50 years old. The client should be cautious, though, as being said, many catches might prohibit contribution. The client should know that contributions may be made until April 15 of the year following the tax year (e.g., can be made until April 15, 2023, for upcoming 2022 taxes), which means if the client gets his return done by April, we can inform him exactly how much he can (or cannot) contribute, and the reason why.

Q: I owe the IRS taxes for prior years but am I due a refund this year?

A: In this situation, the IRS will generally withhold any refund you may be due and apply it toward your outstanding tax debt.

When we prepare tax returns for multiple years, we take care of all these calculations: we cancel out any refunds/tax owed to arrive at one final number so that you know exactly what you can expect to pay or receive after filing.

Q: My family and I live abroad. Can I still use the Earned Income Tax Credit?

A: The Earned Income Tax Credit (EITC) benefits working U.S. citizens and Green Card holders with low to moderate income. For 2017, only those with a gross income of between $15,010 and $53,930 were eligible to qualify for the credit. Eligibility also depends on family composition and filing status.

To qualify for the earned income tax credit, you must meet one of the following criteria:

  • You had a dependent child under 19 living with you in the United States for more than half the calendar year.

  • If you do not have a qualifying child, you must:

    • be between the ages of 25 and 65 at the end of the year,

    • live in the United States for more than half the year, and

    • not qualify as a dependent of another person.

Other qualifying factors can include but are not limited to the following:

  • Married couples filing separately cannot claim the credit.

  • You cannot have filed a Foreign Earned Income Exclusion using Form 2555 or 2555-EZ for any part of the year.

  • Your investment income can not exceed $3,450 for the year.

It is important to note that this is a rarely viable tax strategy for expats because you must forego filing Form 2555 (the Foreign Earned Income Exclusion) to be eligible.

Q: I shouldn't owe taxes, but would I still be eligible for refunds and rebates if it passes the deadline?

A: The short answer is Yes.

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