U.S. Federal Income Tax and Informational Filing Requirements
Income Tax Requirements
In general, U.S. citizens may be required to file state and federal income tax returns. Whether the individual must file a state or federal income tax return will depend on factors such as the amount of income earned, filing status, and age of the individual. If the U.S. citizen is not living in the United States and did not derive income from any particular state, then no state income tax return is required to be filed
On the other hand, a U.S. Federal income tax return may still be required. This is because U.S. citizens are taxed on their world-wide income. Indeed, for many living outside the United States this may be a surprise. Indeed, U.S. Federal income tax law differs from many countries where a filing of world-wide income of the individual's home country only in the case where the person is considered a resident for that particular tax year (ex. France).
Informational Filing Requirements
In addition, U.S. citizens whether living in the United States or abroad may have certain informational filing requirements based on foreign assets. The assets themselves are not taxed. However, should the taxpayer fail to report these assets severe penalties may be imposed by the Internal Revenue Service that generally start at $10,000 USD.
Common informational filing requirments include the Foreign Bank and Financial Accounts ("FBAR"), Statement of Specified Foreign Financial Assets (Form 8938), and reporting by U.S. citizens of their ownership in foreign companies where the taxpayer's stock ownership surpasses a certain threshold (Form 5471).
Regularization of Income tax and informational returns
If you are a U.S. citizen and are not up-to-date on your U.S. tax obligations, please feel to contact me to discuss your situation. The Internal Revenue Service has created different procedures allowing individuals under certain circumstances to regularize their tax situation with little or not penalties.
Or if you are a U.S. citizen that needs assistance in filing U.S. Federal personal income tax returns, please do not hesitate to contact my office to discuss your case.