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November 5, 2017

WHAT EXPATRIATES NEED TO KNOW ABOUT NEW REPUBLICAN TAX BILL AS OF 11/5/17

- by Don D. Nelson, Attorney at Law.

All US expatriates are concerned what effect the pending Republican Tax Plan might have on their taxes while abroad.  The good news is that the foreign earned income exclusion  which is $102,100 for 2017 so far has not been mentioned in the bill and therefore if currently likely to remain the same for 2017 and perhaps beyond.  This means if you are living and working abroad, you can earn (either as self employed or as an employee) up to this amount and not be liable for any US tax on that income. Remember that the exclusion is not automatic. You must file a timely tax return to claim it.  If you file your return 18 months after its due date the IRS can disallow the exclusion.

Some items that if passed (in the bill as of 11/5/17) will affect your US return are:
  • Increase the standard deduction (if you do not itemize) to $24,000
  • Deletion of dependent exemption which is currently $4,050 for your self and your dependents
  • Eliminate the possibility to deduct  state income taxes
  • Eliminates the deduction for casualty losses (such as those incurred from hurricanes and floods)
  • Decreases the deduction for home mortgage interest to that incurred on a $500,000 loan (previously $1.100,000 loan interest)
  • Require that you live in your primary residence for 5 out of past 8 years to get the $500,000 gain exclusion.

Many more deductions  which primarily benefit the middle  class are scheduled to be eliminated. The entire pending bill if taken as a whole significantly benefits the wealth and large corporations and in most situations give no or only a small benefit to the middle class taxpayer.  Those politicians who claim it will benefit the middle class are using smoke and mirrors.

Note that everything mentioned above is subject to change as the tax bill moves through the legislative process and until the fina tax bill is passed and signed by the President.

November 3, 2017

All Your Questions on Proposed GOP Tax Plan Answered


1.6%
1964
1.3%
2010
1.1%
1921
0.9%
READ MORE DETAILS OF SPECIFIC ITEMS HERE FROM THE WASHINGTON POST and see how it will affect your personal taxes.

Careful analysis clearly  shows it does  little for  and maybe even hurts most of  the middle class poplulation while greatly benefits the wealthy and large corporations. Most taxpayers will lose benefit of deducting home mortgage interest, property taxes and state income taxes as well as dependent deductions for your children.





November 1, 2017

All Expat Taxpayers Can Learn from Manaforts Indictment

The criminal charges filed against former Trump campaign manager Paul Manafort and Richard Gates are serious. They are only accusations at this point. All criminal defendants are presumed innocent until they are proven otherwise in a court of law. Still, the 12-count 31-page indictment here is a daunting list of accusations. Manafort and Gates stand accused of conspiracy against the United States, conspiracy to launder money, failing to report foreign bank and financial accounts, acting as an unregistered foreign agent, and making false statements. It’s tough to unpack most of those charges. Even so, there’s a lot in it from which regular taxpayers can learn about how to handle their own taxes and the IRS.

READ MORE HERE IN FORBES ARTICLE

Want to discuss your situation under the absolute privacy and legal confidentiality of attorney client privilege?  Email Don at ddnelson@gmail.com 

October 31, 2017

Manaforts Failure to Report Foreign Finanical Accounts (Form 114 - FBAR) could result in 70 year Jail Term

Forbes magazine article states this is the same way they got Al Capone....tax evasion. Make certain you report all foreign financial accounts that you own or sign on to the IRS to avoid ManafortÅ› problem. READ MORE IN THE FORBES ARTICLE

September 15, 2017

EVERYTHING YOU WANTED TO KNOW ABOUT FOREIGN TAX CREDITS

Generally, the following four tests must be met for any foreign tax to qualify for the credit:
  1. The tax must be imposed on you
  2. You must have paid or accrued the tax
  3. The tax must be the legal and actual foreign tax liability
  4. The tax must be an income tax (or a tax in lieu of an income tax)

Tax Must Be Imposed on You

You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. For example, a tax that is deducted from your wages is considered to be imposed on you.

