Are you a US person?
Do you know what the 15th April tax deadline means to you?
Below are 15 things that US Tax & Financial Services advises you do, or consider now to ensure you meet the 15th April deadline.
US tax compliance is something that many push to the back of their minds until the deadline is upon us. After all, it’s a time-consuming and complex process.
You’re likely to be aware of the United States’ Foreign Account Tax Compliance Act (FATCA), but did you know that Americans living abroad are given an automatic extension to file US tax returns until June?
Although expats have an automatic extension until June 15 to file and pay, interest will accrue from April 15 on any tax due. We recommend starting and completing returns early to avoid a last minute rush and possible interest or penalty charges for late filings.
2014 US Tax Deadline Is Approaching
With changes to the tax system in effect this year and the payment due date fast approaching, it’s easy to get overwhelmed, especially since preparing for your taxes always takes longer than you expect. However, it’s not too late to get your finances in order and meet that 15th April deadline.
1. Find last year’s return
This is vital, as you will need this to compare where your circumstances may have changed from what you have previously filed.
2. Apply for the Social Security number of any children born in 2013
To claim any new arrivals from the last 12 months as Dependents, they must have Social Security numbers, which you will need to apply for now
3. Did you get married in 2013 ?
First of all, congratulations! Secondly, your filing status will have changed from ‘single’ to ‘married filing separately’ or ‘married filing jointly’ and there are tax implications for this change, which you will need to understand fully before filing
4. Did you buy in a new home or sell your old one ?
If you did either of these things, the mortgage interest may be deductible or you may owe capital gains tax
5. Have you made a financial settlement through divorce ?
If you have, these may be taxable, so you will need to take professional advice before submitting your US tax payment and filing your return
6. Did you retire last year ?
If you received any lump sum pay outs or if you have a pension then you may have tax due to be paid on 15th April
7. Has there been a death in the family ?
This may also generate some unexpected tax issues. You should take professional advice to discover what steps to take to ensure you are compliant
8. Did you work in the US in 2013 ?
Even if this was just for a single day, it may mean that you are required to do a state tax return, so seek advice as soon as possible
9. Do you have an Individual Retirement Account (IRA) ?
If you do have an IRA and you are able to make a contribution before April 15th 2014, it could be offset against your 2013 taxes
10. Have you paid non US taxes between January and December 2013 ?
You will need to collate this information and declare it in your US tax return
11. Have you joined any new pensions?
If so, especially with non US pensions, there are US tax implications (what’s a PFIC?!), whether you have joined a company pension or a personal pension, so get advice about this as soon as possible
12. Contact all of your banks
You will need to review all of your bank statements and note the highest balances for you and your family, for your Foreign Bank Account Report (FBAR) – FinCEN Form 114 and Form 8938, as well as noting any related income and non-US tax paid for each account
13. Collate your W-2, 1099, K1 (if applicable) and non US payslips (if applicable)
Your W-2 is a wage and tax statement (US employment), which should be sent by your US employer and is used to report wages paid to employees and the taxes withheld. The 1099 form is typically is sent by an employer to an independent contractor or freelancer as a record of the income they have received from a particular business. However, other versions of the 1099 exist and can be used to report different types of income, such as interest, dividends and debt cancellation, to name but a few. The K1 form is a tax form issued by a partnership to report a partner’s distributed share of income. You will need these forms to determine current figures, so if they are applicable to you, ensure you have received them.
If you work abroad, your non US employer will give periodic payslips and/or annual statements with your wages and tax deductions. Aside from different currencies, many countries work to different tax dates so you’ll need to pro-rate and translate the currency for your US tax filing which is based on world wide income.
14. Check if you qualify for the new Medicare tax
At the start of the 2013 tax year, President Obama and the US Congress imposed an additional tax of 3.8% on a taxpayer’s net investment income, which includes income from interest, rents, royalties and capital gains. Thresholds apply. You will need to check how you are affected and if you owe additional tax.
15. Estimate your tax due for 2013 and make your payment
Your tax payment on April 15th should cover your tax due for 2013 and your First Estimated Payment for Federal and State tax (if applicable)
These are just a few actions to take and factors to consider as you start preparing your 2013 US tax return, but there are more than 15 things to consider in the process and you need to start thinking about them NOW.
– See more at: US Tax & Financial Services