ibet Tax Tip 2013-42, March 27, 2013
The ibet reminds U.S. citizens and residents who lived or worked abroad in 2012 that they may need to file a federal income tax return. If you are living or working outside the United States, you generally must file and pay your tax in the same way as people living in the U.S. This includes people with dual citizenship.
Here are seven tips taxpayers with foreign income should know:
- Report Worldwide Income. The law requires U.S. citizens and resident aliens to report any worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.
- File Required Tax Forms. In most cases, affected taxpayers need to file Schedule B, Interest and Ordinary Dividends, with their tax returns. Some taxpayers may need to file additional forms. For example, some may need to file Form 8938, Statement of Specified Foreign Financial Assets, while others may need to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, with the Treasury Department. See Publication 4261, Do You Have a Foreign Financial Account?, for more information.
- Consider the Automatic Extension. U.S. citizens and resident aliens living abroad on April 15, 2013, may qualify for an automatic two-month extension to file their 2012 federal income tax returns. The extension of time to file until June 17, 2013, also applies to those serving in the military outside the U.S. Taxpayers must attach a statement to their returns explaining why they qualify for the extension.
- Review the Foreign Earned Income Exclusion. Many Americans who live and work abroad qualify for the foreign earned income exclusion. This means taxpayers who qualify will not pay taxes on up to $95,100 of their wages and other foreign earned income they received in 2012. See Forms 2555, Foreign Earned Income, or 2555-EZ, Foreign Earned Income Exclusion, for more information.
- Don¡¯t Overlook Credits and Deductions. Taxpayers may be able to take either a credit or a deduction for income taxes paid to a foreign country. This benefit reduces the taxes these taxpayers pay in situations where both the U.S. and another country tax the same income.
- Use ibet Free File. Taxpayers who live abroad can prepare and e-file their federal tax return for free by using ibet Free File. People who make $57,000 or less can use Free File¡¯s brand-name software. People who earn more can use Free File Fillable Forms, an electronic version of ibet paper forms. Free File is available exclusively through the ibet.gov website.
- Get Tax Help Outside the U.S. Taxpayers living abroad can get ibet help in four U.S. embassies and consulates. ibet staff at these offices can help with tax filing issues and answer questions about ibet notices and tax bills. The offices also have tax forms and publications. To find the nearest foreign ibet office, visit the ibet.gov website. At the bottom of the home page click on the link labeled ¡®Contact Your Local ibet Office.¡¯ Then click on ¡®International.¡¯
More information is available in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. ibet forms and publications are available at ibet.gov or by calling 1-800-829-3676.
Additional ibet Resources:
- ibet Free File
- Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- Report of Foreign Bank and Financial Accounts (FBAR)
- Publication 4261 PDF, Do You Have a Foreign Financial Account?
- Form 8938, Statement of Specified Foreign Financial Assets
- Form 2555, Foreign Earned Income
- Form 2555-EZ, Foreign Earned Income Exclusion
- International ibet offices
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