Foreign Country

A foreign country includes any foreign state and its political subdivisions. Income, war profits, and excess profits taxes paid or accrued to a foreign city or province qualify for the foreign tax credit.

U.S. Possessions

For foreign tax credit purposes, all qualified taxes paid to U.S. possessions are considered foreign taxes.  For this purpose, U.S. possessions include Puerto Rico and American Samoa.

Tax Must Be Paid Or Accrued

You can claim a credit only if you paid or accrued the foreign tax to a foreign country or U.S. possession.

Joint Return

If you file a joint return, you can claim the credit based on the total of any foreign income tax paid or accrued by you and your spouse.

Combined Income

If foreign tax is imposed on the combined income of two or more persons (for example, spouses), the tax is allocated among, and considered paid by, these persons on a pro rata basis in proportion to each person's portion of the combined income.
Example. You and your spouse reside in Country X, which imposes income tax on your combined incomes. Your filing status on your U.S. income tax return is married filing separately. If you earned 60% of the combined income, you can claim only 60% of the foreign taxes imposed on your income on your U.S income tax return. Your spouse can claim only 40%.

Mutual Fund Shareholder

If you are a shareholder of a mutual fund, or other regulated investment company (RIC), you may be able to claim the credit based on your share of foreign income taxes paid by the fund if it chooses to pass the credit on to its shareholders. You should receive from the mutual fund a Form 1099-DIV, or similar statement, showing the foreign country or U.S. possession, your share of the foreign income, and your share of the foreign taxes paid. If you do not receive this information, you will need to contact the fund.

Tax Must Be the Legal and Actual Foreign Tax Liability

Your qualified foreign tax is only the legal and actual foreign tax liability that you paid or accrued during the year. The amount of foreign tax that qualifies is not necessarily the amount of tax withheld by the foreign country. The amount of the foreign tax that qualifies for the credit must be reduced by any refunds of foreign tax made by the government of the foreign country or the U.S. possession.
Example 1:  You received a $1,000 payment of interest from a Country A investment.  
Country A’s withholding tax rate on interest income is 30% ($300), but you are eligible for a reduced treaty withholding rate of 15% ($150) if you provide a reduced withholding statement/certificate to the withholding agent. Your qualified foreign tax is limited to $150 based on your eligibility for the  reduced treaty rate, even if $300 is actually withheld because you failed to provide the required withholding statement/certificate.
Example 2:  You are sent to Country A by your U.S. employer to work for two weeks. You earn $2,500 while in Country A. Under Country A tax law, non-residents are not taxed on personal services income earned in the country if working for a non-Country A employer, earn less than $3,000, and are in the country for less than 30 days. However, in order to leave Country A, you are required to pay tax on the $2,500, but you can file a claim for refund and have the full amount of tax refunded to you later. Because it is fully refundable, none of the tax is a qualified tax, whether or not you file a refund claim with Country A.      
Example 3:  You are a shareholder of a French corporation. You receive a $100 refund of the tax paid to France by the corporation on the earnings distributed to you as dividend. The French government imposes a 15% withholding tax ($15) on the refund you received. You receive a check for $85. You include the $100 in your income. The $15 of tax withheld is a qualified foreign tax.

Tax Must Be an Income Tax or Tax In Lieu of Income Tax

Generally, only income, war profits, and excess profits taxes (collectively referred to as income taxes) qualify for the foreign tax credit. Foreign taxes on wages, dividends, interest, and royalties generally qualify for the credit. The tax must be a levy that is not payment for a specific economic benefit and the predominant character of the tax must be that of an income tax in the U.S. sense.
A foreign tax is not an income tax and does not qualify for the foreign tax credit to the extent it is a soak-up tax. A soak-up tax is a foreign tax that is assessed only if a tax credit is available to the taxpayer. This rule only applies if and to the extent the foreign tax would not be imposed if the credit were not available.
Foreign taxes on income can qualify even though they are not imposed under an income tax law if the tax is in lieu of an income, war profits, or excess profits tax. The tax must be a foreign levy that is not payment for a specific economic benefit and the tax must be imposed in place of, and not in addition to, an income tax otherwise generally imposed.
See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for Taxes in Lieu of Income Taxes.  Examples of such taxes in lieu of foreign income taxes may include:
  1. The gross income tax imposed on nonresidents on income not attributable to a trade or business in the country, where residents with a trade or business are generally taxed on realized net income.
  2. A tax imposed on gross income, gross receipts or sales, or the number of units produced or exported.
If a foreign country imposes a tax in lieu of an income tax that is a soak-up tax imposed in lieu of an income tax, the amount that does not qualify for the foreign tax credit is the lesser of:
  1. the amount of the tax that would not be imposed unless a foreign tax credit would be available; or
  2. the foreign tax you paid that is more than the amount you would have paid if you had been subject to the generally imposed income tax.

