Publication 54 |
2001 Tax Year |
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
2001 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 |
$ 7,450 |
65 or older |
$ 8,550 |
Head of household |
$ 9,550 |
65 or older |
$10,650 |
Qualifying widow(er) |
$10,500 |
65 or older |
$11,600 |
Married filing jointly |
$13,400 |
Not living with spouse at
end of year |
$ 2,900 |
One spouse 65 or older |
$14,300 |
Both spouses 65 or
older |
$15,200 |
Married filing separately |
$ 2,900 |
If you are
the dependent of another taxpayer, see the instructions for Form 1040
for more information on whether you must file a return.
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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.
Self-employed individuals.
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.
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.
65 or older.
You are 65 on the day before your 65th birthday. If your 65th
birthday is on January 1, you are 65 on December 31 of the previous
year.
When To File and Pay
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.
You can use certain private delivery services designated by the IRS
to meet the "timely mailing as timely filing/paying" rule for tax
returns and payments. See your Form 1040 or Form 1040A instructions
for a list of designated delivery services.
Extensions
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.
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.
Service in a combat zone.
If you served in a combat zone or qualified hazardous duty area,
see Extension of deadline in Publication 3.
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.
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.
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. You must pay
any tax you expect to owe with your extension.
Paperless filing.
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.
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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.
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When to file.
Generally, you must request the 4-month extension by the regular
due date of your return.
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.
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 and send any
necessary payment with your Form 4868 or pay the tax due by credit
card. 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.
Extension beyond 4 months.
If you qualify for the 4-month extension 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 until you have first used
the 4-month extension. 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.
Extension granted.
If 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.
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 if the 10-day grace period is
granted.
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.
- You are a U.S. citizen or resident.
- You expect to meet either the bona fide residence test or
the physical presence test, but not until after your tax return is
due.
- Your tax home is in a foreign country (or countries)
throughout your period of bona fide residence or physical presence,
whichever applies.
Generally, if you are granted an extension, it 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.
How to get an extension.
To obtain an extension, you should file Form 2350 with the Internal
Revenue Service Center, Philadelphia, PA 19255-0002, 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.
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.
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 later
qualify for the foreign earned income exclusion, the foreign housing
exclusion, or the foreign housing deduction under the bona fide
residence or physical presence rules, 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.
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. Unless you are self-employed,
your functional currency is the U.S. dollar.
Even if you are self-employed and 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 you have a QBU, translate the results, such as income or loss,
into U.S. dollars on a monthly basis.
Blocked Income
You generally must report your foreign income in terms of U.S.
dollars and, with one exception (see Fulbright grants,
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:
- 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
- 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.
Fulbright grants.
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. To
determine the amount of the tax that you can pay in foreign currency,
get Publication 520.
You may also be able to get details of these
arrangements from the U.S. Educational Foundations or Commissions in
foreign countries.
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 above.
However, you should not file with the Philadelphia Service Center
if you are a bona fide resident of the Virgin Islands or a resident of
Guam or the Commonwealth of the Northern Mariana Islands on the last
day of your tax year.
Resident of Virgin Islands
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If you are a bona fide resident of the Virgin Islands on the last
day of your 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. |
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 on the last day of your 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.
The amount of tax you must pay to the Virgin Islands is figured by
the following computation:
Form 8689, Allocation of
Individual Income Tax to the Virgin Islands, is used for this
computation. You must complete this form and attach it to your return.
You should pay any tax due to the Virgin Islands when you file your
return with the Virgin Islands Bureau of Internal Revenue.
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.
Resident of Guam
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If you are a resident of Guam on the last day of your 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 on the last 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,
Tax Guide for Individuals With Income
From U.S. Possessions, for information about filing Guam
returns.
Resident of the Commonwealth of the Northern Mariana Islands
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If you are a resident of the Commonwealth of the Northern Mariana
Islands on the last day of your 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 on the last 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.
Terrorist or Military Action
U.S. income taxes are forgiven for U.S. Government military or
civilian employees who die as a result of wounds or injuries sustained
outside the United States in a terrorist or military action directed
against the United States or its allies. The taxes are forgiven for
the tax years beginning with the year immediately before the year in
which the injury or wounds were incurred and ending with the year of
death.
If the deceased government employee and the employee's spouse had a
joint income tax liability for those years, the tax must be divided
between the spouses to determine the amount forgiven.
For more information on how to have the tax forgiven or how to
claim a refund of tax already paid, see Publication 559,
Survivors, Executors, and Administrators.
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