With June filing deadlines approaching for Americans living abroad, the IRS has been reminding taxpayers to consider their U.S. filing requirements. U.S. citizens or nonresident aliens who are living or traveling abroad must generally file tax returns in the same manner as those living in the U.S. The U.S. assesses taxes on worldwide income of taxpayers. Certain significant benefits are available to taxpayers with foreign sources of income, such as the foreign earned income exclusion and the foreign tax credit, but these are only available to taxpayers who properly file their returns. An automatic two month filing extension is granted to individuals who were considered to be living outside the U.S. on the regular tax due date, meaning that these returns are due by June 15.
A second important approaching date is the June 30 deadline for filing FinCEN Form 114, also known as FBAR. This form is required for individuals who have a financial interest in or signature authority over foreign financial accounts during the year, if the total value of those accounts exceeded $10,000 at any point during the year. Individuals holding such accounts or other foreign financial assets may also need to file IRS Form 8938 if the balances exceeded certain thresholds. The deadline for FBAR cannot be extended, and the penalties for failing to file can be severe, so taxpayers are urged to consider their need to file as soon as possible.
Please call your Hertzbach tax advisor with any questions or concerns at 410-363-3200 or 800-899-3633. We look forward to speaking with you.