Foreign Taxes for Which You Cannot Take a Credit

The following are some foreign taxes for which you cannot take a foreign tax credit:
  • Taxes on excluded income (such as the foreign earned income exclusion),
  • Taxes for which you can only take an itemized deduction,
  • Taxes on foreign mineral income,
  • Taxes from international boycott operations,
  • A portion of taxes on combined foreign oil and gas income,
  • Taxes of U.S. persons controlling foreign corporations and partnerships who fail to file required information returns,
  • Taxes related to a foreign tax splitting event, and
  • Social security taxes paid or accrued to a foreign country with which the United States has a social security agreement. For more information about these agreements, refer to Totalization Agreements.

Reduction in Total Foreign Taxes Available for Credit

You must reduce your foreign taxes available for the credit by the amount of those taxes paid or accrued on income that is excluded from U.S. income under the foreign earned income exclusion or the foreign housing exclusion.   Need help taking a foreign tax credit in addition to the foreign earned income exclusion or in lieu of that exclusion?  Email us at ddnelson@gmail.com for a mini consultation.

September 12, 2017

Determining if FBARS (forms 114, TDF 90-22.1) were filed for Prior Years or Securing Copy of Prior Year Filed FBARS

Unfortunately  in the BSA E-file system there is no  paper copy of  electronically file forms. The system allows you to save a copy of the form prior to submission  but you cannot retrieve FBAR form 114 or TDF 90-22.1  after submission . The form cannot be read except with Adobe Acrobat Reader.

 If  you were unable to save the file or your files were corrupted you need re-file the FBAR ‘s.  

You can call  313 234 6146  we can tell you what years were filed  if  you  provide the  name and  SSN and I can tell your  what years were file . but again there is not copy of an electrically file form .

Request for copies of FBAR 114 form must be made in writing :

Requests must include the following information:
Filer Name and Social Security Number or Taxpayer Indentation Number  Calendar Year (s) and a contact number 
•             A Flat fee of  $5.00 for five or fewer FBARs,
•             $1.00 for each additional item
•             Copies  will be an additional $0.15 per document .

Check or money order should be made payable to the Internal Revenue Service.
If an attorney or someone else on behalf of the citizen, attached a copy of a 2848 specific to TD F 90-22.1 or form 114 ( called FBAR) or other documentation that gives the authorization to the requestor on behalf to the citizen(s) , for questions and concerns please provide a contact number. 

Allow 90 days for completion upon receipt .    Request and payments should be mailed to:

Detroit –Federal Building ( Formally  IRS Enterprise Computing Center-Detroit)
ATTN: Verification
P O Box 32063
Detroit, MI 48232-0063

September 7, 2017

IRS Streamlined Program - Allows you to Surface with IRS with limited Penalties, and Exposure

he following streamlined procedures are referred to as the Streamlined Foreign Offshore Procedures.

