Public Services
Tax Information
The IRS Home Page, www.irs.gov, has a lot of information available to answer many questions. Go to 'Individuals' and then 'Overseas Taxpayers' you will find a section of FAQ, which will take you to IRS Publication 54. Many questions of overseas taxpayers can be answered from that source.One point to remember for all overseas taxpayers is that the United States taxes its citizens on their worldwide income. Even though they may be eligible to exclude a certain amount of their earned income from their income tax computation, they must file a US tax return in order to claim that exclusion. Also, while certain amounts of their earned income can be excluded for purposes of computing income tax, that income is not excluded for the purposes of computing Self Employment Tax, for those who are self-employed.
Questions about U.S. state taxes should be directed to the appropriate agencies. Neither the IRS nor the Embassy in Islamabad cannot advise you or provide forms for U.S. state.
Contacting the IRS
You must contact the IRS. Unfortunately, there is no one at the Embassy in Islamabad or at any of our Consulates in Pakistan who can answer tax-related questions.
OnLine
IRS Forms
- Tax forms are available by mail from the IRS on-line
- Most forms are also available on CD-ROM as "Publication 1796". You can order a copy of this CD on-line.
Most Commonly Requested 2005 IRS Tax Forms
- Form TDF 90.22.1
Report of Foreign Bank and Financial Accounts - Form W-4
Employee's Withholding Allowance Certificate - Form W-9
Request for Taxpayer Identification Number and Certification - Form W-7
Application for IRS Individual Taxpayer Identification Number - Form 1040
U.S. Individual Income Tax Return - Inst 1040
Instructions for Form 1040, U.S. Individual Income Tax Return and Schedules A, B, C, D, E, F, J, and - Form 1040 A
U.S. Individual Income Tax Return - Inst 1040 A
Instructions for Form 1040-A, U.S. Individual Income Tax Return - Form 1040 EZ
Income Tax Return for Single Filers and Joint Filers With No Dependents - Inst 1040 EZ
Instructions for Form 1040-EZ, Income Tax Return for Single Filers and Joint Filers With No Dependen - Form 1040 NR
U.S. Nonresident Alien Income Tax Return - Inst 1040 NR
Instructions for Form 1040 NR, U.S. Nonresident Alien Income Tax Return - Form 1116
Foreign Tax Credit - Inst 1116
Instructions for Form 1116, Foreign Tax Credit - Form 2350
Application for Extension of Time to File U.S. Income tax Return - Form 2441
Child and Dependent Care Expenses - Inst 2441
Instructions for Form 2441, Child and Dependent Care Expenses - Form 2555
Foreign Earned Income - Inst 2555
Instructions for Form 2555, Foreign Earned Income - Form 2555 EZ
Foreign Earned Income Exclusion - Inst 2555 EZ
Instructions for Form 2555-EZ, Foreign Earned Income Exclusion - Form 2688
Application for Additional Extention of Time to File U.S. Individual Tax Return - Form 3903
Moving Expenses - Form 4506-T
Request for Transcript of Tax Return - Form 4852
Substitute for W-2, Wage and Tax Statement - Form 4868
Application for Automatic Extension of Time to File U.S. Individual Income Tax Return - Form 8822
Change of Address - Pub 970
Tax Benefits for Education - Pub 1
Your Rights as a Taxpayer - Pub 54
Tax Guide for U.S. Citizens and Resident Aliens Abroad - Pub 513
Tax Information for Visitors to the United States - Pub 514
Foreign Tax Credit for Individuals - Pub 515
Withholding of Tax on Nonresident Aliens and Foreign Corporations - Pub 516
U.S. Government Civilian Employees Stationed Abroad - Pub 521
Moving Expenses - Pub 535
Business Expenses - Pub 593
Tax Highlights for U.S. Citizens and Residents Going Abroad - Pub 915
Social Security Benefits and Equivalent Railroad Retirement Benefits
Treasury Reporting Rates Of Exchange - Annual Average Rates
The IRS provided us with the following information on exchange rates for use with your 2005 Federal tax forms:
IRS will not post an exchange rate schedule on its web site. Instead, you may use the US Treasury rate from Financial Management Service (FMS) or exchange rates listed on the Federal Reserve website.
Any of these rates could be used and accepted. If the IRS were to examine the return and ask how the exchange rate were computed, the individual would need to be able to show how the rate they used was computed. Since any of these are obtained from legitimate sites, they would be accepted.
You can find out more about the IRS and exchange rates here.
Individual Taxpayer Identification Numbers (ITINs)
Social Security Numbers are only available to American Citizens and Legal Permanent Residents (LPRs, or "Green Card" holders). They are not issued to spouses of American Citizens who are not LPRs or students going to the U.S. for college.
Instead, the Individual Taxpayer Identification Number (ITIN) was created for use as a tax reporting number for those taxpayers who do not qualify for Social Security Numbers. ITINs are for tax purposes only. The numbers are not valid as personal identification, and do not imply or in any way provide legal status in the U.S. or entitle holders to work in the U.S.
