The IRS Audit Blog

Posts Tagged ‘irs tax forms’

Question: IRS Foreign Earned Income Tax Worksheet?

I am currently filing Form 1040 for 2007.
(Also filing Form 2555-EZ).

To figure out my tax, I am using Foreign Earned Income Tax Worksheet-Line 44 from IRS Pub.4655 (Supplemental Instructions for 2007).

And to figure out #4 on this Foreign Earned Income Tax Worksheet (Tax on the amount on line 3), I used the Tax Table.
I found out what my tax was by finding where my taxable interest was listed.

But, #5 on this Worksheet asks for the same thing (Tax on the amount on line 2). Although lines 2 & 3 have two different numbers, since my taxable income stays the same, the amounts for #4 and #5 of this Worksheet are the same. Am I correct? Please correct me if I am wrong.

#6 of this worksheet asks us to subtract #5 from #4. Yet, since they are the same number, the amount on #6 automatically becomes zero.

I am very confused.
Thank you very much for your help in advance.

Answer: You shouldn’t feel bad about being confused. These forms can be a bit daunting. However, I wonder if we’re talking about the same forms. Line 4 on the Worksheet asks only for the amount of exclusion (from Line 18 of 2555EZ), not the tax on any amount. Line 5 asks for itemized deductions that you can take against foreign income. Are you sure you’re looking at Lines 9 and 10?

Anyway, here’s the theory. First, you compute the tax on your all your taxable income. (Line 7 is the income, Line 8 is the tax on this income) Then you figure the tax on that portion of your income that was excluded (Line 6 is the net exclusion amount, and Line 9 is the tax) The difference on Line 10 is then carried over to 1040 Line 44, which is your basic tax liability.

Yes, there could be an easier way of doing it, but this method was figured out by accountants ‘cuz it makes perfect sense from an accountant’s point of view, but is rather confusing to a normal person.

Questions? e-mail me, or contact me through my website htp://members.toast.net/busra17

Hatboro council looks into alleged ethics violations

Officials on Hatboro Council will decide individually whether or not they will file ethics complaints to the state concerning two of their own, after council’s former vice president found that Democrats Nancy Guenst and Aleta Ostrander had tax liens they did not report in their 2006 to 2008 statements of financial interest.

Inheritance Tax Returns

Tax opportunities during taxing times

The Internal Revenue Service has designated Jan. 29 as Earned Income Tax Credit Awareness Day. At Oweesta we work with Native communities to help them build financial assets, and we are partnering with the IRS to promote awareness of the EITC throughout Indian country.

How to Complete and File a 1040EZ Tax Form : Who Uses the 1040EZ Tax Form?