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US 'Free File' Open To Expats

Tuesday, March 29, 2011

The United States Internal Revenue Service (IRS) has announced that taxpayers living abroad can now use its Free File to prepare and electronically file their returns at no cost.

The IRS confirmed that five Free File companies can now handle returns filed from foreign addresses. This means both US citizens and resident aliens living abroad with adjusted gross incomes of USD58,000 or less can use brand-name software to prepare their returns and then e-file them for free.

This option may be especially attractive to taxpayers living and working abroad who claim the foreign earned income exclusion, because the USD58,000 income limit applies after the exclusion of up to USD91,500. This, effectively, makes Free File available to many higher-income taxpayers.

Taxpayers also can use Free File to request an extension if they cannot meet the regular tax deadline. Free File will be open until October 17, 2011 to accommodate taxpayers who get the regular six-month tax-filing extension, as well as people taking advantage of the special June 15 tax-filing deadline available to taxpayers who live and work outside the US.

The IRS reminds US citizens and resident aliens that federal law requires them to report income from all sources, both foreign and domestic, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers also need to report the country or countries in which the accounts are located.