Information
provided on this site is for general guidance
only and is often simplified. Actual IRS procedures
are complex, and taxpayers should obtain professional
assistance or use IRS sources for complete information.
US
Citizens Abroad
US
citizens living abroad have the same tax filing
responsibilities as those living at home, and
must file Form 1040 or one of its variants. All
individuals residing overseas should file their
US income tax returns with the Internal Revenue
Service Center.
Individuals claiming either of the foreign earned
income exclusions or the housing deduction should
file their returns at the same address, even if
their residence at the time of filing is in the
United States.
US
embassies in a number of foreign countries have
IRS departments which often accept filing of US
income tax returns for forwarding to the United
States.
The
ordinary due date (April 15) for US income tax
returns of individuals applies to expatriate taxpayers
as well, although there is an automatic extension
of time for filing to June 15 is provided to expatriate
US citizens and resident aliens who, on the normal
due date of the return, are residing abroad. The
filing extension does not apply to payment of
tax.
Individuals
who qualify for this automatic extension need
not file any form with the IRS to obtain the extension
but should simply attach a statement to their
tax returns indicating that they qualify. It should
be emphasized that the automatic extension of
time for filing does not extend the time for payment
of tax. Interest will be charged by the IRS on
any unpaid balance of tax from the normal due
date (April 15) until the date the return is filed,
even if the due date is extended.
As
for domestic tax-payers, Form 4868 provides an
automatic extension of time for filing to August
15. Any unpaid tax should be remitted with Form
4868. Further filing extensions using Form 2350
are available for tax-payers claiming the foreign
income or foreign housing exclusions.
An
individual due to pay a balance of tax over $1,000
is required to file Form 1040ES on a quarterly
basis. Due dates for payments of estimated taxes
are April 15, June 15, September 15, and January
15 of the following year. In order to avoid penalties,
90% of the total tax liability for the year must
be paid through this procedure or through withholding.
Penalties will no apply if
the estimated tax exceeds the total income tax
liability for the preceding year.
US individuals with more than US$10,000 (at the
time of writing) in foreign deposits or securities
must file Form 90-22.1 with the US Treasury Department.
All
individuals who expatriate or terminate their
US residency must file Form 8854, Initial and
Annual Expatriation Information Statement, once
in order for the expatriation or termination to
be effective for US tax purposes.
Following
the American Jobs Creation Act, Form 8854 was
revised to permit individuals to meet the new
notification and information reporting requirements
imposed by AJCA. In particular, Form 8854 was
expanded so that it functions as both the initial
and the annual expatriation information statements
required by AJCA. Revised Form 8854 and its instructions
also address how individuals should certify (in
accordance with the new law) that they have met
their federal tax obligations for the five preceding
taxable years and what constitutes notification
to the Department of State or the Department of
Homeland Security.
Notice
2005-36 provided special rules for individuals
who filed the revised Form 8854 by June 15, 2005.
Treasury and the IRS recognize that until the
revised Form 8854 was released, individuals who
lost US citizenship or terminated long-term resident
status after June 3, 2004 did not know how to
meet the new notification and information reporting
requirements imposed by AJCA. Accordingly, Notice
2005-36 provides that if an individual who loses
US citizenship or terminates long-term resident
status after June 3, 2004 files the revised Form
8854 by June 15, 2005, the individual will be
treated as having met his or her reporting obligations
on the date on which the taxpayer provided the
requisite notice to the Department of State or
the Department of Homeland Security.
Form
8854 and its instructions are available at the
agency Web site, IRS.gov, but are no longer obtainable
from US embassies or consulates abroad.
In
order to take a foreign tax credit, Form 1116
should be filed with Form 1040. Form 1116 is used
to figure the amount of foreign tax paid or accrued
that can be claimed as a foreign tax credit. The
foreign income tax on which a credit can be claimed
is the amount of legal and actual tax liability
paid or accrued during the year.
Taxpayers
who claim the foreign earned income exclusion,
claim
the foreign housing exclusion or deduction, or
live in a foreign country should file their returns
with Department of the Treasury, Internal Revenue
Service Center, Austin, TX 73301-0215.
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