IRS Issues Guidance on Nonresident Filing Requirements and Foreign Asset Reporting

The IRS recently issued a reminder to certain U.S. citizens, dual citizens and resident aliens that filing deadlines are approaching. The warning was addressing individuals that lived overseas including those individuals with dual citizenship, U.S. citizens or resident aliens or members of the military serving outside the U.S. on the regular due date of their tax return. Taxpayers who meet the criteria above are granted automatic two-month extensions to file their income tax return pushing their deadline to Monday, June 17, 2013. A statement must be attached to the taxpayer's return explaining which of the two situations apply in order for the extension to be granted.

Nonresident aliens who received income from U.S. sources during 2012 must also determine whether they have a filing obligation. The filing deadline for nonresident aliens is normally April 15. A June 17th deadline applies if the nonresident alien is not an employee, is not self-employed or does not receive non-employee compensation subject to U.S. income tax withholding or if he or she has no office or place of business in the United States.

Generally, U.S. Citizens, resident aliens and in some cases nonresident aliens are also required to report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceed certain thresholds at any time during the tax year. The thresholds vary depending on filing status but start as low as $50,000. The form is due with the taxpayer's annual return.

Separately, taxpayers with foreign accounts whose aggregate value exceeds $10,000 at any time during the tax year must file Treasury Department Form TD F 90-22.1. This threshold does not vary depending on filing status and the form is due by June 30, 2013.

Failure to file either form can result in harsh penalties from the IRS. Incomplete or non-filing of Form 8938 or TD F 90-22.1 carries a penalty of $10,000.

For more information or questions on this topic, please contact our office at 813-282-3400 or