May 29, 1990
Unique Filing Considerations for
U.S. Taxpayers Living Abroad
WASHINGTON - The filing season is not yet over for United
States taxpayers living overseas, but with their June 15 deadline
rapidly approaching, the Internal Revenue Service suggests they
review tax considerations unique to filing from abroad.
As of mid-May the IRS had received 352,000 income tax returns
from overseas, as compared to 313,000 at this point last year. More
than 500,000 returns are expected to be filed.
Taxpayers living and working abroad may be entitled to exclude
from federal income tax up to $70,000 of foreign earned income. The
IRS emphasized that this exclusion is not automatic. To qualify,
taxpayers must file a tax return electing the exclusion, even if
their income is less than $70,000. The return claiming the
exclusion must be filed within one year of the original due date of
the tax return.
The IRS reports that the most common error made on tax returns
received from overseas so far this filing season involves
computation of the earned income credit. This credit is based on
earnings of less than $19,340 and is available to taxpayers who
maintained a home in the United States for a dependent child and
lived there for more than half the year.
Taxpayers needing information to complete their forms may call
any of 14 IRS offices located in embassies and consulates throughout
the world, or the international taxpayer service office in
Washington, D.C. at (202) 287-4301. IRS maintains overseas offices
in Bonn, Caracas, London, Manila, Mexico City, Nassau, Ottawa,
Paris, Riyadh, Rome, Sao Paulo, Singapore, Sydney and Tokyo.
Those taxpayers overseas who need additional time beyond June
15 to file tax returns must file Form 4868 to request an extension
until August 15.
In a "town meeting" held in London earlier this year, issues
were addressed that will help the IRS improve service to those
living abroad. One change being instituted is the mailing of bills
and notices by airmail to shorten delivery time.
The IRS said it is also reviewing forms used by overseas
taxpayers as part of its ongoing simplification efforts. In
addition to using the same forms filed by individuals living in the
United States, many overseas taxpayers use Form 2555 to claim the
foreign earned income exclusion, Form 1116 to claim a credit for
foreign taxes paid, and other specialized forms.
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