IRS Chases Taxpayers With Foreign Assets
Wednesday, May 29, 2013
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
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.