Tax
Survey Highlights Confusion Over US Expat Tax Returns
With the end of the FATCA grace period looming, out of six million Americans living or working abroad, nearly two million of them admit they aren’t very knowledgeable when it comes to their tax filing obligations, according to a survey by the US expat tax service provider H&R Block and Internations.org, an online community of Americans overseas.
With the end of the FATCA grace period looming, out of six
million Americans living or working abroad, nearly two million of
them admit they aren’t very knowledgeable when it comes to their
tax filing obligations, according to a survey by the US expat tax
service provider H&R Block and Internations.org, an online
community of Americans overseas.
The survey revealed that a majority of expats seek assistance and
when they do, more than three-quarters of the time (78 per cent)
they seek the help of a US-based tax preparer. The survey also
found that more than four out of 10 expats file in March or
April, a full two to three months before the filing deadline of
15 June.
“The US is one of the only countries that taxes income based on
citizenship instead of residency. We know that taxes can be
confusing for most taxpayers and with the additional complexity
of working or living in a foreign country it is key to get help,”
said Roland Sabates, senior manager of H&R Block’s expat
services and a tax attorney.
FATCA
The survey comes during the final year for the FATCA grace period which offers taxpayers more lenient payment deadlines. FATCA became law in 2010 and placed a requirement on foreign financial institutions to begin reporting the existence of US account holders to the IRS. Registration is ongoing and actual reporting to the IRS will begin in 2015.
“The IRS continues to offer a variety of open-ended compliance options for taxpayers who may have overlooked their US tax filing obligations in the past. But with FATCA reporting on the horizon, we could see these more lenient options disappear at any time," said Sabates.
H&R Block said that to report their information, taxpayers must submit the foreign bank account reporting form to the US Department of Treasury by 30 June. However, the information also may need to be included with the tax return on Form 8938, which is due earlier in the month. The FBAR is now required to be filed electronically and cannot be mailed to the Department of Treasury.
