Do you know that more than 10 million US citizens living abroad? Due to this, the income tax implications of US citizenship can be both times consuming and challenging, due to the complexities of the rules and the lack of professional help in many parts of the world. But, don’t worry. We are going to provide you a quick background on the rules of expat taxation, as well as some tax tips that are mainly relevant for this year’s filing.
Must File Your U.S. Income Tax Return
U.S. citizens who have income from any source have to file a U.S. tax return even if they live outside of the country. The only exception is for citizens whose income is below legal filing limits. These limits based upon filing status were as follows:
- Single Person: $9,750; if 65 or older, $11,200
- Married Filing Jointly (Both Spouses): $19,500 and $21,800 (if 65 or older)
- Married Filing Separately: $3,800
- Head of Household With Dependent: $12,500; and $13,950(if 65 or older)
- Keep in mind that failure to file a return can result in significant civil and criminal charges.
When to File
Whether you are a U.S. citizen or resident alien residing abroad, or are in the military on duty outside the U.S., on the regular due date of your return, then you are allowed an automatic 2-month extension to file your tax return. The automatic 2-month extension is to June 15, but you must pay any tax due by April 15 or else interest will be charged starting from April 15.
IRS Delays Are To Be Anticipated
Although the government of U.S. shutdown ended many months ago, the effects are still being felt in the form of delays in the IRS processing. Delays are expected due to several changes to the Tax Code under the Tax Cuts and Jobs Act.
Get Ready For Certain Unique Deadlines.
The tax return filing deadline is June 15 but there are vital exceptions. For example- The FBAR (foreign bank account reporting form) which has a primary deadline of April 15, but is automatically extended for 6 months to October 15. Apart from this, relates to the reporting your ownership in a foreign trust or your pension treated as a trust for tax purposes), which has a deadline of March 15 that can be extended only if you file your extension request by the initial due date.
Where to File
You can mail your U.S. tax return to Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, USA.
Electronic Filing
Taxpayers with an Adjusted Gross Income (AGI) within a specified threshold can file their tax return electronically for free using Free File. In addition to this, Taxpayers with an AGI greater than the specified threshold can use the Free File Fillable Forms or can also use e-file by buying commercial software. A few companies provide software that can accommodate foreign addresses.