VERY Simple US Tax Question (I think)

Factual Questions
1

I’ve never filed my own taxes in the US before, so I was hoping someone with a little knowledge of filing individual income taxes could give me and my co-worker some help. Here’s the situation:

My new(ish) coworker (an American citizen) started working here in Seoul during November of 2007. She’s fresh out of college and never done her taxes, so she’s no help at all to herself. As for myself, I just keep confusing myself on the IRS website.

We’re trying to figure out what forms she needs to file and when. Does she fill out a regular 1040? Or does she need to do a 2555-EZ? Since she only came to Korea in November, she doesn’t yet pass any of the tests for the Foreign Earned Income Exclusion, but she will in just a month or so. Does she file for the 2007 tax year? Or does she just wait for 2008 and file then with the exclusion?

If she files now and claims the exclusion anyway, would that cause a problem?

Any advice would be welcome.

2

Er, error in the post! She came in June of 2007. I don’t know why I thought it was in the winter. I must be getting scatterbrained.

3

Just for reference, I don’t know nuthin’, am not an expert, don’t take this advice: but I believe she’ll need to file a 1040 regardless, same as any other year. The 2555 form is a supporting document to show how she qualifies to exclude her foreign earned income. It’s filed together with your 1040.

IIRC, there are a couple of different tests, not just physical presence, which might allow her to qualify for the foreign earned income exclusion.

As for when this should be file, it was a month ago. I’ve heard that people living abroad are entitled to an automatic two-month extension, but I’m not sure whether that’s something you need to send in a form for or not.

But an extension of time to file doesn’t confer an extension of time to pay. If your friend is likely to owe tax for 2007, then she should have sent in her best estimate of the amount back in mid-April.

4

I guess our question in that case is whether or not she “owes” any taxes for her 2007 work with our company. Because if she qualifies for the Exclusion, does that mean that she doesn’t owe? Or is that refunded?

5

The tax codes are never simple. She needs to call the IRS or a tax preparer, and find out what she has to do. Taxes are due about April 15, with variations so it doesn’t occur on Sunday. She may need to prepay taxes. The way the IRS runs things, they don’t want to wait until the end of the year for their money.

6

Depends on details of her work with you, details of her stay abroad and details of her other income sources.