 US Filing Deadlines and Penalty Information
As a US Citizen or Resident you are required to file a US personal income
tax return, reporting worldwide income, in exactly the same way that you would
if you were living in the United States. This can sometimes come as a
shock to US citizen who has been living in the UK, or indeed anywhere outside
the US, for a number of years or maybe even has never lived in the US. See
deadlines for when to file.
The interaction between UK and US taxes can be complex and equally the incompatibility
of certain sources of income between the two countries can lead to complications
when preparing these returns. For example the US will not a UK ISA as
a tax free investment vehicle, any interest or gains accruing in such an account,
to a US citizen or resident, will be taxable on their US return as if the account
were just a normal investment account. Another notable complication arises
in the areas of pensions, which are also not recognised by the IRS.
Due to these factors, and the increase in reporting requirements for US individuals
overseas, what would be simple situation in the US can be very time consuming
and complex issue in the UK. As such it is common for a tax return to
go from a few pages, when filing in the US, to 20-30 and more when filing from
the UK. In true IRS fashion, there is a form for everything, the once
lonely 1040 can be accompanied by various other forms including 2555, 1116 and
6251 to name but a few.
On the plus side the requirement to file is more easily determined, basically
all you need to ask yourself is are you a US citizen or resident (Green
card
holders). If so then anyone earning any level of income will almost certainly
be required to file. It is worth noting also that in some cases non US
citizens or residents will be required to file a US tax return also, but normally
only to the extent that you have spent some time in the US and have income that
can be related to your time in the US, for example business trips or investments
located in the US. The rules regarding non residents can also become quite
involved and if you feel you may fall into this category you may wish to contact
me to discuss further.
The IRS has it's own system of
deadlines for filing which can be viewed through
this link.
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