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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7266
Experience:  15years with H & R Block. Divisional leader, Instructor
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Hello, I am a dual citizen (Italian-American). I have never

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Hello, I am a dual citizen (Italian-American). I have never lived in the States, always lived in Italy and paid taxes here, never earning more than the amount which qualifies for Foreign Earned Income Exclusion. I have never filed a tax return, did I have to? Thanks for your help

Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
Yes you were and are required to still file even if your earnings were below the annual foreign exclusion amount. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. The exclusion is not an automatic event. You must file and claim the exclusion for it to be counted.


The foreign earned income exclusion is voluntary. You can choose the foreign earned income exclusion and the foreign housing exclusion by completing the appropriate parts of Form 2555. Your initial choice of the exclusions on Form 2555 (PDF) or Form 2555-EZ (PDF) generally must be made with:




  • a timely filed return (including any extensions),



  • a return amending a timely filed return, or



  • a late-filed return filed within 1 year from the original due date of the return (determined without regard to any extensions).



You can choose the exclusion on a return filed after the periods described above provided you owe no federal income tax after taking into account the exclusion. If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described above provided you file before IRS discovers that you failed to choose the exclusion. You must type or legibly print at the top of the first page of the Form 1040 "FILED PURSUANT TO SECTION 1.911-7(a)(2)(i)(D)."


The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.


Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.


In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers. FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Reporting applies for assets held in taxable years beginning after March 18, 2010. So you would need to file for 2010 and 2011 if you are in the FATCA reporting requirements.


The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts). Individuals must file each form for which they meet the relevant reporting threshold.


I sincerely XXXXX XXXXX information is helpful and encourage you to look at your information and file at least the last 6 years.

Customer:

Hi Robin,


 

Customer:

 


 

Robin D :

Hello

Customer:

Thank you very much for your help. I have just become aware of all these requirements and hope I will not incur in penalties. I have read on the IRS site that they have started a new streamlined procedure for persons in my position.


 

Customer:

Thanks again

Robin D :

You are most welcome. Yes, the IRS is not out to trap anyone, just to make sure that US persons are complying with the set laws.
Here is the announcement about the streamlined procedures
http://www.irs.gov/uac/IRS-Announces-Efforts-to-Help-U.-S.-Citizens-Overseas-Including-Dual-Citizens-and-Those-with-Foreign-Retirement-Plans

Robin D :

Taxpayers wishing to use the new procedure will be required to submit: (1) delinquent tax returns, with appropriate related information returns, for the past three years, (2) delinquent FBARs for the past six years, and (3) any additional information regarding compliance risk factors required by future instructions. Payment of any federal tax and interest due must accompany the submission. More information about the application process including where submissions should be sent, will be provided prior to the effective date.

Robin D :

I hope you will find all the above helpful and I thank you in advance for a positive rating.

Customer:

Yes,it was very helpful. Thanks again

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7266
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and other Tax Specialists are ready to help you

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