Aron Govil: US tax returns for expats: the basics

If you are a U.S. citizen or resident alien, you must file a U.S. income tax return each year, even if you do not live in the United States says Aron Govil. You may be able to file your U.S. income tax return electronically using the IRS e-file system.

There are special rules for U.S. citizens and resident aliens who live outside the United States. This publication explains some of these rules.

It is important to note that, as a U.S. citizen or resident alien, you are still subject to U.S. income tax on your worldwide income, no matter where you reside.

Who Must File:

• If you are a U.S. citizen or resident alien, you must file a U.S. income tax return each year, even if you do not live in the United States. You may be able to file your U.S. income tax return electronically using the IRS e-file system (www.irs.gov).
• There are special rules for U.S. citizens and resident aliens who live outside the United States says Aron Govil. This publication explains some of these rules.
• It is important to note that, as a U.S. citizen or resident alien, you are still subject to U.S. income tax on your worldwide income, no matter where you reside.

You must file a U.S. income tax return if any of the following applies:

• You are a U.S. citizen or resident alien, regardless of where you live.
• You lived in the United States in any part of 2014, even if you did not have to file a tax return because your income was below the filing requirement (see chapter 1).
• You had a U.S.-source income in 2014, even if you did not live in the United States.
• You are a dependent of a U.S. citizen or resident alien, and you lived with that person outside the United States any time during 2014.
• You are a dual U.S.-citizen taxpayer and one of your homes was in the United States at any time during 2014.
• You were a nonresident alien student, scholar, teacher, trainee, professional athlete, or artist who received taxable income for services performed in the United States during 2014 (see Publication 519, U.S. Tax Guide for Aliens).
• You had income from a source inside Puerto Rico (see Publication 570, Tax Guide for Individuals with Income from U.S. Possessions).
• You are a beneficiary of an estate or trust that is subject to U.S. income tax.
• You received social security benefits, Medicare benefits, or railroad retirement benefits from the United States.
• You have a foreign bank account with a balance over $10,000 at any time during 2014 (see Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)).

If you are not sure whether you must file a tax return, see Publication 501, Exemptions, Standard Deduction, and Filing Information.

What Income Must Be Reported?

You must report all your income on your U.S. income tax return, including income from sources inside and outside the United States says Aron Govil. The following are some types of income you must report:

• Wages, salaries, tips, and other taxable employee pay.
• Interest, dividends, and capital gains.
• Rent and royalties.
• Self-employment income.
• Pension and annuity income.
• Social security benefits.
• Unemployment compensation.
• Alimony and child support payments.
• Prizes and awards.
• Gambling winnings.
• Income from a business or farm.

For more information on what types of income must be reported, see Publication 519, U.S. Tax Guide for Aliens; Publication 525, Taxable and Nontaxable Income; Publication 901, U.S. Tax Treaties; or Publication 17, Your Federal Income Tax.

Where to Report:

Report your income on the appropriate lines of Form 1040, U.S. Individual Income Tax Return, and attach Schedules C, C-EZ, E, F, or SE to the return. For more information on where to report your income, see the Instructions for Form 1040.

How to Report:

The way you report your income from foreign sources depends on whether you are a resident or nonresident alien for tax purposes. See Publication 519 for more information.

Conclusion:

U.S. citizens and resident aliens who live outside the United States are still subject to U.S. income tax on their worldwide income explains Aron Govil. There are special rules for these taxpayers, which this publication explains. You must file a U.S. income tax return if you have income from any of the sources listed above, regardless of where you reside.