U.S. citizens and resident aliens, including those with dual citizenship or those who lived or worked abroad in 2012, may have a federal tax liability and filing requirement. The June 17 filing deadline is fast approaching. (These taxpayers generally received an automatic two-month extension from filing on the regular April 15 deadline.) Here are the rules and who must comply with them.
Living or Working Outside the U.S.
The filing deadline is Monday, June 17, 2013, for U.S. citizens and resident aliens living or working overseas, or serving in the military outside the United States. Eligible taxpayers get two additional days this year because the normal June 15 extended due date falls on Saturday.
These taxpayers generally received an automatic two-month extension from the usual April 15 filing deadline to file their returns. To use this automatic two-month extension, taxpayers must attach a statement to their returns explaining which of these two situations applies (living and working outside the U.S. or in military or naval service on duty outside the U.S.).
The IRS recently issued a news release to remind people affected of their obligations.
Nonresident aliens who received income from U.S. sources in 2012 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be April 15 or June 17 depending on their sources of income.
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 fill out and attach Schedule B to their tax returns. Certain taxpayers may also have to fill out and attach to their return an IRS form concerning foreign financial assets.
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.
Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets if the aggregate value of those assets exceeds certain thresholds.
Consult with your tax adviser to explain the thresholds for reporting, what constitutes a specified foreign financial asset, how to determine the total value of relevant assets, what assets are exempt and what information must be provided.
If affected taxpayers are not able to file by June 17, they can request an additional extension to October 15. (Tax due payments made after June 17 will be subject to interest and failure-to-pay penalties.) However, to receive the additional extension, they must file Form 4868. Unlike the first extension, the second is not automatic.
Another Upcoming Deadline
Separately, taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2012 must file a form with the Treasury Department (TD F 90-22.1). This "Report of Foreign Bank and Financial Accounts" is not a tax form and is due to the Treasury Department by June 30, 2013. Consult with your tax adviser if you believe you must file this five-page form.