You may want to see:
Publication 501 Exemptions, Standard Deduction, and Filing Information 514 Foreign Tax Credit for Individuals 521 Moving Expenses 523 Selling Your Home 590 Individual Retirement Arrangements (IRAs) 597 Information on the United States-Canada Income Tax Treaty Form (and Instructions) 1116: Foreign Tax Credit 2106: Employee Business Expenses 2555: Foreign Earned Income 2555-EZ: Foreign Earned Income Exclusion 3903: Moving Expenses Schedule A (Form 1040): Itemized Deductions Schedule C (Form 1040): Profit or Loss From Business SS-5: Application for a Social Security Card W-7: Application for IRS Individual Taxpayer Identification Number
See chapter 7 for information about getting these publications and forms.taxmap/pubs/p54-015.htm#en_us_publink100047559
U.S. citizens and resident aliens living outside the United States generally are allowed the same deductions as citizens and residents living in the United States.
If you choose to exclude foreign earned income or housing amounts, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. This includes any expenses, losses, and other normally deductible items that are allocable to the excluded income. You can deduct only those expenses connected with earning includible income.
These rules apply only to items definitely related to the excluded earned income and they do not apply to other items that are not definitely related to any particular type of gross income. These rules do not apply to items such as:
- Personal exemptions,
- Qualified retirement contributions,
- Alimony payments,
- Charitable contributions,
- Medical expenses,
- Mortgage interest, or
- Real estate taxes on your personal residence.
For purposes of these rules, your housing deduction is not treated as allocable to your excluded income, but the deduction for self-
employment tax is.
If you receive foreign earned income in a tax year after the year in which you earned it, you may have to file an amended return for the earlier year to properly adjust the amounts of deductions, credits, or exclusions allocable to your foreign earned income and housing exclusions. taxmap/pubs/p54-015.htm#en_us_publink100047560
In 2008, you had $80,000 of foreign earned income and $9,500 of deductions allocable to your foreign earned income. You did not have a housing exclusion. If you excluded all of your foreign earned income, you would not have been able to claim any of the deductions on your 2008 return.
In 2009, you received a $12,000 bonus for work you did abroad in 2008. You can exclude $7,600 of the bonus because the limit on the foreign earned income exclusion for 2008 was $87,600 and you have already excluded $80,000. Since you must include $4,400 of the bonus ($12,000 − $7,600) for work you did in 2008 in income, you can file an amended return for 2008 to claim $455 of the deductions. This is the deductions allocable to the foreign earned income ($9,500) multiplied by the includible portion of the foreign earned income ($4,400) and divided by the total foreign earned income for 2008 ($92,000).