US Tax Law Change for Americans Living Abroad

August 27, 2011 10:40 PM

As a US citizen, living and working abroad for many years, I recently heard of a new law that I must file tax returns on the US by Aug 31, 2011 or face a penalty. Anyone know about this? If US citizens live and pay taxes abroad, they generally are exempt up to $91,500.
posted by foxinsocks to law & government (9 answers total)

The thing you mean is the OVDI. (Forbes writeup.)

If US citizens live and pay taxes abroad, they generally are exempt up to $91,500.

But not exempt from filing, and this isn't new at all. See this very recent previously.
posted by holgate at 10:50 PM on August 27, 2011

Filing is not necessarily the same as paying taxes.
posted by Blazecock Pileon at 11:48 PM on August 27, 2011

by Aug 31, 2011 or face a penalty.

Yeah, you automatically get an extension of the April 15th filing date if you reside outside the United States.

The tax exempt cap (introduced as part of the Bush tax "cuts" and effectively a tax increase on well-earning American expats) puts into play the 330/365 calculus you have to use if you travel back to the Land of the Free during the tax year.
posted by three blind mice at 12:42 AM on August 28, 2011

First: Yeah, you should have been filing taxes for all the years you have been abroad. It doesn't matter if you are exempt. You still have to file the taxes. Because the IRS does not know you are exempt until you do so.

Second: This has nothing to do with the April 15th yearly deadline (or the automatic extension to June 15th for expats) for filing taxes. The Aug 31 deadline is about declaring foreign accounts.
posted by vacapinta at 1:20 AM on August 28, 2011

Also, every US citizen abroad should really sit down and read this: Tax Guide for U.S. Citizens and Resident Aliens Abroad.

If you have been also filing Form TD F 90-22.1 (also known as FBAR) like that Guide I linked instructs you to, then you don't have to worry about the OVDI. The Aug 31 deadline is for people who haven't been filing it.
posted by vacapinta at 1:37 AM on August 28, 2011

Ok so basically a US citizen residing abroad is a criminal if they haven't been filing taxes even if they wouldn't owe anything to the IRS and are paying taxes to another country where they reside and are also a citizen? But in this case the US citizen just has to fill out the letter and if their income and assets total less than 100K then they're off the hook?

What is the "Complete Voluntary Disclosure Package" exactly? I can see what the letter is but I'm not finding details of this "package".
posted by hazyjane at 2:50 AM on August 28, 2011

In addition to filing a return, if you have over $10,000 in any foreign bank accounts (even split between them) you need to declare it in an FBAR form -- this is what the Aug 31st deadline is about.
posted by ukdanae at 3:01 AM on August 28, 2011

Uh, the requirement to file a tax return is not a "new law." This requirement has been on the books for decades.

That you're only finding out about it now does not mean it's a new law.

Get on the phone with a qualified US tax attorney ASAP and resolve this sooner rather than later.
posted by dfriedman at 3:51 AM on August 28, 2011 [1 favorite]

If you follow the OVDI link in the first response, you will see that the deadline has now been extended to September 9.
posted by megatherium at 7:17 AM on August 28, 2011