IRS Announces More Time for late FBAR Filers

WASHINGTON - Last week, the Internal Revenue Service reminded U.S. citizens and resident aliens, including those with dual citizenship, with a foreign bank or financial account that a new deadline now applies to reports for these accounts.

New Deadline for Reporting Foreign Accounts

Congress changed the deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) to match Tuesday's federal income tax return. This means that the 2016 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 18, 2017.  

For the first time, FinCEN will now grant filers missing the April 18 deadline an automatic extension until Oct. 16, 2017 to file the FBAR. Specific extension requests are not required. Previously, FBARs were due on June 30 without exception.

In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2016. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. 

Most U.S. Citizens Abroad Need to File

An income tax filing requirement generally applies even if a taxpayer qualifies for protection against double taxation through the Foreign Earned Income exclusion or the Foreign Tax credit.  However, a U.S. income tax return must be filed to claim this protection.

Citizens and "Green Card" holders who live abroad have an extra 60 days to file their income tax returns until June 15, 2017.    Tax payments are still due on April 18, and interest will apply to any payment received after that date. More details can be found here.  

Dahl Tax Law offers a step-by-step guide to preparing and filing an Foreign Bank Account Report. Get yours here.

Why do I have to file a U.S. tax return when I don't work in the U.S.?

Twice this week, I’ve talked with Americans living abroad who’ve received bad advice from family members or U.S.-based tax professionals that they did not need to file an annual tax return with the IRS because they did not work in the United States.   The U.S. taxes its citizens even if they live and work abroad.

There are different income thresholds. Basically, if you earn more than U.S. $10,500  - before your home-country tax payments - you need to file a U.S. tax return.  And the threshold is even lower if you’re married or  self-employed. You can find a short quiz to determine if you need to file a US tax return here.  

When taking this quiz, if you’re unsure about your filing status, the website can help you find the answer.  If you're married to a non-U.S. citizen, you may have difficulty qualifying for Head of Household filing status. You would need to live with a “qualifying person.” This means either a U.S. Citizen spouse or child. Many dual nationals cannot qualify as Head of Household because they did not live in the United States long enough to transmit citizenship to their children.  This strikes me as terribly unfair. Children deserve support, and parents deserve equal tax treatment regardless of the nationality of their children.

The other big problem I uncovered was the FBAR. Neither person was aware of the obligation to report their “foreign” bank accounts once they met the $10,000 threshold.  Find out more here. 

When making decisions about your financial affairs, make sure you get advice from a qualified professional. I offer free initial consultations and would be happy to answer your questions. You can request an appointment here.

Christine Dahl is an American attorney based in The Hague who helps expats and dual nationals understand and comply with U.S. tax laws. 

Seminar: Get your FATCA & FBAR questions answered!

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Please join us in Rotterdam (17 September) and The Hague (24 September) to learn more about the latest developments in the U.S. Internal Revenue Service’s hunt for Americans abroad.

Photo by Scott Olson/Getty Images News / Getty Images

• Find out what you can do to protect your financial assets and build wealth while living abroad. 
• What do FATCA and FBAR mean for you?
• How will your savings and investments be taxed in The Netherlands?
• What U.S. tax obligations follow U.S. citizens and Green Card holders living abroad? 
• What strategies are available for tax-efficient inheritance and retirement planning?

Presented by International Financial Advisor Clare Summerfield of Elliot Lloyd Wealth Management, U.S. Attorney Christine Dahl of TaxHelp for US Expats, and Wim Bull, DK Accountants & Advisors

Dates and Locations

• Thursday, 17 September 2015, at 19.00 at the American School of Rotterdam
• Thursday, 24 September 2015, at 17.00 at the World Trade Centre, The Hague

More information and registration available here: http://www.elliotlloyd.com/seminars

ALERT: FBAR due date changes for 2016 to 15 April!

President Obama on Friday (31-July-15) signed into law a short-term highway funding program that contains some important changes to the due dates of various tax forms, including three which are relevant to expats: Form 3520, Form 3520-A, and FBAR. The 2016 FBAR is now due on 15 April with a maximum six-month extension until 15 October.

The new deadlines are:

(9) The due date of Form 3520–A, Annual Information Return of a Foreign Trust with a United States Owner, shall be the 15th day of the 3d month after the close of the trust's taxable year, and the maximum extension shall be a 6-month period beginning on such day.

(10) The due date of Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, for calendar year filers shall be April 15 with a maximum extension for a 6-month period ending on October 15.

(11) The due date of FinCEN Report 114 (relating to Report of Foreign Bank and Financial Accounts) shall be April 15 with a maximum extension for a 6-month period ending on October 15 and with provision for an extension under rules similar to the rules in Treas. Reg. section 1.6081–5. For any taxpayer required to file such Form for the first time, any penalty for failure to timely request for, or file, an extension, may be waived by the Secretary.

Read more about the rest of the bill here.