Taxpayers Abroad Can Choose IRS Free File; Don’t Forget to Report Foreign Accounts
Those individuals living abroad can now use IRS Free File to prepare and electronically file their federal income tax returns for free. This means that U.S. citizens and resident aliens living abroad with adjusted gross incomes of $58,000 or less can use software and e-file for free. This may be even more attractive to those who claim the foreign earned income exclusion because the $58,000 limit applies after the exclusion of up to $91,500 is subtracted. Those eligible individuals claiming the foreign earned income exclusion on Form 2555 or the foreign tax credit on Form 1116 should check the software to guarantee it includes these forms. To start, visit www.irs.gov/freefile and select “Pick a Free File Company.” This will be open until October 17, 2011 to accommodate any taxpayers that received a six-month tax-filing extension and those individuals living and working outside the United States who received the special June 15 tax-filing extension.
As a reminder from the IRS, U.S. citizens and resident aliens are required by federal law to report income from all sources, including income from foreign trusts and foreign banks and securities accounts. Affected taxpayers need to fill out Part III of Schedule B in most cases, and need to report the country or countries in which the accounts are located. Taxpayers with foreign accounts whose aggregate value is over $10,000 during 2010 must file Treasure Department Form TC F 90-22.1 by June 30, 2011. Any taxpayers who failed to disclose foreign accounts or report foreign income in the past are encouraged to take advantage of the Offshore Voluntary Disclosure Initiative designed to help people with undisclosed income from hidden offshore accounts get current with their taxes. The full details about the initiative are on http://www.irs.gov.
If you have any questions or would like more information, please contact Wood, Atter & Wolf, P.A., in Jacksonville and Ponte Vedra Beach, Florida.
