Key Terms

Resources for International Taxpayers

International taxpayers may be subject to U.S. tax and income reporting rules.  You may be affected by these requirements if you are:
  • A U.S. citizen or resident alien working, living, or doing business abroad or receiving investment income from abroad.
  • A U.S. entity doing business abroad or receiving investment income from abroad.
  • A foreign individual working, living, or doing business in the United States or receiving investment income from the United States.
  • A foreign entity doing business in the United States or receiving investment income from the United States.

Topics on this page include:

Frequently Asked Questions

Common questions from international taxpayers include:

Q. How can I find out if I’m required to file a U.S. tax return and whether my income is subject to U.S. income tax?
 

A: If you’re a US citizen or resident alien the rules for filing income tax returns and paying estimated tax are generally the same whether you live in the United States or abroad.  Your worldwide income generally is subject to U.S. income tax, regardless of where you reside (and you must report your income on your return in U.S. dollars).  Read these FAQs on the IRS website for more information. 
 
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Q: I don’t have a U.S. income tax liability.  Does that mean I don’t have to file a return with the IRS?
 

A: No, just because you don’t owe U.S. income tax doesn’t mean that you don’t have to file.  All U.S. citizens and green card holders (other than green card holders who are treated as residents of another country pursuant to an income tax treaty) with income above certain thresholds must file even if they live abroad and have no net U.S. tax liability.  Many international taxpayers have adjusted gross incomes (AGI) of under $25,000, as shown below.
 
Adjusted Gross Income of Total International Returns for TY 2010
 
Generally, you’ll need to file for 2012 if your worldwide income is above $9,750 for a single person or $19,500 for a married couple filing jointly.  See IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for a complete list of filing requirements and other information.
 

Q. I have a bank account outside the United States.  Do I need to report it to the IRS?
 

A. Yes, if certain conditions are met.  The Bank Secrecy Act requires U.S. citizens and residents to report foreign accounts on a Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90–22.1).  This reporting is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions.  Hundreds of thousands of taxpayers file these reports each year.  You’ll need to file an FBAR if: 
  • You’re a U.S. citizen or resident, a domestic partnership, a domestic corporation, domestic estate, or trust, and 
  • You have a financial interest in or signature authority or other authority over any financial account in a foreign country, if 
  • The aggregate value of these accounts exceeds $10,000 at any time during the calendar year. Read these FAQs to find out more.


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Q. Once I file any required FBARs, can I assume I’ve reported everything I’m required to report about my foreign accounts or other assets?

 
A. No, you need to determine whether you should also report foreign financial assets on Form 8938, which is required by a new regime commonly known as FATCA.  The IRS has a chart that helps identify the types of assets that must be reported on Form 8938.  The filing requirement is triggered when the aggregate value of the assets exceeds $50,000, although a higher threshold may apply to joint filers or those who reside abroad.  The instructions for Form 8938 will help you determine the total value of specified foreign financial assets.  There may be some overlap between items you report on an FBAR and those reported on Form 8938.  See Information for U.S Taxpayers on Form 8938 Requirements.
 
 

Q. I recently learned about my U.S. tax obligations.  How can I get current?
 

A. For information on common situations and potential solutions, see Options Available to Help Taxpayers with Offshore Interests, which discusses the following scenarios in more detail.
 
Situation Option for Tax Compliance
You properly reported all your income and paid the tax on it, but recently learned you should have been filing FBARs.
File the delinquent FBARs according to the instructions and attach a statement explaining why they’re late.
 
The IRS will not impose a penalty for the failure to file the delinquent FBARs if there are no underreported tax liabilities and you haven’t previously been contacted about an audit or a request for delinquent returns.
 
You didn’t file certain required information returns such as Form 5471 for controlled foreign corporations (CFCs) or Form 3520 for foreign trusts, but you reported and paid tax on all your taxable income with respect to all transactions related to the CFCs or foreign trusts.
 File the delinquent information returns according to the instructions for the form and attach a statement explaining why you are filing them late. (The Form 5471 should be submitted with an amended return showing no change to income or tax liability.)
 
You are a non-resident U.S. taxpayer and you didn’t file returns, but the returns have low risk factors (including tax owed in an amount such as $1,500/year). File delinquent tax returns, including delinquent information returns, for the past three years; delinquent FBARs for the past six years; and additional required information regarding compliance risk.  You must pay any federal tax and interest due at the same time of the submission.  The IRS website has more information about this option.
You have undisclosed foreign accounts and unreported income or you are seeking protection from criminal prosecution, or both. Consider asking the IRS to accept you into the Offshore Voluntary Disclosure Program (OVDP).  OVDP offers a civil settlement structure in which taxpayers pay an offshore penalty in lieu of other penalties that may be assessed for offshore noncompliance.  The OVDP also offers protection from criminal prosecution.  If you are preliminarily accepted into OVDP, you must submit certain information, including eight years of amended tax returns, FBARs, and information returns as well as information about your offshore accounts. In addition, you must submit full payment of the tax and interest due, and certain penalty amounts.  You may enter into the OVDP and later elect to opt out of the civil settlement structure of the program.  In such situations, the IRS will determine if penalty mitigation is appropriate.  
You have an interest in a Canadian RRSP or RRIF and you either (i) didn’t make an election on Form 8891 to defer paying tax on the investment income earned by the fund until you receive distributions or (ii) didn’t  file annual information returns on Form 8891. Consider asking the IRS to accept you into the Offshore Voluntary Disclosure Program (OVDP).  
 

Q.  I’ve heard that some taxpayers give up their American citizenship or status as long-term residents (i.e., taxpayers who have held a green card during at least 8 of the last 15 years) for federal tax purposes.  Is that true?  What do I need to know about that?
 

A.  Yes, renunciations (or as the IRS refers to them, expatriations) increased more than sixfold between 2008 and 2012.  The IRS is required to publish a list of individuals who have chosen to give up their citizenship or resident status.  You need to know that your tax liability could be affected by your expatriation, and notification requirements apply to you.  Different rules apply according to the date you expatriated.
 
 

Advocating for International Taxpayers

 
National Taxpayer Advocate Nina Olson has written extensively about the problems facing international taxpayers in her Annual Report to Congress.
 
From the FY2014 Objectives Report:

From the 2012 Annual Report: 

From the 2011 Annual Report: 

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The Taxpayer Advocate Service Is Here to Help

 
The Taxpayer Advocate Service is your voice at the IRS. We help taxpayers whose problems with the IRS are causing financial difficulties; who have tried but haven’t been able to resolve their problems with the IRS; and those who believe an IRS system or procedure isn’t working as it should. If you think you might be eligible for our help and you live outside the United States, call us at (787) 522-8601 (English) or (787) 522-8600 Spanish.

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ABOUT THE NTA

Nina E. Olson Nina E. Olson, the National Taxpayer Advocate, is the voice of the taxpayer before the IRS and Congress. She leads the Taxpayer Advocate Service (TAS), an independent organization within the IRS, in helping taxpayers resolve problems with the IRS and in working for systemic change in the IRS and the U.S. tax code.

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