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Taxmap/pubs/p54-001.htm#TXMP7cb3cf2f Chapter 1 Filing Information

Useful items

You may want to see:

See chapter 7 for information about getting these publications and forms.

Taxmap/pubs/p54-001.htm#TXMP50747b42 Filing Requirements

Filing Requirements

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.

Your income, filing status, and age generally determine whether you must file an income tax return. Generally, you must file a return for 2004 if your gross income from worldwide sources is at least the amount shown for your filing status in the following table.

Filing Status*		Amount
Single		$ 7,950
65 or older		$ 9,150
Head of household		$10,250
65 or older		$11,450
Qualifying widow(er)		$12,800
65 or older		$13,750
Married filing jointly		$15,900
Not living with spouse at end of year		$ 3,100
One spouse 65 or older		$16,850
Both spouses 65 or older		$17,800
Married filing separately		$ 3,100
*If you are the dependent of another taxpayer, see the instructions for Form 1040 for more information on whether you must file a return.

Taxmap/pubs/p54-001.htm#TXMP31365266 Gross income.

This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax.

For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount.

If you are self-employed, your gross income includes the amount on line 7 of Schedule C (Form 1040), Profit or Loss From Business, or line 1 of Schedule C-EZ (Form 1040), Net Profit From Business.

Taxmap/pubs/p54-001.htm#TXMP4dcc7a29 Self-employed individuals.

If your net self-employment income is $400 or more, you must file a return even if your gross income is below the amount listed for your filing status in the table shown earlier. Net self-employment income is defined in Publication 533, Self-Employment Tax.

Taxmap/pubs/p54-001.htm#TXMP11b7b1ed 65 or older.

You are considered to be age 65 on the day before your 65th birthday. For example, if your 65th birthday is on January 1, 2005, you are considered 65 for 2004.

Taxmap/pubs/p54-001.htm#TXMP610a4951 When To File and Pay

When To File

If you file on the calendar year basis, the due date for filing your return is April 15 of the following year. If you file on a fiscal year basis (a year ending on the last day of any month except December), the due date is 3 months and 15 days after the close of your fiscal year. In general, the tax shown on your return should be paid by the due date of the return, without regard to any extension of time for filing the return.

A tax return delivered by the U.S. mail or a designated delivery service that is postmarked or dated by the delivery service on or before the due date is considered to have been filed on or before that date. See your Form 1040 or Form 1040A instructions for a list of designated delivery services.

Taxmap/pubs/p54-001.htm#TXMP466c84ae Extensions

Extension

You can get an extension of time to file your return. In some circumstances, you can also get an extension of time to file and pay any tax due.

However, if you pay the tax due after the regular due date, interest will be charged from the regular due date until the date the tax is paid.

Taxmap/pubs/p54-001.htm#TXMP32b8647f Automatic 2-month extension.

You may be allowed an automatic 2-month extension to file your return and pay any federal income tax that is due. You will be allowed the extension if you are a U.S. citizen or resident, and on the regular due date of your return:

• You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or
• You are in military or naval service on duty outside the United States and Puerto Rico.

If you use a calendar year, the regular due date of your return is April 15.

Taxmap/pubs/p54-001.htm#TXMP79fe90ea Service in a combat zone.

If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file. See Extension of Deadline in Publication 3.

Taxmap/pubs/p54-001.htm#TXMP23f6ef71 Married taxpayers.

If you file a joint return, either you or your spouse can qualify for the automatic extension. If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it.

Taxmap/pubs/p54-001.htm#TXMP56c92e24 How to get the extension.

To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

Taxmap/pubs/p54-001.htm#TXMP4c2f4c5f 4-month extension.

If you are not able to file your return by the due date, you generally can get an automatic 4-month extension of time to file. To get this automatic extension, you must file Form 4868. Or, you can file Form 4868 electronically (e-file) by telephone, using your personal computer, or through a tax professional. For more information about filing electronically, see the form instructions.

The form must show your properly estimated tax liability based on the information available to you.

You may not be eligible. You cannot use the automatic 4-month extension of time to file if: You want the IRS to figure your tax, or You are under a court order to file by the regular due date.

Taxmap/pubs/p54-001.htm#TXMP7399c7cf When to file.

Generally, you must request the 4-month extension by the regular due date of your return.

Taxmap/pubs/p54-001.htm#TXMP4b84a87a Previous 2-month extension.

If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 2-month extension of time to file your return, for a total of 4 months. The automatic 2-month extension and the 4-month extension start at the same time. You do not have to request the 4-month extension until the new due date allowed by the first extension, but the total combined extension will still only be 4 months from the regular due date.

Taxmap/pubs/p54-001.htm#TXMP51746ef3 Time to pay not extended.

A 4-month extension of time to file is not an extension of time to pay. You must make an accurate estimate of your tax based on the information available to you. If you find you cannot pay the full amount due with Form 4868, you can still get the extension. You will owe interest on the unpaid amount.

