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Foreign assets and income: multiple forms and filing deadlines

The April 15 filing deadline for U.S. income taxes is only a few days away. But when you live abroad, earned money abroad, or have foreign accounts, April 15 is by no means the only date you need to be aware of.

In this post, we will inform you about other filing deadlines that affect U.S. taxpayers who live abroad or have offshore accounts or assets. We will also briefly review the various forms involved.

Keep in mind that the U.S. asserts the right to tax you on all of your income – even what you earned abroad. This is true even if you already paid tax on foreign income to the country where you earned it.

Also be aware that you may be eligible for the foreign tax credit or be able to benefit from the foreign earned income exclusion. It is quite possible that, as a result, you may not have to pay U.S. taxes or can at least minimize your tax liability.

Rather than April 15, your filing deadline when living abroad will be June 15. In other words, you will have two additional months to file, compared to taxpayers in the U.S.

If you are a nonresident alien, the applicable filing deadline – April 15 or June 15 – can be rather confusing. This is because the deadline could be either date, depending on what the sources of your income were.

When you have foreign income or assets, it is also important to remember to complete Schedule B and include it along with your return. If you have a foreign account that exceeded $10,000 in value during the tax year, you may already be planning on filing the FBAR form, now also called FinCEN Form 114, with the Treasury Department.

The FBAR is not due until June 30. But there is a section of Schedule B for your income tax return that will ask about foreign accounts.

There is one other potential complication that we should touch upon before closing this post. The Foreign Account Tax Compliance Act (FATCA) has imposed additional reporting requirements for certain offshore assets. If you hold certain assets abroad, you will need to file yet another form, Form 8938.

In short, tax compliance involving foreign income and assets is a complicated and challenging endeavor. It is best faced with the assistance of a skilled tax attorney.

Source: IRS.gov, “IRS Reminds Those with Foreign Assets of U.S. Tax Obligations

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