The Cheapest Way to Claim the FEIE (for US residents filing taxes)

Legal Taxes
#1

For US residents who live in Taiwan… please remember that you’re legally obligated to file taxes with the IRS.

But the good news is that if you’ve been in Taiwan for over 330 days in 2020 and earnd less than NT$3 million (NT$6 million if you’re married filing jointly), you don’t need to pay anything. But you still need to file. If you didn’t file and get audited, you’ll owe taxes. So, it’s better to report your income than not report.

I usually use TurboTax, but having to pay $90 every year to file a $0 tax return was getting really old. This year, I switched to Tax Slayer, which costs $25. Still not free… I don’t understand why I have to pay money to fill out forms that I’m legally required to submit (grumble, grumble). But it’s a lot better than TurboTax.

The only problem is that Tax Slayer isn’t very intuitive. After spending an entire day trying to figure out where they buried the appropriate tax forms, I finally figured it out. And I’m writing this up as a step-by-step guide in hopes that someone else might find this useful.

First, make an account with Tax Slayer. Then, complete these steps.

  1. If you have an interest-earning bank account back in the States, search for “1099-INT.” (Click the question mark in the top right corner of the screen) Fill in the required information, which you can get from your bank.
  2. If you have investments with a financial institution in the States, search for “1099-DIV.” Fill in the required information, which you can get from your investment company.
  3. Search for “Foreign Earned Compensation” Fill in your address, your employer’s address, and your 2020 pre-tax salary. (Make sure to convert all values to USD.)
  4. Search for “2555.” Enter the exact same information that you just entered in step 3 (I have no idea why the computer can’t copy the information over by itself).
    In case you’re wondering, step 3 is to report your income, and step 4 is to exclude it. If you complete step 3 without step 4, you’ll end up paying taxes on the income you earned in Taiwan.
  5. Are you greeted with a screen that says you owe $0 in taxes? Awesome! Review and submit.

After you’ve filed taxes with Tax Slayer, you still need to report how much money you have in your bank accounts here in Taiwan. You can do this here: Individuals Filing the Report of Foreign Bank and Financial Accounts (FBAR)

Hope this guide helps someone :).

NOTE: This guide assumes that you have a working knowledge of the US tax code. If you don’t know the difference between FEIE and FTC, don’t be afraid to research–it’s really not that complicated, and there are already many excellent guides available online. But if you don’t feel like researching your tax situation, Tax Slayer won’t be able to help you. If you’re looking for a product that holds your hand through each step of the way, Tax Slayer isn’t the product for you.

2 Likes
#2

I just fill out and file all the forms myself. Cost: zero. Well, still have to pay for DHL, which is under NT$1,000.

1 Like
#3

I don’t pay anything to do it online. I just kept trying different ones until one works for free. There are loads of them.

#4

Unfortunately, I don’t have the option of filing mine electronically.

#5

You know… with Tax Slayer, you have to select the forms yourself and pay US$25. Since I’ve already figured out what forms I need, I might as well fill them out myself and mail it in.

Good thing I hadn’t paid yet…

#6

I used OnLine Taxes OLT.com and filed online for free.

It is one of the free options you can find
here.

1 Like
#7

Maybe things have changed, but in the past whenever I’ve tried to use an online filing method, even those listed by the IRS, everything is free until you get to form 2555 (FEIE). So like Dr. Milker I just always fill out and mail myself.

I’ll give the sites mentioned another shot this year.

1 Like
#8

Just expanding on what you said for anyone reading this who would qualify, you can also be in other non-US countries (except Cuba) for a period of time that adds up to 330 days. Also if you have bona fide residence in another country, including Taiwan, then you would qualify. So 183 days in Taiwan should do the trick assuming you have legal residency and pay Taiwan income tax.

1 Like
#9

H&R Block let’s you claim FEIE for free.

#10

If you mean you don’t have to pay any US taxes, that’s only true if you work for an employer as a regular salaried employee and they pay your social security + medicare.

You still have to pay tax to the US if you’re self-employed / a contractor / or run your own business and take a salary, and your total compensation is less than NT$3m. About 15% tax that either you or your business pays even if your income can be fully excluded by the foreign earned income exclusion.

3 Likes
#11

yep, good distinction to add as well!

#12

But still, filing the basic forms isn’t free according to their website

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1 Like
#13

Which site are you using?
Stay away from H&Rs expat site. It charges. But their regular site doesn’t. I used it free this year and the previous 3 years.

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2 Likes
#14

Income tax status in Taiwan is irrelevant. It’s all about residency.

#15

No, income tax (to Taiwan in this instance) matters. Many tax experts say that arguing bona fide residence is strongest when one actually pays tax in their bona fide residence. Here is exactly what the IRS says about FEIE using the Bona Fide Residence Test:

Determination

Whether you are a bona fide resident of a foreign country is determined by the facts of your situation and may include such factors as your intention or purpose for being in the foreign country, your activities in the foreign country, and whether you paid taxes to the foreign country, among other things.

As you can see in the quote, of the three factors mentioned, two of them are gray areas and can be lied about, only one (whether you actually paid taxes) can be clearly documented. So it makes sense that that one is the strongest way to prove bona fide residence.

#16

I’m exempt from income tax in Taiwan, as is everyone I work with, and none of us have had any problem using the FEIE. Dozens if not hundreds of us, every year, for decades. Every tax accountant for expats knows this. But you do you.

#17

How does that work?

#18

Employer’s status with the government.

#19

Sounds like a sweet deal. Not like I pay a lot in taxes, but still.

1 Like
#20

It’s the reason many people choose to work overseas.