You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Interest and penalties are assessed (charged) from the original due date of your return.

Taxmap/pubs/p54-001.htm#TXMP17d4df17 Extension beyond 4 months.

If you file Form 4868 and you later find that you cannot file within the 4-month extension period, you may be able to get 2 more months to file, for a total of 6 months.

You can apply for an extension beyond the 4-month extension either by sending a letter to the IRS or by filing Form 2688 . You should request the extension early so that, if refused, you still will be able to file on time. Except in cases of undue hardship, Form 2688 or a request by letter will not be accepted unless you have first filed Form 4868. Form 2688 or your letter will not be considered if you send it after the extended due date.

To get an extension beyond the automatic 4-month extension, you must give all the following information.

• Your reason for requesting the extension.
• The tax year to which the extension applies.
• The amount of additional time you need.
• Whether you have already requested another extension for time to file for this tax year.

You can sign the request for this extension, or it can be signed by your attorney, CPA, enrolled agent, or a person with a power of attorney. If you are unable to sign the request because of illness or for another good reason, a person in close personal or business relationship to you can sign the request.

Taxmap/pubs/p54-001.htm#TXMP76931b52 Extension granted.

If the IRS approves your application for this extension, you will be notified.

If an extension is granted and the IRS later determines that the statements made on your request for this extension are false or misleading and an extension would not have been granted based on the true facts, the extension is null and void. You may have to pay the failure-to-file penalty if you file after the regular due date.

Taxmap/pubs/p54-001.htm#TXMP4caf47f2 Extension not granted.

If your application for this extension is not approved, you must file your return by the extended due date of the automatic extension. You may be allowed to file within 10 days of the date of the notice you get from the IRS if the end of the 10-day period is later than the due date. The notice will tell you whether the 10-day grace period is granted.

Taxmap/pubs/p54-001.htm#TXMP4f6cf15e Further extensions.

You generally cannot get an extension of more than 6 months. However, if you are outside the United States and meet certain tests, you may be able to get a longer extension.

You can get an extension of more than 6 months to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. The tests, the exclusions, and the deduction are explained in chapter 4.

You should request an extension if all three of the following apply.

1. You are a U.S. citizen or resident.
2. You expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due.
3. Your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.

If you are granted an extension, it generally will be to 30 days beyond the date on which you can reasonably expect to qualify under either the bona fide residence test or the physical presence test. However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension to 90 days beyond the close of the year following the year of first arrival in the foreign country.

Taxmap/pubs/p54-001.htm#TXMP715c09ff How to get an extension.

To obtain an extension, you should file Form 2350 with the Internal Revenue Service Center, Philadelphia, PA 19255-0002, or the local IRS representative, or other IRS employee.

You must file Form 2350 by the due date for filing your return. Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15.

Taxmap/pubs/p54-001.htm#TXMP6123530f What if tests are not met.

If you obtain an extension and unforeseen events make it impossible for you to satisfy either the bona fide residence test or the physical presence test, you should file your income tax return as soon as possible because you must pay interest on any tax due after the regular due date of the return (even though an extension was granted).

You should make any request for an extension early, so that if it is denied you still can file your return on time. Otherwise, if you file late and additional tax is due, you may be subject to a penalty.

Taxmap/pubs/p54-001.htm#TXMP18b99dd8 Return filed before test is met.

If you file a return before you meet the bona fide residence test or the physical presence test, you must include all income from both U.S. and foreign sources and pay the tax on that income. If you meet either of the tests later and qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you can file a claim for refund of tax on Form 1040X. The refund will be the difference between the amount of tax already paid and the tax liability as figured after the exclusion or deduction.

Taxmap/pubs/p54-001.htm#TXMP46602a1f Foreign Currency

Foreign Currency

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into U.S. dollars. How you do this depends on your functional currency. Your functional currency generally is the U.S. dollar unless you are required to use the currency of a foreign country.

You must make all federal income tax determinations in your functional currency. The U.S. dollar is the functional currency for all taxpayers except some qualified business units (QBUs). A QBU is a separate and clearly identified unit of a trade or business that maintains separate books and records.

Even if you have a QBU, your functional currency is the dollar if any of the following apply.

• You conduct the business in dollars.
• The principal place of business is located in the United States.
• You choose to or are required to use the dollar as your functional currency.
• The business books and records are not kept in the currency of the economic environment in which a significant part of the business activities is conducted.

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.

If your functional currency is not the U.S. dollar, make all income tax determinations in your functional currency. At the end of the year, translate the results, such as income or loss, into U.S. dollars to report on your income tax return.

Taxmap/pubs/p54-001.htm#TXMP52770a35 Blocked Income

Blocked Income

You generally must report your foreign income in terms of U.S. dollars and, with one exception (see Fulbright Grant, later), you must pay taxes due on it in U.S. dollars.