How to Apply for an ITIN
Complete IRS form W-7, available at http://www.irs.gov, or at http://www.irs.gov/pub/irs-pdf/fw7.pdf. All new ITIN applicants should use the December 2003 revision of Form W-7.
Obtain a certified copy of your passport at the Embassy or one of our Consulates as a notarial service. The cost is US$30. You must apply in person with your passport.
Check the instructions with form W-7 for additional filing requirements, such as the need to include original, completed tax returns. Each applicant will have to show a federal tax purpose for seeking an ITIN, either by attaching a federal tax return to Form W-7 or providing documents that support an exception to the requirement to file a return. Exceptions are listed in the Form W-7 instructions.
Processing time for an ITIN is four to six weeks.
Copies/Transcripts of Previous Tax Returns
Tax Scams
The U.S. Department of the Treasury and the Internal Revenue Service warn taxpayers of an e-mail-based scheme that attempts to trick taxpayers into revealing personal information such as social security numbers, driver's license information and bank and credit card numbers.
In this ploy, unsuspecting consumers receive an e-mail, claiming they are under investigation for tax fraud and are subject to prosecution. The e-mail informs recipients they can "help" the investigation by providing "real" information and directs them to an official-looking web site, deptreas.org/irs/7634//, where detailed personal information must be provided to dispute the charge.
Identity thieves can use an individual's personal data to take over their financial accounts, run up charges on their credit cards, apply for loans, credit cards or other services in the victim's name and file fraudulent tax returns.
At the request of the IRS and the Treasury Inspector General for Tax Administration (TIGTA), the Internet service provider that was hosting the web site has shut the site down. The scheme is being investigated by TIGTA, which addresses threats to federal tax administration. The bogus IRS web page and the e-mail in this instance contained several grammatical errors, rendering them immediately suspect. However, new versions of the scam could surface in the future, including more effectively written text and a different destination web site.
The IRS does not use e-mail to contact taxpayers about issues related to their accounts. Official taxpayer contact usually includes a letter on IRS stationery in an IRS envelope. IRS letters also contain a contact phone number.
Taxpayers who believe they have received suspect communication are encouraged to contact TIGTA through http://www.treas.gov/tigta. Additional information on identity theft and other fraud may be found on the following web sites: http://www.consumer.gov/idtheft and http://www.tigta.gov
Basic Tax Guide for Green Card Holders: Understanding Your U.S. Tax Obligations (October 2006)
If you have a U.S. green card, you are a lawful permanent resident of the U.S. even if you live abroad. This means you are treated as a U.S. resident for U.S. income tax purposes and you are subject to U.S. tax on your worldwide income from whatever source derived. Accordingly, you must file a U.S. tax return unless (a) there has been a final administrative or judicial determination that your lawful permanent resident status has been revoked or abandoned, (b) your gross income from worldwide sources is less than the amounts that require a tax return to be filed, or (c) your U.S. residence status is affected by an income tax treaty.
What if my green card has been taken by or given to someone in the US government?
If you’ve surrendered your green card, this doesn’t necessarily mean that your status as a lawful permanent resident has changed. Your status will not change unless and until you get an official notice from the U.S. Citizenship and Immigration Service (USCIS) that there has been a final administrative or judicial determination that your green card has been revoked or abandoned. You can contact the USCIS to check the status of your card.
What If I Have Been Absent From The U.S. For A Long Period Of Time?
Your tax responsibilities as a green card holder do not change if you are absent from the U.S. for any period of time. Your income tax filing requirement and possible obligation to pay U.S. taxes continue until you either surrender your green card or there has been a final administrative or judicial determination that your green card has been revoked or abandoned. Therefore, even if the U.S. Citizenship and Immigration Service (USCIS) no longer recognizes the validity of your green card because you have been absent from the United States for a certain period of time or the green card is more than ten years old, you must continue to file tax returns until there has been a final determination that is not subject to appeal that your green card has been revoked or abandoned.
What if I haven't filed prior U.S Income Tax Returns?
If you have not filed a U.S. income tax return for one or more years and there is no tax liability for any of those years, you should file returns for the current year and two prior years. However, if you have not filed a U.S. income tax return for one or more years and any income tax is due for any of those years, you should file returns for the current year and five previous years.
What if I have income taxes withheld from income I received from the U.S.?
When an entity in the U.S. makes a non-wage payment (like social security or pension payments) to a nonresident alien, it is required to withhold 30% of the payment (only 85% of a social security payment is subject to the 30% tax) and forward it to the IRS. When an entity in the U.S. sends a payment to a green card holder who lives outside the U.S., it generally should not withhold the 30% tax. If this tax is withheld in error because you have a foreign address, you should notify the payer of the income with a Form W-9 to stop the withholding and you can claim a refund of the tax withheld in error.
What if I’m living in another country? Do I have to pay taxes to both the U.S. and the country where I am living?
