Video instructions and help with filling out and completing Which Form 2220 Abroad

Instructions and Help about Which Form 2220 Abroad

Music good morning everyone and welcome to today's class which is called filing requirements for US citizens and residents living abroad basically everybody who is required to file an American return regardless of whether they're a US citizen a u.s. resident or an alien in the United States with us source income all of those people need to file returns with varying filing requirements in today's class is about figuring out who is required to file when and on what form and to start the day off I've got a couple of poll questions up and these poll questions are actually geared around an actual tax return situation that I ran into last filing season for a person named George he was a client that came into my office he had an American tax return that had been prepared for him incorrectly over multiple years by multiple tax preparation firms it seemed no firm he went into quite understood how to report foreign earnings so I thought it would be a good way to start off today's class by exploring it so let's take a look at George's first situation which is actually at the bottom of the screen here it says George is a US citizen and resident and during the year he worked for an employer in the United States and earned $30,000 he also worked in the Canadian tar sands for six months of the year under a union contract where he earned $50,000 how much income should he report on his US tax return so for those of you who are just joining in on our class it is under way but what I'd like you to do real quick is tell me how much income George needs to report on his tax return when he's living inside the United States as a resident and a citizen but also spending a good deal of his time up in Canada does he need to report that Canadian income on his American return or does the fact that he's earning the money in Canada and filing a Canadian tax return have any impact on his u.s. filing requirement gives you guys a couple of minutes to select the correct answers give it your best shot okay good so we have agreement here I'll just show you the results of this first poll only a couple people responded and then I had a couple of texting and I was kind of egging you on with the right answer anyway but the truth of the matter is that if you are an American resident a US citizen then you need to report worldwide income knowing this fact I frequently run across tax returns and George is not the first case and frequently hear news stories and stories coming out of IRS about how people tax preparers need to be educated on this very important fact that you don't just pay tax on income that is earned inside the United States you pay tax on income that is earned anywhere in the world now I'm going to close this poll out and go to the next one okay so George a US citizen did not reside in the US at any time during the year and has lived in Canada as a resident since 1990 George earned $80,000 of wages in Canada and received an inheritance of $30,000 in cash from the estate of his uncle who was a US citizen and resident as well so how much income should he report on his u.s. tax return and the answer is $80,000 the income buddy earned in Canada is gonna be taxed on his u.s. return he actually has a u.s. filing requirement even though he hasn't lived in the United States for the past 25 years and that's something that gets people as well and it's actually a fairly unique requirement with respect to the United States I believe Austria is the only other nation in the world that taxes citizens on the worldwide income even when they no longer reside in that country if you are a citizen of virtually any other country in the world and you leave that country you emigrate away from that country to live somewhere else that country stopped taxing you on income except income source to that nation so for example if a Canadian leaves Canada and comes to the United States and lives and works in the United States and holds no Canadian property and has no other Canadian income then they would not file Canadian returns and they'd be under no obligation to do so but the reverse situation where you have an American who goes to Canada and lives there permanently for decades continues through all of those decades to have an American filing and even if they haven't been to the United States or had any us source income in those decades so there is a important piece of information there about filing requirement that a lot of people don't get so today's class really should be an elementary class who needs to file a tax return and I'm going to show you some very basic information about who is required to file a tax return and yet when it comes to say the IRS enrolled agent exam or the Oregon tax preparer and consultant exams filing requirements are some of the most frequently missed questions in other words the finer details of who must file a tax return often escapes professional preparers who've been doing this for years so we're gonna get into the basics today with these concepts firstly that's heading here who must file a return and we start with this very first sentence that says you must file a return if you are a citizen or a resident of the United States or a resident of Puerto Rico and you meet the following filing requirements and essentially the filing requirements for most individuals are