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How the IRS Treats International Taxpayers and Returns

  2019-12-09

The IRS requires all U.S. citizens, resident aliens, and other U.S taxpayers to file a tax return each year, no matter where they are located in the world. This means international taxpayers who were born, have lived, or are living in the U.S. must file with the IRS. This article applies to you if: You have lived in the U.S. You have paid tax in the U.S. in any way. • You are a U.S. citizen or resident, even if you are not living there now. • You have ever filed a U.S. tax return. • You have relocated to a country outside the U.S.

 

Brief Summary of International Taxpayers and Returns

 

  • The U.S. taxes your worldwide income, no matter where it is earned.

  • You can normally reduce the amount of U.S. tax you need to pay by using various exclusions and deductions.

  • You may have additional reporting requirements besides a standard federal income tax return.

  • You will need to file your return at the right address, we’ve provided details below.

  • You will typically need to file your return by June 15, if you have requested an extension, you typically have until December 15 to file.


 

All Tax Returns Must be Converted to U.S. Dollars and Submitted

The IRS only accepts tax returns and other forms that are submitted with U.S. dollar amounts. You must convert your local currency to U.S. dollars using a standard exchange rate. Typically, you will use the up-to-date exchange rate when you receive, pay, or accrue an item or complete a transaction.

 

The IRS does not have an official exchange rate, but they will generally accept any standard exchange rate that is applied consistently. They do list a number of yearly average exchange rates at this page.
 

You Will Require a Social Security Number or Tax Identification Number

All tax returns are required to have a unique number that you will reference on your returns. If you have a Social Security Number (SSN), then you can use that. To obtain a SSN, use Form SS-5, Application for a Social Security Card. If you are not able to get a SSN, you can apply for an Individual Taxpayer Identification Number by completing Form W-7, Application for IRS Individual Taxpayer Identification Number.


 

You May Be Able to Claim Foreign Income Exclusions, Foreign Tax Credits, or Foreign Housing Exclusions or Deductions

The IRS allows international taxpayers to deduct or exclude certain amounts of income, provided you can pass certain residency tests. The types of exclusions and deductions include:

 

  • The foreign housing exclusion or deduction

  • The foreign income exclusion

  • The foreign tax credit

 

 

These credits, deductions, or exclusions can substantially reduce or eliminate your U.S. tax liability.


 

Additional Reporting Requirements for International Taxpayers

Depending on the value of certain foreign assets, you may also be required fo file FBAR or FATCA Fomr 8938 forms. You can find details at the above links.


 

Where to File Your International Tax Return

If you claim certain exclusions or deductions from the IRS, specifically the foreign earned income exclusion or the foreign housing exclusion or deduction, you can file your return at the address below. Additionally,  if you pass the bona fide residence test or the physical presence test, you can also use this address:

 

If you are requesting a refund, or there is no check or money order enclosed:

 

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0215

USA

 

If you are filing and also including a check or money order:

 

Enclosing a check or money order:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303

USA

 

You can also e-file your U.S. tax return through a FreeFile or a commercial tax filing software service. 


 

When to File Your International Tax Return

Taxpayers located in the U.S. typically need to file their tax return by April 15 every year. International U.S. taxpayers who live outside the U.S. or Puerto Rico automatically get a two-month extension to file their returns, meaning they’re due by June 15 every year. If you file an extension to complete your return, it will typically be due by October 15, although a permissive extension until December 5th is available. 

 

You can request an extension by completing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, this must be completed and filed with the IRS before June 15. 

 

Note that if you owe tax on the previous year’s tax return you will be charged late payment penalties and interest after June 15.


 

Payment Options for U.S. Taxes

The IRS allows you to pay U.S. taxes using several different methods:

 

  • Electronic Federal Tax Payment System (EFTPS): You can use this service if you have a U.S. bank account. 

  • Federal Tax Collection Service: You can make a wire transfer to pay your U.S. taxes.

  • Check or money order: The payment should be made payable to the “United States Treasury” and should be for the full amount due.

  • Debit or credit card: You can also pay using a debit or credit card, find more details here.

 

Note that some of these payment methods may incur an additional fee.


 

Contact Details for the IRS for International Taxpayers

You can contact the IRS International Taxpayer Service Call Center as follows:

 

  • Telephone on 267-941-1000 (not toll-free).

  • Fax on 267-466-1055 (for international tax account issues only).

 

The call center is available Monday through Friday, from 6 AM to 11 PM, Eastern Time. 

 

You can also write to the IRS as follows:

 

International, individual taxpayers:

 

Internal Revenue Service

International Accounts

Philadelphia, PA 19255-0725

 

International, business taxpayers:

 

Internal Revenue Service

International Accounts         

Ogden, UT 84201-0038


 

Do You Need Help With International Taxes?

Parent and Parent LLP is a specialized tea, of tax accountants, tax attorneys, and tax consultants. We specialize in assisting expats with their tax filing requirements, including any issues or problems you may face. Contact us today to learn how we can help you.

 

Frequently Asked Questions About International Taxpayers and Returns


 

If I am a U.S. citizen living outside the U.S., do I need to file a U.S. tax return?

Yes. Your worldwide income is subject to U.S. tax, so you will need to file a tax return. Note that there are likely to be various exclusions and deductions you can apply that may reduce the tax you owe.

 

If I pay tax overseas, do I still have to file a U.S. return?

Yes. You will need to file a U.S. return unless you revoke your residency status in the U.S. or your U.S. citizenship.

 

When do I need to file a U.S. return?

If you are outside the U.S. and Puerto Rico, you will typically need to file your return no later than June 15 in the year following the tax year you’re filing for. You can request an extension to delay filing until December 15. Note that tax underpayment penalties and interest will accrue from June 15.

 

Do I need to file additional forms in addition to my U.S. individual income tax return?

In some circumstances, you may be required to file additional forms. These can include:

 

  • If you have foreign assets worth over a certain amount, you may have obligations under FBAR or FATCA reporting rules. 

  • If you run a business outside the U.S., you may need to file additional forms.

  • If you are claiming certain foreign exclusions or deductions, you will need to file the relevant forms. 

  • There are some other circumstances where additional reporting and forms may be required. 

 

If I am not a U.S. citizen or resident, and I live outside the U.S., do I still need to file a return or pay U.S. taxes?

If you’re a nonresident alien, you may need to file a return and pay taxes if you have any income sourced from the U.S.

 


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