Eligibility for the Streamlined Foreign Offshore Procedures

In addition to having to meet the general eligibility criteria, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Foreign Offshore Procedures described in this section must:  (1) meet the applicable non-residency requirement described below (for joint return filers, both spouses must meet the applicable non-residency requirement described below) and (2) have failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a foreign financial account, and such failures resulted from non-willful conduct.  Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
For information on the meaning of foreign financial asset, see the instructions for FinCEN Form 114, which may be found at FinCen and the instructions for Form 8938, which may be found at Instructions for Form 8938.
Non-residency requirement applicable to individuals who are U.S. citizens or lawful permanent residents (i.e., “green card holders”):  Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days.  Under IRC section 911 and its regulations, which apply for purposes of these procedures, neither temporary presence of the individual in the United States nor maintenance of a dwelling in the United States by an individual necessarily mean that the individual’s abode is in the United States.  For more information on the meaning of “abode,” see IRS Publication 54, which may be found at Publication 54.
Example 1:  Mr. W was born in the United States but moved to Germany with his parents when he was five years old, lived there ever since, and does not have a U.S. abode.  Mr. W meets the non-residency requirement applicable to individuals who are U.S. citizens or lawful permanent residents.
Example 2:  Assume the same facts as Example 1, except that Mr. W moved to the United States and acquired a U.S. abode in 2012.  The most recent 3 years for which Mr. W’s U.S. tax return due date (or properly applied for extended due date) has passed are 2013, 2012, and 2011.  Mr. W meets the non-residency requirement applicable to individuals who are U.S. citizens or lawful permanent residents.
Non-residency requirement applicable to individuals who are not U.S. citizens or lawful permanent residents: Individuals who are not U.S. citizens or lawful permanent residents, or estates of individuals who were not U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the last three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not meet the substantial presence test of IRC section 7701(b)(3).  For more information on the substantial presence test, see IRS Publication 519, which may be found at IRS Publication 519.

Example 3:  Ms. X is not a U.S. citizen or lawful permanent resident, was born in France, and resided in France until May 1, 2012, when her employer transferred her to the United States.  Ms. X was physically present in the U.S. for more than 183 days in both 2012 and 2013.  The most recent 3 years for which Ms. X’s U.S. tax return due date (or properly applied for extended due date) has passed are 2013, 2012, and 2011.  While Ms. X met the substantial presence test for 2012 and 2013, she did not meet the substantial presence test for 2011.  Ms. X meets the non-residency requirement applicable to individuals who are not U.S. citizens or lawful permanent residents.


If you need assistance of wish to discuss entering the program, etc. email us at ddnelson@gmail.com.

August 31, 2017

Criteria IRS uses for FOREIGN EARNED INCOME EXCLUSION - IRS NOW FORCING YOU FOLLOW RULES (FORM 2555)

The Acone case linked below provides you with the criteria viewed by the IRS and Courts with respect to foreign tax domicile and foreign abode which you must satisfy to secure the foreign earned income exclusion on Form 2555 if you are an expat.

https://docs.google.com/document/d/e/2PACX-1vS-i3toACXWWJXyzfeEAoOgVpJOsI23tMCohLL8ICV-yX4A4X06WwzREBKKbLH0gpZe18Y2TznNiLiu/pub 

If you need help because the IRS has disallowed your expat  foreign earned income exclusion we may be able to help.  Email us at ddnelson@gmail.com 

July 26, 2017

One Financial Mistake That Can Cost Expats Living Abroad Millions - and We See This All Too Often When We do Tax Returns


Too many expats and others living abroad keep all of their savings and investments in low interest paying bank or savings accounts in the USA. This is historically a big mistake.  It is understandable that you want to keep your funds in the USA, because the banks and currency in your country of location may not be stable or safe. However, other than some reserves a US bank account is not the answer.

Investing in the stock market (over the long run and in good conservative companies) and real estate (in areas where history shows the values will increase significantly in the future - Such as California) will give you a nest egg on retirement of 3 to 4 times the amount you will have if you just keep it all in a bank earning interest.  The worst place to keep it as you can see in the following article is under your mattress.

Read More in the following Washington Post article http://wapo.st/2ucJSBq

Remember also, investments in stocks and real estate abroad is mostly treated the same for US tax purposes as investing in US stocks and bonds. However, investing in foreign mutual funds can result in you having to pay higher taxes (thanks to the US Mutual Fund Lobby).  Want to discuss your investment  and tax strategy. Email Don at ddnelson@gmail.com.  We have assisted hundreds of clients on their way to accumulating retirement wealth.

