Tax filing for American expats: A checklist

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15th of June. This is the deadline for filing tax returns for United States Citizens and green-card holders living outside of the US. Indeed, while the deadline to complete the tax return exercise is the 15th of April for US residents, US expatriates automatically have a two month extension. Two months ahead of the deadline, this is where to start:

Who is eligible for the two month extension?

American citizens, green card holders and individuals on military duty outside of the United States. These individuals are not required to file for an extension as they automatically benefit from an additional two months. Americans living abroad are also eligible to file for a further extension until the 15th of October should they need it.

Although no late penalty fee will by due until the 15th of June, there will still be an interest on the tax not paid by the 15th of April despite the extension.

Where to file your tax returns?

American expatriates should mail their tax returns to:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0215

USA

Taxpayers with an Adjusted Gross Income (AGI) less than $66, 000 can file their federal taxes for free online. These are your options.

Taxpayer Identification Number

You will need a social security number (SSN) or an individual taxpayer identification number (ITIN) if you are filing your tax returns. If you need an SSN, you can apply for one using the form SS-1 and if you are not eligible for one, you will need an ITIN which you can obtain by filing a W-7 form.

Foreign currency

If an American expatriate is being paid in a foreign currency, the gross earnings should be converted to American dollars. One can rely on the exchange rates from the Treasury Department’s Currency Exchange Rate and the Federal Reserve Bank.

The Foreign Bank and Financial Accounts, or FBAR

If an American expatriate has any financial interest in bank, securities or financial account abroad which value exceeded $ 10,000 during the year for which the tax return is being filed. The FBAR can be filed electronically here.

Who to turn to if you need help?

If you need help, the Internal Revenue Service office in Philadelphia is here provides international tax assistance.

 

Letitia McGuigan, Tax Managerat H&R Block Expat  Tax Services gives you a few tips:

To keep in mind:

U.S. citizens who are living outside the U.S. receive an automatic filing extension to June 15 so they have more time to file.  Depending on the country of residence, there may be local filing requirements in that country as well as a U.S. filing requirement.  Additionally, many countries have different tax year dates, so filers need to ensure their income reflects the U.S. tax year (Jan-Dec) for the U.S. return and the other country’s tax year (e.g. July-June for Australia) for that return. 

Things that are often overlooked:  

There are additional forms and schedules that need to be completed, which online DIY tax software usually don’t support, so it is best to get help from a tax advisor with specific experience in U.S. tax preparation.  Additionally, filing an FBAR is required for clients with foreign financial accounts over $10,000 and that is often overlooked. The penalty for not filing an FBAR can be greater than that of not filing a tax return.