If, because of restrictions in a foreign country, your income is not readily convertible into U.S. dollars or into other money or property that is readily convertible into U.S. dollars, your income is "blocked" or "deferrable" income. You can report this income in one of two ways:

1. Report the income and pay your federal income tax with U.S. dollars that you have in the United States or in some other country, or
2. Postpone the reporting of the income until it becomes unblocked.

If you choose to postpone the reporting of the income, you must file an information return with your tax return. For this information return, you should use another Form 1040 labeled "Report of Deferrable Foreign Income, pursuant to Rev. Rul. 74-351." You must declare on the information return that you will include the deferrable income in your taxable income for the year that it becomes unblocked. You also must state that you waive any right to claim that the deferrable income was includible in your income for any earlier year.

You must report your income on your information return using the foreign currency in which you received that income. If you have blocked income from more than one foreign country, include a separate information return for each country.

Income becomes unblocked and reportable for tax purposes when it becomes convertible, or when it is converted, into dollars or into other money or property that is convertible into U.S. currency. Also, if you use blocked income for your personal expenses or dispose of it by gift, bequest, or devise, you must treat it as unblocked and reportable.

If you have received blocked income on which you have not paid tax, you should check to see whether that income is still blocked. If it is not, you should take immediate steps to pay tax on it, file a declaration or amended declaration of estimated tax, and include the income on your tax return for the year in which the income became unblocked.

If you choose to postpone reporting blocked income and in a later tax year you wish to begin including it in gross income although it is still blocked, you must obtain the permission of the IRS to do so. To apply for permission, file Form 3115, Application for Change in Accounting Method. You also must request permission from the IRS on Form 3115 if you have not chosen to defer the reporting of blocked income in the past, but now wish to begin reporting blocked income under the deferred method. See the instructions for Form 3115 for information.

Taxmap/pubs/p54-001.htm#TXMP61ce3971 Fulbright Grant

Fulbright Grant

All income must be reported in U.S. dollars. In most cases, the tax must also be paid in U.S. dollars. If, however, at least 70% of your Fulbright grant has been paid in nonconvertible foreign currency (blocked income), you can use the currency of the host country to pay the part of the U.S. tax that is based on the blocked income.

Taxmap/pubs/p54-001.htm#TXMP5674caca Paying U.S. tax in foreign currency.

To qualify for this method of payment, you must prepare a statement that shows the following information.

• You were a Fulbright grantee and were paid in nonconvertible foreign currency.
• The total grant you received during the year and the amount you received in nonconvertible foreign currency.
• At least 70% of the grant was paid in nonconvertible foreign currency.

The statement must be certified by the U.S. educational foundation or commission paying the grant or other person having control of grant payments to you.

You should prepare at least two copies of this statement. Attach one copy to your Form 1040 and keep the other copy for identification purposes when you make a tax deposit of nonconvertible foreign currency.

Taxmap/pubs/p54-001.htm#TXMP734f0afe Figuring actual tax.

When you prepare your income tax return, you may owe tax or the entire liability may have been satisfied with your estimated tax payments. If you owe tax, figure the part due to (and payable in) the nonconvertible foreign currency by using the following formula.

	Adjusted gross income that is blocked income	×	Total U.S. tax	=	Tax on blocked income
	Total adjusted gross income

You must attach all of the following to the return.

• A copy of the certified statement discussed earlier.
• A detailed statement showing the allocation of tax attributable to amounts received in foreign currency and the rates of exchange used in determining your tax liability in U.S. dollars.
• The original deposit receipt for any balance of tax due that you paid in nonconvertible foreign currency.

Taxmap/pubs/p54-001.htm#TXMP777b4f37 Figuring estimated tax on nonconvertible foreign currency.

If you are liable for estimated tax (discussed later), figure the amount you can pay to IRS in nonconvertible foreign currency using the following formula.

	Adjusted gross income that is blocked income	×	Total estimated U.S. tax	=	Estimated tax on blocked income
	Total adjusted gross income

If you must pay your host country income tax on your grant, subtract any estimated foreign tax credit that applies to your grant from the estimated tax on the blocked income.

Taxmap/pubs/p54-001.htm#TXMP1f5b7526 Deposit of foreign currency with disbursing officer.

Once you have determined the amount of the actual tax or estimated tax that you can pay in nonconvertible foreign currency, deposit that amount with the disbursing officer of the Department of State in the foreign country in which the foundation or commission paying the grant is located.

Taxmap/pubs/p54-001.htm#TXMP11466f28 Estimated tax installments.

You may either deposit the full estimated tax amount before the first installment due date or make four equal payments before the installment due dates. See Estimated Tax, later.

Taxmap/pubs/p54-001.htm#TXMP613acbd9 Deposit receipt.

