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The Internal Revenue Service (IRS) recently reminded taxpayers living and working outside the United States to file their 2021 federal income tax return by Wed., June 15. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.
Just as most U.S. taxpayers must timely file their returns with the IRS, those living and working in another country are also required to file. An automatic two-month deadline extension—until June 15—is normally granted for those overseas. Anyone who qualifies gets the extra time—they don’t need to ask for it.
A taxpayer must file, even if they qualify for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit. These benefits are not automatic and are only available if a U.S. return is filed. This is true, even if these or other tax benefits substantially reduce or eliminate U.S. tax liability.
In addition, the IRS urges families to check out expanded tax benefits, such as the Child Tax Credit, Credit for Other Dependents, and Child and Dependent Care Expenses and claim them if they qualify. Though taxpayers abroad often qualify, the calculation of these credits differs, depending upon whether they lived in the U.S. for more than half of 2021.
A taxpayer qualifies for the special June 15 filing deadline if either of these options apply:
Be sure to attach a statement to the return indicating which of these two situations applies.
Federal law requires U.S. 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 complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds.
Keep in mind, a special reporting requirement applies to most people who have foreign bank or financial accounts, which is often referred to as the FBAR requirement. The FBAR requirement applies to anyone with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2021. They must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them.
Tied to the regular tax-filing due date, the deadline for filing the annual FBAR was generally April 18, 2022. But FinCEN is granting filers who missed the original deadline an automatic extension until Oct. 17, 2022. There is no need to request this extension.
Extra time is available for those who cannot meet the June 15 date. The IRS urges anyone needing the additional time to make their request electronically. Several electronic options are available.
Doeren Mayhew’s tax advisors are here to assist with your filing needs. To obtain tax compliance assistance or to explore what credits are available to you, contact us today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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