June 16 Tax Deadline Nears for Taxpayers Living Abroad

U.S. taxpayers living abroad qualifying for an automatic two-month extension must file their 2013 Federal individual income tax returns by Monday, June 16, 2014.

The June 16th deadline applies in the following two situations: (1) U.S. citizens and resident aliens living overseas, or (2) U.S. taxpayers serving in the military outside the U.S. on the regular April 15th due date. Eligible taxpayers get one additional day because the normal June 15th extended due date falls on Sunday this year. To use the two-month extension, taxpayers must attach a statement to their tax return explaining which of these two situations applies.

Many taxpayers living abroad are still not aware that the Internal Revenue Code requires U.S. citizens and resident aliens to report all worldwide income, including income from foreign trusts and foreign bank and securities accounts on their federal income tax return. Not surprisingly, there are many taxpayers based here in the U.S. who are also not aware of this law requiring the reporting of all worldwide income.

The Internal Revenue Code also requires U.S. persons with foreign accounts whose aggregate value exceeded $10,000 at any time during 2013 must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Form 114 replaces TD F 90-22.1, the FBAR form used in the past. It is due to the U.S. Treasury Department by Monday, June 30th and can only be filed electronically through the U.S. Treasury’s BSA E-Filing System website. This due date cannot be extended and Federal income tax extensions do not extend the FBAR filing due date. The civil penalty for willful failure to file an FBAR equals the greater of $100,000 or 50% of the total balance of the foreign account per violation. The government may also look to file criminal charges for will failure to file. Non-willful violations that are not due to reasonable cause incur a penalty of $10,000 per violation.

Taxpayers who cannot meet the June 16th deadline to file their 2013 Federal individual income tax return can get an automatic extension until October 15, 2014. But remember, this is an extension of time to file, not an extension of time to pay. Interest, currently at the rate of three percent per year compounded daily, applies to any payment made after April 15, 2014. In some cases, a late payment penalty, usually 0.5 percent per month, applies to payments made after June 16, 2014.

Now for some taxpayers, an additional extension beyond October 15th may be available. For example, members of the military and others serving in Afghanistan and other combat zone localities normally have until at least 180 days after they leave the combat zone to file their returns and pay any taxes due.

If you have never reported your foreign investments on your U.S. Tax Returns or even if you have already quietly disclosed, you should seriously consider participating in the IRS’s 2012 Offshore Voluntary Disclosure Initiative (“OVDI”). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California qualify you for OVDI.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.