The 2018 U.S. tax season is well underway! Although many believe that the U.S. tax season is over after the April 15 deadline, the deadline for many individuals and corporations outside of the U.S. is June 17, 2019. If you fall under one of the various categories of taxpayers who are subject to the June 17 deadline, please be sure to mark the date in your calendars and have everything filed on time to avoid paying penalties and interest.
The typical U.S. citizen and Green Card holder, living and working in the U.S. is required to file their tax returns with the Internal Revenue Service (IRS) no later than April 15 each year. There is an extension available to those taxpayers, that extends the time to file the return for 6 months.
For U.S. citizens or resident aliens living and working outside of the U.S., you are entitled to an automatic two month extension to file and pay taxes, without needing to file for an extension with the IRS. Interest on any unpaid tax will be charged from the original due date of the return. To qualify for this automatic extension, you must include a statement with your tax return proving that you meet the requirements.
Although this automatic extension is provided to ensure individuals located outside of the U.S. are able to file their taxes on time, an additional 4-month extension can be applied for by filing with the IRS.
Persons/Corporations/Entities That Must Follow the June 17th Deadline
The U.S. is in a unique position on the worldwide stage, in that they are part of a select group of countries that tax based on citizenship rather than residency. As such, U.S. citizens living outside of the United States must file their taxes annually to maintain compliance with U.S. tax law.
To assist U.S. citizens who must also file taxes with their country of residency, which can lead to complications in the application of U.S. tax treaties for tax practitioners, U.S. tax law grants an automatic extension of time to file for citizens who live and work outside of the U.S. There are certain other individuals and entities which must file their returns by the June 17, 2019 deadline which are:
- U.S. citizens and Green card holders living in Canada and otherwise outside the United
- Canadians and other nonresident alien individuals who sold their U.S. real property in
- Canadians and other nonresident alien individuals who are claiming a refund of any
overwithheld U.S. taxes in 2018;
- Canadians and other nonresident alien individuals with U.S. rental income making (or
who made) net rental income election;
- Certain Fiscal year-end Canadian and other non-U.S. corporations that have a U.S.
- Calendar year-end Canadian and other non-U.S. corporations filing a treaty-based
- Certain Fiscal year-end U.S. domestic corporations.
U.S. citizens and Residents
The two month extension from the April 15, 2019 deadline applies to U.S. citizens and green card holders that do not live or work in the U.S. One of the following tax Forms may be applicable if this is you.
Form 1040 – U.S. Individual Income Tax Return
This Form is the typical U.S. tax return filed by individuals. It is utilized by U.S. citizens and Green Card holders to file their annual income tax returns. The 2018 version of Form 1040 has a variety of schedules that may need to be attached. It is expected that the typical taxpayer will not require any additional Schedules to be attached to their return. If the return includes certain complications, such as claiming specific credits or deductions, you may need to complete one or more of the following Schedules:
Schedule 1 – Additional Income and Adjustments to Income (used for additional income, such as capital gains, unemployment compensation, prize or award money, gambling winnings or if you have any deductions to claim, such as student loan interest deduction, self-employment tax, educator expenses.)
Schedule 2 – Tax (used if you elect Alternative Minimum Tax AMT or need to make an excess advance premium tax credit repayment.)
Schedule 3 – Nonrefundable Credits (used if you are claiming a nonrefundable credit other than the child tax credit or the credit for other dependents, such as the foreign tax credit, education credits, general business credit.)
Schedule 4 – Other Taxes (used if you owe other taxes, such as self-employment tax, household employment taxes, additional tax on IRAs or other qualified retirement plans and tax-favored accounts.)
Schedule 5 – Other Payments and Refundable Credits (used to claim a refundable credit other than the earned income credit, American opportunity credit, or additional child tax credit or if you have other payments, such as an amount paid with a request for an extension to file or excess social security tax withheld)
Schedule 6 – Foreign Address and Third Party Designee (used to provide a foreign address or a third party designee other than your paid preparer.)
Form 2555 – Foreign Earned Income
This Form incorporates your foreign earned income exclusion as well as any applicable housing exclusion and deduction.
Form 5471 – Information Return of U.S. Persons With Respect To Certain Foreign
U.S. citizens and residents who are officers, directors or shareholders in certain foreign corporations are required to file Form 5471 to satisfy Internal Revenue Code reporting requirements.
Form 8621 – Information Return by a Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund
A U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC), have to file this Form, provided they fulfill certain requirements. These requirements are based on whether they:
- Receive certain direct/indirect distributions from a PFIC;
- Realize gains on a direct/indirect disposition of PFIC stock;
- Report information relating to a QEF or section 1296 mark-to-market election;
- Make an election reportable in Part 2 of Form 8621; or
- Need to file an annual report pursuant to IRC section 1298(f).
Form 8833 – Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)
This Form is used to make a treaty-based return position disclosure as required under IRC section 6114. This is usually utilized by dual resident taxpayers to indicate the treaty provision and explain the treaty based position taken.
Form 8938 – Statement of Specified Foreign Financial Assets
This Form is used for taxpayers to report their specified foreign financial assets if the total value of all the specified foreign financial assets in which the taxpayer has an interest in is more than the reporting threshold.
U.S. Non-Resident Aliens
The filing due date for individuals filing Form 1040NR, U.S. Nonresident Alien Income Tax Return who did not have wages subject to U.S. income tax withholding in June 17, 2019. The following Forms may be required to be filed if this is you. Form 1040NR, U.S. Nonresident Alien Income Tax Return
There are a variety of individuals who are required to file Form 1040NR each year, some of
- If you were a nonresident alien engaged in a U.S. trade or business;
- You sold U.S. real property in 2018;
- You represented a deceased person who would have had to file Form 1040NR;
- You represented an estate or trust that had to file Form 1040NR;
Form 8840 – Closer Connection Exception Statement for Aliens
This Form is used to claim a closer connection to a foreign country exception to the substantial presence test.
Non U.S. Based Entities
In accordance with U.S. domestic law, these are certain foreign corporations and entities with U.S. interactions that are required to file a U.S. Corporation Income Tax Return. If your business is located outside of the U.S. but has business dealings with U.S. customers, you may be required to file Form 1120-F.
Form 1120-F – U.S. Income Tax Return of a Foreign Corporation
A foreign corporation is required to file this Form to report income, gains, losses, credits, deductions and to factor in their U.S. income tax liabilities.
Very truly yours,
U.S. TAX IQ Team