Living abroad offers a lot of exciting experiences. But you'll still share one thing with all of us you left here in the United States: tax filing.
If you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and paying estimated taxes are generally the same whether you are in the United States or living outside the country.
Why? Because your worldwide income is subject to U.S. income tax, regardless of where you reside.
This filing season, though, some U.S. taxpayers living in other countries might find their tax tasks easier and less expensive.
Taxpayers abroad now can use the IRS Free File service to prepare and e-file their returns at no cost as long as the meet the program's requirements.
Five companies that participate this year in Free File can handle returns filed from foreign addresses. They are:
- eSmart Tax powered by CompleteTax
- Free TaxACT
- H&R Block Free File
- Online Taxes at OLT.com
- TaxSlayer
Foreign income Free File limit: The main Free File requirement is an adjusted gross income of $58,000 or less.
But taxpayers who live and work in another country and who claim the foreign earned income exclusion can make more than that and still qualify.
The foreign earned income exclusion allows qualifying American taxpayers abroad to keep up to $91,500 from U.S. taxation.
The $58,000 Free File income limit then applies after the exclusion amount is subtracted from the foreign-based U.S. taxpayer's earnings.
So the free filing service is effectively available to many higher-income taxpayers living abroad.
Extra filing time for folks in foreign countries: U.S. taxpayers who are overseas, or who are in the military and stationed outside the country, also get an automatic two-month extension to file. Their 1040s aren't due until June 15.
Remember, however, that regardless of where you live, if you owe any tax, it must be paid by the regular April due date — that's the 18th this year — or you'll incur interest charges.
If June rolls around and you still can't get your tax return done, you can get another four months, until mid-October (or Oct. 17 this year) by filing Form 4868.
Taxpayers who do need until October to finish their returns, regardless of where they live, still will have access to Free File in the fall if they meet the eligibility requirements.
The free tax preparation and electronic filing program will be available through Oct. 17.
Related posts:
- Free File is open for 2011 business
- Taxes worldwide and the quality of life
- The IRS' electronic future
- It's EFTPS time
- New federal tax refund debit cards
- Figuring your estimated tax payment amount
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