July 12, 2017

WHEN YOU RECEIVE A LETTER FROM THE IRS

Tips on How to Handle an IRS Letter or Notice

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS:

Do not panic. Simply responding will take care of most IRS letters and notices.Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Read the letter carefully; some notices or letters require a response by a specific date.Respond timely. A notice may likely be about changes to a taxpayer’s account, taxes owed or a payment request. Sometimes a notice may ask for more information about a specific issue or item on a tax return.

A timely response could minimize additional interest and penalty charges.If a notice indicates a changed or corrected tax return, review the information and compare it with your original return. If the taxpayer agrees, they should note the corrections on their copy of the tax return for their records. There is usually no need to reply to a notice unless specifically instructed to do so, or to make a payment.Taxpayers must respond to a notice they do not agree with. They should mail a letter explaining why they disagree to the address on the contact stub at the bottom of the notice. Include information and documents for the IRS to consider and allow at least 30 days for a response.

There is no need to call the IRS or make an appointment at a taxpayer assistance center for most notices. If a call seems necessary, use the phone number in the upper right-hand corner of the notice. Be sure to have a copy of the related tax return and notice when calling.Always keep copies of any notices received with tax records. The IRS and its authorized private collection agency will send letters and notices by mail. The IRS will not demand payment a certain way, such as prepaid debit or credit card. Taxpayers have several payment options for taxes owed.

Need help understanding a notice or responding to the IRS (or state tax agency). Email us at ddnelson@gmail.com and attach a copy.

July 8, 2017

Plan Ahead for Tax Time When Renting Out Residential or Vacation Property Outside of USA


Summertime is a time of year when people rent out their property located in a foreign country. In addition to the standard clean up and maintenance, owners need to be aware of the tax implications of residential and vacation home rentals both in and outside of USA. Most of the tax rules are the same for both.
Receiving money for the use of a dwelling also used as a taxpayer’s personal residence generally requires reporting the rental income on a tax return. It also means certain expenses become deductible to reduce the total amount of rental income that's subject to tax.
Dwelling Unit.  This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It's possible to use more than one dwelling unit as a residence during the year.
Used as a Home.  The dwelling unit is considered to be used as a residence if the taxpayer uses it for personal purposes during the tax year for more than the greater of: 14 days   or 10% of the total days rented to others at a fair rental price. Rental expenses cannot be more than the rent received.
Personal Use.  Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.
Divide Expenses. Special rules generally apply to the rental of a home, apartment or other dwelling unit that is used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. Special deduction limits apply.
How to Report. Use Schedule E to report rental income and rental expenses on Supplemental Income and Loss. Rental income may also be subject to Net Investment Income Tax. Use Schedule A to report deductible expenses for personal use on Itemized Deductions. This includes such costs as mortgage interest, property taxes and casualty losses.
Special Rules.  If the dwelling unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. Find out more about these rules; see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
 You can get forms and publications on IRS.gov/forms at any time.
Foreign Taxes May Have to be Paid in the Country in which the property is located.  Check with a local accountant. For instance in Mexico you must not only pay income taxes on the rental income but may also have to pay Value Added Taxes.  Failure to register and pay can result in substantial penalties in Mexico and other countries.
Good News - You do get foreign tax credits for income taxes paid in foreign countries which will offset your US taxes on the same income dollar for dollar. Other taxes you pay may be deductible as rental expenses. Most states do not allow a foriegn tax credit on state returns.
Additional Resources:
YouTube Videos:
Renting Your Vacation Home – English | Spanish | ASL
Share this tip on social media -- Plan Ahead for Tax Time When Renting Out Residential or Vacation Property. https://go.usa.gov/xNHTy#IRS

Email us for US tax and legal planning for the rental of your foreign property or its sale or purchase. Planning ahead can often avoid tax problems later.   ddnelson@gmail.com    Also visit our website at www.taxmeless.com 

June 20, 2017

Understanding the benefits of trusts for US expats and nonresidents with US assets from Fidelity