A green card holder is considered to be a resident of the U.S. for U.S. income tax purposes and is therefore subject to U.S. taxes on worldwide income. If there is no income tax treaty between your country of residence and the U.S., you must pay taxes to both countries. You generally will get a tax credit against either your U.S. taxes or your foreign income taxes, depending on your particular circumstances, so you will not be subject to double taxation.
If the country where you are living has an income tax treaty with the U.S., the treaty may contain so-called “tie-breaker rules” to determine which country will be treated as the country of your residence for income tax purposes. Usually, the location of the individual’s permanent home or the center of the individual’s vital interests determines resident status. If you are a resident of the treaty country under the tie-breaker rule and you elect to apply the treaty, you will be considered to be a resident of the treaty country for U.S. income tax purposes and will not be required to file a Form 1040. To make this election, you must file a U.S. Nonresident Alien Income Tax Return (Form 1040NR) in the year of the election and attach a copy of Form 8833 (Treaty-Based Return Position Disclosure under Section 6114 or 7701(b)). Green card holders who reside in a country that has an income tax treaty with the U.S. should contact an income tax professional or an office of the Internal Revenue Service for assistance.
What If I Surrender My Green Card?
Generally, if you surrender your green card during the taxable year, your tax status as a resident alien will terminate on the last day of that calendar year. However, if you can establish that, for the remainder of the calendar year, your tax home is in a foreign country or you maintain a closer connection to that foreign country than to the United States, your residency termination date will be the date you surrender your green card.
If you are a resident of the United States because you meet both the substantial presence test for the taxable year and have a green card during the taxable year, your residency termination date will be the later of the date you surrender your green card or the last day you are physically present in the United States, provided you can establish one of the exceptions above. See Pub 519 (U.S. Tax Guide for Aliens) and the instructions to Form 8840 (Closer Connection Exception Statement for Aliens) for additional information.
If you are a nonresident alien as of the last day of the year and a resident alien for a portion of the year, you should file a Form 1040NR even if you have no U.S. source income and attach a copy of Form 1040 that reflects your income for the period of the year that you were a resident alien.
What if I am a Long-Term Resident When I Surrender My Green Card?
If you are a long-term resident of the United States, defined as an individual who is a U.S. lawful permanent resident in at least 8 of the prior 15 taxable years prior to the termination of permanent resident status, there are special rules to comply with. Your residency termination date will not occur until you file a completed Form 8854 with the IRS and notify the Department of Homeland Security of your termination of residency, notwithstanding that for the remainder of the taxable year your tax home is in a foreign country or you have a closer connection to a foreign country. Until you file Form 8854 with the IRS and notify the Department of Homeland Security of your termination of residency, your termination of your permanent resident status for immigration purposes will not relieve you of your obligation to file U.S. tax returns and report your worldwide income as a resident of the United States. For purposes of U.S. tax rules, the date of your termination of residency will be the later of the date you notify the Department of Homeland Security or the date Form 8854 is filed with the IRS in accordance with the instructions for the form.
How Do I Give Notice To The Department Of Homeland Security That I Terminated My Residency Status?
You will be considered to have given notice of a termination of residency to the Secretary of Homeland Security as of the date that you complete Form I-407 (Abandonment of Lawful Permanent Resident Status) before a diplomatic or consular officer of the United States or at a Port of Entry of the United States before a U.S. immigration official.
What If I Have Had My Green Card For Less Than 8 Years Out Of The Last 15 Taxable Years At The Time I Revoke or Abandon My Green Card?
You do not need to file a Form 8854 for any reason.
If I Am a Long-Term Resident, Must I File Form 8854 For The Next 10 Years After I Surrender My Green Card?
You must file a Form 8854 for each of the 10 tax years after the date of your abandonment of your long-term resident status only if:
- your average annual net income tax liability for the 5 years ending before the date of your termination of residency is more than a set amount ($124,000 for 2004, $127,000 for 2005, $131,000 for 2006),
- your net worth is $2 million or more on the date of your termination of residency, or
- you fail to certify on Form 8854 that you have complied with all of your U.S. federal tax obligations for the 5 years preceding the date of your termination of residency.
Failure to file a required Form 8854 in any of the 10 tax years after the date of your termination of residency may result in a $10,000 penalty for each year that the form is required but not filed.
Where Do I Get Form 8854?
The form is accessible on the internet at: http://www.irs.gov/formspubs/index.html
Taxation Under Section 877.
If you are subject to section 877, you will be subject to an alternative tax regime with respect to your U.S. source gross income. For this limited purpose, special source and taxation rules apply; you should consider consulting a tax advisor as to the specific consequences. You generally will not be able to claim the benefits of an income tax treaty to reduce or exempt your income from U.S. taxation because the United States reserves the right to tax former citizens and long term residents according to U.S. law in almost all of its treaties. If you are subject to section 877 and you spend more than 30 days during any calendar year in the United States within the ten years following your termination of residency, you may be treated as a resident of the United States for tax purposes for that entire calendar year.