Expats and the Affordable Care Act

U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period. In addition, U.S. citizens who are bona fide residents of a foreign country (or countries) for an entire taxable year are treated as having minimum essential coverage for that year. In general, these are expats who qualify for a foreign earned income exclusion under section 911 of the Internal Revenue Code. Individuals may qualify for this rule even if they cannot use the exclusion for all of their foreign earned income because, for example, they are employees of the United States. Individuals that qualify for this rule need take no further action to comply with the individual shared responsibility provision during the months when they qualify. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for further information on the foreign earned income exclusion.

U.S. citizens who meet neither the physical presence nor residency requirements will need to maintain minimum essential coverage, qualify for an exemption or make a shared responsibility payment for each month of the year. For this purpose, minimum essential coverage includes a group health plan provided by an overseas employer. One exemption that may be particularly relevant to U.S. citizens living abroad for a small part of a year is the exemption for a short coverage gap. This exemption provides that no shared responsibility payment will be due for a once-per-year gap in coverage that lasts less than three months.

No extension for your FBAR filing

The FBAR must be reported to the IRS by June 30 of each year by electronically filing it using the US Department of the Treasury’s Financial Crimes Enforcement Network E-Filing System. Important! The FBAR is not filed with your income tax return it is filed separately.

There is no extension for filing the FBAR. If you did not have all the information you need to file the FBAR by June 30, you should file as complete a return as you can. When you have gathered all the additional information or new information becomes available, you can amend the return.

There is a maximum $10,000 penalty if your failure to file was inadvertent. if you are found guilty of willfully not filing an FBAR, the minimum fine is $100,000 or half the value of the account, whichever is greater.

The FBAR is a separate filing from your income tax return and is not attached to your tax return.

Good news for some U.S. taxpayers abroad

Taxpayers abroad can now use IRS Free File to prepare and electronically file their returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $58,000 or less can use brand-name software to prepare their returns and then e-file them for free. A second option, Free File Fillable Forms the electronic version of IRS paper forms, has no income limit and is best suited to people who are comfortable preparing their own tax return. Check out the e-file link on IRS.gov for details on the various electronic filing options.

Who Must File An FBAR?

United States persons are required to file an FBAR if:

  1. The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  2. The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Find additional information at the IRS or download your FBAR reporting forms. The filing deadline is June 30, 2014 and remember you can not get an extension.

June 15 Filing Deadline

Expatriate Tax Deadlines

June 15 – Tax filing deadline (for tax year 2013, the deadline is June 16, 2014).  If you cannot file by then, an extension can be filed to extend the filing deadline to October 15.  Penalties can be assessed after this date on any tax due.