Absent US Taxpayers Reminded To File Tax Returns

by Leroy Baker, Tax-News.com, New York

12 March 2004

A US citizen is obliged to file a US income tax return regardless of the duration of any absence from the US, a tax expert with accounting firm Deloitte & Touche has warned as the April 15 deadline draws nearer.

“Most people who leave their home country, such as the UK for example, cease to be taxable on their worldwide income in that country after a certain period of absence,” observes Andy Hodge, Tax Partner at Deloitte. “The US system requires its citizens to continue to file returns reporting worldwide income, regardless of the length of time that they reside elsewhere."

Although taxpayers may obtain a two month extension to file a return, any outstanding tax payable for 2003 must be paid to the IRS before the required deadline. Failure to meet this oblgation will result in the application of interest and penalties to overdue taxes.

However, US taxpayers should also check whether they must meet any tax obligations in the country of their employment. “A US citizen working abroad will typically be liable for tax in the country where he or she is working, as well as remaining liable to US tax,” notes Hodge. He adds: “Although the risk of double taxation exists, reliefs are available to minimize its impact.”

He concludes: “International taxation becomes very complicated for US citizens living and working abroad. Professional advice should be sought in order to ensure that filing penalties are avoided and claims for reliefs from double taxation are made on a timely basis.”

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