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Those with foreign assets reminded of pending deadlines & electronic filing requirement

In a news release, IRS has reminded U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2013, that they may have a U.S. tax liability and a filing requirement in 2014, and that the June 17 filing deadline is quickly approaching. In addition, taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2013 must electronically file Form 114, Report of Foreign Bank and Financial Accounts (FBAR), by June 30, 2014.

Background. U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular due date of their tax return, generally have an automatic two-month extension beyond the regular Apr. 15 deadline to file their returns. The June 16 deadline is extended this year to June 17 since the extended due date falls on a Sunday. To use this automatic two-month extension, taxpayers must attach a statement to their return explaining which of these two situations applies.

Nonresident aliens who received income from U.S. sources in 2013 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be Apr. 15 or June 16 depending on sources of income.

U.S. citizens and resident aliens are legally required to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B, Interest and Ordinary Dividends, 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.

Certain taxpayers may also have to fill out 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 Form 8938 if the aggregate value of those assets exceeds certain thresholds.

Separately, taxpayers 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, an FBAR form. This form replaces TD F 90-22.1, the FBAR form used in the past. The new FBAR is due to the Treasury Department by June 30, 2014, must be filed electronically, and is only available online through the BSA E-Filing System website (see ). It is not a tax form.

Free file and e-file now available. Taxpayers abroad can now use IRS Free File to prepare and electronically file their returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $58,000 or less can use brand-name software to prepare their returns and then e-file them for free.

A second option, Free File Fillable Forms, the electronic version of IRS paper forms, has no income limit and is best suited to people who are comfortable preparing their own tax return. Taxpayers can check out the e-file link on IRS’s website for details on the various electronic filing options.

A limited number of companies provide software that can accommodate foreign addresses. Both Free File and e-file are available until Oct. 15, 2014, for anyone filing a 2013 return..

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