Upon accepting the foreign currency, the disbursing officer will give you a receipt in duplicate. The original of this receipt (showing the amount of foreign currency deposited and its equivalent in U.S. dollars) should be attached to your Form 1040 or payment voucher from Form 1040-ES. Keep the copy for your records.

Taxmap/pubs/p54-001.htm#TXMP662d3c6c Does My Return   Have To Be On Paper?

Efile

IRS e-file (electronic filing) is the fastest, easiest, and most convenient way to file your income tax return electronically. It's so easy, millions of people use it.

IRS e-file offers accurate, safe, and fast alternatives to filing on paper. IRS computers quickly and automatically check for errors or other missing information. Even returns with a foreign address can be e-filed!

Taxmap/pubs/p54-001.htm#TXMP6762d420 How to e-file.

There are two ways you can e-file.

1. Using an Authorized IRS e-file Provider.
   1. You can prepare your return, take it to an Authorized IRS e-file Provider, and have the provider transmit it electronically to the IRS, or
   2. You can have a tax professional prepare your return and transmit it for you electronically
2. Using your personal computer.

These methods are explained in detail in the instructions for your tax return.

Taxmap/pubs/p54-001.htm#TXMP46eda7f7 Where To File

Where To File

If any of the following situations apply to you, file your return with the:

 
Internal Revenue Service Center  
Philadelphia, PA 19255-0215.

• You claim the foreign earned income exclusion.
• You claim the foreign housing exclusion or deduction.
• You claim the exclusion of income for bona fide residents of American Samoa.
• You live in a foreign country or U.S. possession and have no legal residence or principal place of business in the United States.

The exclusions and the deduction are explained in chapter 4.

If you do not know where your legal residence is and you do not have a principal place of business in the United States, you can file with the Philadelphia Service Center. The address for the Philadelphia Service Center is shown earlier.

However, you should not file with the Philadelphia Service Center if you are a bona fide resident of the Virgin Islands, Guam, or the Commonwealth of the Northern Mariana Islands during your entire tax year.

Taxmap/pubs/p54-001.htm#TXMP7183cbc3 Resident of Virgin Islands

If you are a bona fide resident of the Virgin Islands during your entire tax year (even if your legal residence or principal place of business is in the United States), you generally are not required to file a U.S. return. However, you must file a return with the Virgin Islands and pay your tax on income you have from all sources to the:     Virgin Islands Bureau of Internal Revenue   9601 Estate Thomas   Charlotte Amalie   St. Thomas, Virgin Islands 00802

Taxmap/pubs/p54-001.htm#TXMP3ea302d0 Non-Virgin Islands resident with Virgin Islands income.

If you are a U.S. citizen or resident and you have income from sources in the Virgin Islands or income effectively connected with the conduct of a trade or business in the Virgin Islands, and you are not a bona fide resident of the Virgin Islands during your entire tax year, you must file identical tax returns with the United States and the Virgin Islands. File the original return with the United States and file a copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue.

You must complete Form 8689, Allocation of Individual Income Tax to the Virgin Islands, and attach it to your U.S. return. You should file your U.S. return with the Internal Revenue Service Center, Philadelphia, PA 19255-0215.

See Publication 570, Tax Guide for Individuals With Income From U.S. Possessions, for information about filing Virgin Islands returns.

Taxmap/pubs/p54-001.htm#TXMP77b40f13 Resident of Guam

If you are a bona fide resident of Guam during your entire tax year, you should file a return with Guam and pay your tax on income you have from all sources to the:   Department of Revenue and Taxation   Government of Guam   P.O. Box 23607   GMF, GU 96921

However, if you are a resident of the United States for any day of your tax year, you should file a return with the United States and pay your tax on income you have from all sources to the Internal Revenue Service Center, Philadelphia, PA 19255-0215.

See Publication 570 for information about filing Guam returns.

Taxmap/pubs/p54-001.htm#TXMP38b4d72c Resident of the Commonwealth of the Northern Mariana Islands

If you are a bona fide resident of the Commonwealth of the Northern Mariana Islands during your entire tax year, you should file a return with the Northern Mariana Islands and pay your tax on income you have from all sources to the:   Division of Revenue and Taxation   Commonwealth of the Northern Mariana Islands   P.O. Box 5234, CHRB   Saipan, MP 96950.

However, if you are a resident of the United States for any day of your tax year, you should file a return with the United States and pay your tax on income you have from all sources to the Internal Revenue Service Center, Philadelphia, PA 19255-0215.

See Publication 570 for information about filing Northern Mariana Islands returns.

Previous Page:  Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad - Tax Guide for U.S. Citizens and Resident Aliens Abroad Next Page:  Publication 54 - Tax Guide for U.S. Citizens and Resident Aliens Abroad - Nonresident Spouse Treated as a Resident Use     to find additional instances of index items.