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Tax Time for Americans Overseas . . . Who & When?

Posted on March 4, 2011 at 12:05 PM

Americans abroad, I ask, “Who must file income tax forms to the U.S.? Who?"

All we Americans abroad who live abroad are supposed to know that we are required to file personal income forms with the Internal Revenue Service each and every year. And yet, what if a person makes little income? What is the level of income necessary to trigger the filing requirement? (1) Because, technically, not ALL Americans have to file with the IRS each year . . . specifically, those who have sufficiently low levels of total worldwide income to report in the first place. And (2) what types of income are included in the income level at which an American must file with the IRS? This question was posed to me recently by L.  For purposes of illustration, L is an American gal, married to a Norwegian and does not work.  She therefore has no earned income.  She also has no interest or dividends, stocks, annuities, etc. that might be taxable as income, so she has no personal income. L’s husband happily pays all the bills. Lucky L!

 

The answers to this are found at IRS Publication 54. For those of you with chronic tax-avoidance syndrome, this is found online at the IRS’s quite user-friendly website, www.irs.gov. You are welcome to visit it, and you will find out all types of things you wanted to know . . . as well as some you surely would rather not!  The Search box is not natural-language-savvy, but it’s also not completely hopeless.  Here’s the link to the current Publication 54: http://www.irs.gov/pub/irs-pdf/p54.pdf. We didn’t think we’d get sentimental about this, but the IRS stopped sending this around to folks just this year, and frankly, it means I can’t add it to my book shelf.

 

For my part, I’ll share the American overseas core filing lower limits here in reader-friendly English. Chicago-style English, that is: For adults (non-dependents), are you single and did you make less than $9,350 dollars - or if you’re 65 or older, less than $10,750 dollars in 2010? Don’t count foreign pensions, either. Well, then you don’t have to file for 2010. If you’re married filing separately, though, which most of my clients are, did you make less than $3,650 dollars in 2010? Yeah, I thought not – and then you better be filing, buddy. Ah, and, say, you were self-employed? Sorry, chump. You have to file even if you made only $400 dollars the entire year.

 

Now, when to file?

If you have not been filing and should have been filing, you should file RIGHT NOW: the current tax year’s forms that are due (in this case, for 2010), and the 3 prior years’ forms (in this case, 2007, 2008 and 2009).

 

If you have been filing on an ongoing basis, and you will owe tax, you should file by April 15th - since any taxes owed are due on that date (no matter where you live). However, if you don’t file by that date, you should file as soon afterward as you can, and, frankly, the interest on a small tax bill due is so low, most can live with that difference if they don’t have their current year figures in overseas income figured out until sometime after April 15th.

 

Most Americans overseas have moderate incomes: If you are filing and know you won’t owe any taxes, you can file by June 15th or submit an auto-extension form. If you submit an auto-extension form, you can file up to Oct. 15th. (Just note that the auto-extension form means, they give you permission to file late:  it doesn't excuse you from NOT sending in the extension request....It's not exactly that 'automatic.')

 

That wasn’t too hard, was it? Now, if you’re still scared to death, you can use my services, and I do the filing work for you. Up to you. Velkommen or Best Wishes!

Categories: Law Stuff, Auditing Stuff, International Miscellaneous