Living or working abroad does not eliminate your US tax filing requirement

As a US Citizen or Green Card holder, you are required to report your worldwide income to the IRS regardless of where you live, unless your GROSS income is under the current year filing requirements.

Individual tax returns are due on April 15 each year. The IRS extends the filing (not payment) deadline automatically by two months — giving you until June 15th to file. You can also apply for additional extensions through October 15, though you may owe interest and penalties on your unpaid taxes.

You may be eligible for the Foreign Earned Income Exclusion (FEIE)

If you lived outside the US for at least 330 days for 12 consecutive months beginning any month of the year AND you meet the tax home test, you may be able to claim the FEIE to exclude up to $105,900 for 2019 and $107,600 for 2020 of your foreign earned income from US taxation. Track your travel time to the US carefully if you plan to qualify for the FEIE.

This exclusion is an election and can only be made if you file a tax return!

Report of Foreign Bank and Financial Accounts (FBAR)

FBAR must be filed by April 15 (or date of extension) if you have $10,000 or more in your foreign account(s) at any point during the year. Even if you held that balance for only one day (or one minute), a filing requirement is triggered. Beware that accounts also include any accounts you have signature authority over, such as your buildings’ HOA account or any business accounts. Remember that FBAR filing doesn’t incur any tax liability—it is simply a reporting requirement.

Reporting Specified Foreign Financial Assets (FACTA)

This includes, but is not limited to: Foreign Corporations, Partnerships, and Trusts as well as Foreign stocks and mutual funds held directly or in a foreign financial account, and Foreign real estate held by a foreign entity. If your financial accounts are over certain limits, they will also need to be reported here in addition to the FBAR reporting.

Penalties for failure to file or late filing of foreign assets are $10,000 and more. This gets complicated so please consult with a tax professional.

Get caught up if you are behind

Millions of Americans are behind on their US tax returns because they were not aware of their need to file. While this may prompt fear into those who realize they are behind, it is never too late to get caught up. And now is a great time. The IRS created the Streamlined Offshore Filing Procedures to help innocent taxpayers get caught up and they recently waived all late filing and FBAR penalties. This program has no “closing date” so it could end at any time.