Understanding the benefits of trusts
 Control of your wealth
 Protection of your legacy
 Privacy and probate savings
They say death and taxes are inevitable. But that may not be completely true. If you die this year, your estate will avoid taxes as long as it is valued at less than $5,490,000—and up to $10,980,000 for a surviving spouse. So who needs a trust?
“Many people are surprised to learn that there are many benefits to having a trust other than potential tax savings,” says Andrew Hamil, head of Fidelity Personal Trust Company. “Though taxes are important, protection of your assets and assuring your family's well-being in the event of incapacity far outweigh the benefits of tax savings for most people.”  Read More

Need help with a US trust or Will to dispose of your US assets, contact ddnelson@gmail.com.  If you have assets located in the country you live in abroad, best to hire a local attorney to draw up the property documents to transfer those assets upon your demise.


June 12, 2017

Taxpayers Abroad Must File by June 15; Extensions Available; New Filing Deadline Now Applies to Foreign Account Report


Taxpayers living and working abroad that they must file their 2016 federal income tax return by Thursday, June 15.

The special June 15 deadline is available to both U.S. citizens and resident aliens abroad, including those with dual citizenship. For those who can’t meet the June 15 deadline, tax-filing extensions are available and they can even be requested electronically. In addition, a new filing deadline now applies to anyone with a foreign bank or financial account required to file an annual report for these accounts, often referred to as an FBAR.

Here is a rundown of key points to keep in mind:

Most People Abroad Need to File An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return. A taxpayer qualifies for the special June 15 filing deadline if both their tax home and abode are outside the United States and Puerto Rico. Those serving in the military outside the U.S. and Puerto Rico also qualify for the extension to June 15.
Be sure to attach a statement indicating which of these two situations applies. Interest, currently at the rate of four percent per year, compounded daily, still applies to any tax payment received after the original April 18 deadline. For details, see the When To File and Pay section in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. Special Income Tax Return Reporting for Foreign Accounts and Assets
Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.
Choose Free File



Automatic Extensions Available Taxpayers abroad who can’t meet the June 15 deadline can still get more time to file, but they need to ask for it. Their extension request must be filed by June 15. Automatic extensions give people until Oct. 16, 2017, to file; however, this does not extend the time to pay tax. An easy way to get the extra time to file is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868. To get the extension, taxpayers must estimate their tax liability on this form and pay any amount due. Another option for taxpayers is to pay electronically and get an extension of time to file. IRS will automatically process an extension when taxpayers select Form 4868 and they are making a full or partial federal tax payment using Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or a debit or credit card. There is no need to file a separate Form 4868 when making an electronic payment and indicating it is for an extension. Electronic payment options are available at IRS.gov/payments. International taxpayers who do not have a U.S. bank account should refer to the Foreign Electronic Payments section on IRS.gov for more payment options and information. Combat Zone Taxpayers get More Time Without Having to Ask for it Members of the military and eligible support personnel serving in a combat zone have at least 180 days after they leave the combat zone to file their tax returns and pay any taxes due. This includes those serving in Iraq, Afghanistan and other combat zone localities. A complete list of designated combat zone localities can be found inPublication 3, Armed Forces’ Tax Guide, available on IRS.gov. Various circumstances affect the exact length of the extension available to any given taxpayer. Details, including examples illustrating how these extensions are calculated, can be found in the Extensions of Deadlines section in Publication 3.
New Deadline for Reporting Foreign Accounts

Starting this year, the deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is now the same as for a federal income tax return. This means that the 2016 FBAR, Form 114, was normally required to be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 18, 2017. But FinCEN is granting filers missing the original deadline an automatic extension until Oct. 16, 2017 to file the FBAR. Specific extension requests are not required. In the past, the FBAR deadline was June 30 and no extensions were available. In general, the FBAR filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2016. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website. Report in U.S. Dollars Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.
Both Forms 114 and 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.


More Information Available Any U.S. taxpayer here or abroad with tax questions can refer to the International Taxpayers landing page and use the online IRS Tax Map and the International Tax Topic Index to get answers. These online tools group IRS forms, publications and web pages by subject and provide users with a single entry point to find tax information. Taxpayers who are looking for return preparers abroad should visit the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.

More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.