IRS Chases Taxpayers With Foreign Assets
29 May 2013
Posted by: Author: Mike Godfrey
Source: Mike Godfrey (Tax-News.com, Washington)
The Internal Revenue Service (IRS) has reminded United States citizens and resident aliens, including those with dual citizenship, who have lived or worked abroad during all or part of 2012, that they may have a tax liability and filing requirement in 2013.
The IRS confirmed that the extended filing deadline is June 17, 2013, for US citizens and resident aliens living overseas, or serving in the military outside the US. Eligible taxpayers get two additional days because the normal June 15 extended due date falls on Saturday this year.
Nonresident aliens who received income from US sources in 2012 must also determine whether they have a US tax obligation. The filing deadline for nonresident aliens can be April 15 or June 17 depending on sources of income.
Federal law requires US citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return.
Certain taxpayers may have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets. The IRS also asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires US citizens to report the country in which each account is located.
Generally, US citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Instructions for Form 8938 explain the thresholds for reporting, what constitutes a specified foreign financial asset, how to determine the total value of relevant assets, what assets are exempted and what information must be provided.
Separately, taxpayers with foreign accounts whose aggregate value exceeded USD10,000 at any time during 2012 must file a further form with the Treasury Department by June 30, 2013. Though this form can be filed on paper, Treasury encourages taxpayers to file it electronically.
Taxpayers abroad can now use IRS Free File to prepare and electronically file their returns for free. This means both US citizens and resident aliens living abroad with adjusted gross incomes (AGI) of USD57,000 or less can use brand-name software to prepare their returns and then e-file them for free. Taxpayers with an AGI greater than USD57,000 who do not qualify for Free File can still choose electronic filing.