NEWS WRAP - Tax Filing Season is Upon Us
Tax filing seasons got underway on 27 January, the date on which the Internal Revenue Service began to accept the first of 150 million anticipated returns.
The due date for tax payments is 15 April*, with interest starting to accrue on any tax owed after this date.
Over recent years many tax filers have become accustomed to filing returns digitally – for many this represents the most efficient way of managing the process – and 2020 is likely to be no different, with a record number of digital tax filers expected. However, this comes despite the problems of the Free File program — a partnership between the IRS and private-sector tax-return software companies.
The National Taxpayer Advocate recently reported that only 2% of eligible filers used the scheme despite the fact that 90% of returns are filed digitally; it seems many would rather pay fees than use the occasionally problematic Free File software.
For those still bearing the scars from the disruption caused by the many changes introduced in tax year 2018, there will be relief in the fact that the 2020 tax filing year will be very similar to 2019.
Yes, there is a marginally higher standard deduction of $12,200 for singles and $24,400 for married couples, but the fact that these are higher means it is less likely that filers will itemize deductions.
Another important change relates to those paying divorce alimony – for divorces concluded after the end of 2018) – these payments will no longer be tax deductible, while recipients of such alimony income no longer have to pay tax on the payments.
What about tax-filing for foreign citizens in the United States?
Foreign citizens living in the United States are, like everyone else, required to file an annual Federal Tax Return with the IRS, declaring their US and worldwide income as well as any non-US bank accounts. Expats may also need to file a State Tax Return as well as IRS Form 8938 for foreign account tax compliance under the Foreign Account Tax Compliance Act (FATCA). While some resident aliens will also need to file a Foreign Bank Account Report (FBAR) form as well.
Independent tax advice should be sought to determine your own personal qualification status and the type of filing you need to carry out.
Useful dates for tax filing year 2020
You should consider all of the following dates as part of your 2020 tax filing calendar:
- 27 January: Tax filing season opens.
- 15 April: Tax deadline day. You will begin accruing interest from this day even if you qualify for extensions.
- 15 June: Deadline day for US citizens living outside of the US (they receive an automatic two-month extension), although if US expats file earlier they can avoid interest.
- 15 October: An additional extension date for Americans living abroad. Form 4868 is required to apply for this extension.**
- 15 December: Expats can receive a further deadline if they write to the IRS requesting a final two-month extension. However, this extension is entirely at the discretion of the IRS.
Plan your money with Blacktower in the US
Blacktower Financial Management (US) LLC provides independent cross-border wealth management, financial advice and tax planning services for US-interested individuals.
For example, we can help with the structure and management of your assets, including pensions, so that you are compliant with both FATCA and FBAR.
Contact us today to discover more about the Blacktower (US) LLC and how we can be of benefit to you.
Disclaimer: Blacktower (US) LLC is not a tax adviser and independent tax advice should be sought. The above does not constitute advice.