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Posted by Tiffany Gaskin

Tax Guide for Citizens and Resident Aliens Abroad

Tax Guide for Citizens and Resident Aliens Abroad

Yes, if you are a U.S. citizen living abroad or a resident alien, you must file income, estate, and gift tax returns. You are expected to pay taxes regardless of where you may be (the USA or abroad), and your worldwide income is subject to USA income tax. 

When to file your taxes as a U.S. citizen abroad 

U.S. citizens or alien residents staying overseas, or those on military duties outside the U.S., are allowed a 2-month extension to file their returns and pay all amounts due without an extension. 

However, for a calendar year return, the automatic 2-month extension will be paid on June 15. If the individual qualifies for this extension, penalties for paying the taxes will only be assessed after the 2-month extension due to the late payment. If the taxpayer is allowed an extension, interests will be delivered on any tax paid not paid on the return's regular date. If a taxpayer doesn't qualify for the 2-month extension, then penalties for paying late are assessed from the returns' primary due date. 

Every taxpayer will need a social security number or an individual taxpayer identification number. If you don't have any of these, you use form SS-5 to apply for a social security card. The SS-5 form can be gotten from the IRS website. If you and your spouse are not eligible for a social security number, you can get a taxpayer identification number (ITIN) by filing form W-7 with other required documents.

The amounts to be paid in taxes must be expressed in U.S. dollars, and if the taxpayers received all or a part of the income in foreign currencies, the monies must be changed to U.S. dollars. Taxpayers should use the yearly average exchange rates to report foreign-earned income gotten throughout a tax year. But if the taxpayer had foreign transactions on some days, the exchange rates, there are specific exchange rates to be used for such particular days, all available on the IRS website. 

All tax returns for prior years must be filed, and these are years when your gross income is equal to or even more significant than the personal exemption amount and deductions combined. More so, taxpayers abroad must file taxes that go back to as much as six years before paying the taxes. But there are specific facts, situations, and considerations that may allow for extensions, and the IRS has more information on such circumstances. 

You can also obtain copies of your tax transcript from previous and current years to get information on your returns. The transcript is free, and it helps U.S. citizens living abroad with information on the history of their tax returns. You can get a copy of your tax return, and unlike the tax transcript, you will have to pay for this copy. 

If you are unsure about getting a tax preparer for your U.S. taxes, please visit the IRS site for a searchable directory of tax preparers in your area. The listed tax preparers are certified and recognized by the IRS.

Now for U.S. citizens living abroad with a child, it is possible to claim exemptions for the child as a dependent or anyone else dependent. To qualify as a dependent, the person must also be a U.S. citizen, a national or resident alien. Children are residents of the same country as their parents, but you include your social security number on your return to claim the dependency clause. 



Tiffany Gaskin
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