There are a number of special considerations that can affect both U.S. Resident Aliens and U.S. citizens who live and work abroad for all, or part of the tax year.

If you are a U.S. citizen or U.S. Resident Alien, all of the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad.

Another important consideration is that your worldwide income will always be subject to U.S. income tax, regardless of where you reside now. You may have US tax filing obligations if you have personal income such as wages, salary, commissions, tips, consultancy fees, pension fund, alimony, U.S. or foreign social security, interest, dividends, capital gains, rental property, farm income, royalties, inheritance, or payment in kind in the U.S. or abroad. You may have U.S. tax filing obligations even if you haven’t been to the U.S. or left several years ago, and all of your income is from “Foreign” (non-U.S.) sources. However, income that you earned while living abroad, can qualify for significant tax credits that may reduce, or even in some cases eliminate your entire U.S. tax obligation.

If you are a U.S. Citizen or a U.S. Resident Alien residing overseas, or if you are in the U.S. military on deployment outside of the country, on the regular due date of your tax return (typically April 15th), you are allowed an automatic 2-month extension to file your return without requesting an extension. For a calendar year return, the automatic 2-month extension lasts until June 15th. An additional extension of time to file can be obtained to extend the due date of your return for 6 months form the original due date (or an additional 4 months from the automatic extension received while living abroad), but it will require filing some additional paperwork with the IRS. Note that in both cases, you must pay any tax due by April 15th or interest will be charged starting on April 15th.

If you own or have signature authority over any foreign financial accounts (including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account) that have a total aggregate value exceeding certain thresholds at any point during the tax year, you will be required to file a “Report of Foreign Bank and Financial Accounts” commonly referred to as an “FBAR” with the IRS, although some possible exceptions exist.

In addition to the FBAR is the “Foreign Account Tax Compliance Act” commonly referred to as “FATCA” with the IRS. A FATCA should be filed if your aggregate foreign holding are worth $50,000.00 or more and you reside in the United States. If you live abroad, higher thresholds may also apply. The FATCA report needs to be filed each year with your Individual Income Tax Return. As of January 1, 2015, foreign banks, under FATCA, will be reporting directly to the IRS, so it is especially important that you file the forms correctly.

If your aggregate foreign bank account holdings exceed the threshold for one or both of these reporting requirements, you should call or email us today to discuss your individual situation.

Do I need to file a State Tax Return?

That will depend upon the state where you last resided. In most cases you will not need to file a state income tax return; however, each state has its own rules and some states do require you to file a tax return even if you have moved abroad. In the state of Wisconsin, it will really depend on when you moved and what ties you have to the state. For taxpayers who resided outside of Wisconsin, we will research the filing requirements for your particular state.