HAVEN'T FILED LAST YEAR'S TAX RETURN?

IRS TAX TIP 2003-71

HERE IS WHAT TO DO


The IRS says it hears many reasons from taxpayers for not filing a tax return. You may not have known whether you were required to file. Whatever the reason, it's best to file your return as soon as you can. If you need help, even with a late return, the IRS is ready to assist you.

The failure to file a return can be costly - whether you end up owing more or missing out on a refund. If you owe taxes, a delay in filing may result in a "failure to file" penalty and interest charges. The longer you delay, the larger these charges grow.

There is no penalty for failure to file if you are due a refund. But if you wait too long to file, you may risk losing the refund altogether. The deadline for claiming refunds is three years after the return due date.

Individuals who are entitled to the Earned Income Tax Credit must file their return to claim the credit even if they are not otherwise required to file.

Whether or not you must file a tax return will depend upon a number of factors, including your filing status, age, and gross income. Some taxpayers are required to file whether or not they owe money. Even if you do not meet any of the requirements, you should file a return if you are due a refund.

For more information on how to file a tax return for a prior year, visit the IRS Web site at IRS.gov.

Hello Helen,

I'm almost embarrassed to say that I haven't filed my 2002 tax return yet.  There are a number of reasons why I haven't.  Regardless of what they are, they need to get done.  I hope you can help.  I almost dont know where to begin.  I'm 23 years old.  Have had a few different jobs in the US when I lived there and I always used to file the 1040EZ without a problem, but this time everything seems so complicated.
I moved to the UK in March of 2002, got married here in April of last year.  After I got married/honeymooned I went back to work in the States in hopes to get transferred to my jobs London base, that didn't happen so I took the month of May off from my job and finally quit in June 2002.  I got a job here in the UK in August 2002 and have been working here ever since.  I never owned my own home in the states, have always rented or lived with parents.  The flat my husband and I live in here in the UK is in his name.  
I had a look at some of the tax forms I think I need to fill out, but I'm finding it so confusing.

Please if you can offer any advice I would greatly appreciate it.  I've read a few of your other entries and you seem more informed about tax returns than I do:)

Please help if you can.  I think, more than anything, I need help figuring out which forms to fill out.  Many thanks,

Kitty

Hi Kitty

As 2002 was the first year you were living and working outside of the US, you will need to meet either the Physical presence or the Bona Fide residence test to qualify for the foreign earned income exclusion. Either check the IRS website on irs.gov for more information on this or give me a call on 0208 466 9297.

Once you know which test you qualify under, you should calculate your qualifying days which is really the numbers of days you were present in the UK. This is to work out the exclusion you get in 2002.  The exclusion is $80,000 in 2002 for the entire year. As you came over half way through the year this is pro-rated in your case.  This is all done on form 2555.

You then need to figure out your foreign tax credit which is credit you claim on your US return for UK taxes paid in 2002.  This is done on form 1116.

You file the above forms in addition to Form 1040, and the relevan schedules (if relevant).

Hope this helps.  I fyou have more questions or need further explanation regarding the above feel free to ask here in the forum or call me on the number above.

Helen

Dear Helen,

    Thank you so much,
You've really made me feel better about the whole filing procedure.  I've got some time off coming up so I'm going to sit down soon and get it done!:)  Thank you for offering more help if I have any questions.  I might take you up on that offer if I get stuck.

Once again,

Thanks so much

God bless,

Kitty:)
   
   

Hello Helen,

    Well it's been a little over a week since I last sent you a message.  Since my vacations started I've sat down each day to finally get started on my taxes but I must admit, I'm stuck :-/  My loving husband has been as helpful as a British Citizen who doesn't have to file taxes could be.  Long story short, I need your help!  Would it be possible for you to send a price list for your filing services.  I would rather have the peace of mind that this was done by a professional.  If it's not too much inconvenience please email me the details at smoul65294@yahoo.com.  
I wait to hear from you.

Many Thanks,

Kitty

Hi Helen

Just discovered this site - went looking for it specifically for tax info, so it's a fantastic find.

I'm cutting it fine even against the extended Monday deadline for overseas taxpayers. But now the only other American we know (actually, I don't even know her, my husband does!!) said she never files US taxes. That sounds risky, but from your explanation posted 14.04, it seems that I only risk penalties or loss if I'm expecting a refund. I made much, much less than $80K and I don't get the earned income credit, so I'm inclined not to file at all. Is this is a really bad plan?

Many thanks for your thoughts

Tracy  [smiley=!blank.gif]

Obviously it is up to you whether you file or not.  But it is a requirement by legislations to file a tax return if your worldwide income is over your standard deductions.  

You may face difficulties re-newing your passport when this runs out, or when you want to obtain a morgage from a US mortgage lender or any other matters regarding immigration or financial matter if you don't file.

However, it is ultimately your decision as to what to do.

Helen

Thanks for that. For what it's worth, I went ahead and filed anyway. I got nervous about what the future could hold, and I read some of Chris Hansen (the Elephant?)'s postings from this time last year, and got the impression it's just a better idea to co-operate.