[nina_70]

NOTE/ Deadline to file if you live abroad is June 15th BUT/ any tax due must be paid (post-dated) April 17th, otherwise you will have to pay penalties. So, you need to figure out your taxes due now.

[nina_70]

Originally Posted by Dee Dee

Did you guys know that there is a big change in tax that is affecting us (Expats)?

"If you claim the foreign earned income exclusion or the foreign housing exclusion Form 2555 or Form 2555-EZ, you must figure your tax using Foreign Earned Income Tax Worksheet found in the Instructions for Form 1040"

As a result of this, my tax payment is MUCH MUCH higher than last year! OUCH!

Does any of you know why there is such a change without any news ever talking about it? I was in the dark until I saw my bottom line.

As I remember it, this is related to changes in tax laws regarding claims for Housing Exclusion (the very oddly titled "Tax Increase Prevention and Reconciliation Act" of 2005). There was a big debate about this a while back (plus some postings on Geoexpat in Sept'04). There was even a campaign by American Chamber of Commerce in Hong Kong to try to reverse it. Unfortunately since tax law is so complicated most people don't get involved (or even understand the consequence) until the bottom line comes in...

More info here...
http://amcham.org.hk/taxhike/

The net result of this is that the Housing Exclusion is not as good a deal as it used to be. So, if you're living in an expensive place (e.g. one paid by your employer) you immediately have a tax impact. Smaller place (less rent) is the way to go now...my hubby and I actually moved out of our big employer-sponsored mid-levels apartment to a very small non-sponsored Causeway Bay apartment when this tax law went into effect.

[KnowItAll]

>> Unfortunately since tax law is so complicated most
>> people don't get involved (or even understand the
>> consequence) until the bottom line comes in...

So true .. everyone assumed "it would not affect me".

[mobespierre]

i'd like to shake a fist at the US government... i'm not a fan of paying two sets of taxes. are we the only country that double taxes its expats?

[shwetapershad]

I thought the deadline to pay your dues was April 15th. Was hoping it would turn out to be April end. :Sigh:
Guess we'll be hit hard this time (don't ask)....

[nina_70]

Originally Posted by shwetapershad

I thought the deadline to pay your dues was April 15th. Was hoping it would turn out to be April end. :Sigh:
Guess we'll be hit hard this time (don't ask)....

Normally you're right, but this year 15th falls on a Sunday, and Monday 16th is Emancipation day so IRS has extended the date until 17th.

If you want all the gory details of the date, here they are....like all US tax stuff, it's ridiculously overly-complicated!

Questions and Answers ? April 17 Deadline
--------------------------------------------------------
Why are taxpayers getting extra time to file and pay?
Taxpayers will have extra time to file and pay because April 15 falls on a Sunday in 2007, and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia.

By law, filing and payment deadlines that fall on a Saturday, Sunday or legal holiday are timely satisfied if met on the next business day. Under a federal statute enacted decades ago, holidays observed in the District of Columbia have an impact nationwide, not just in D.C. Under recently enacted city legislation, April 16 is a holiday in the District of Columbia. The IRS recently became aware of the intersection of the national filing day and the local observance of the new Emancipation Day holiday after most forms and publications for the current tax filing season went to print.

Individuals in the District of Columbia, as well as in six eastern states, already had an April 17 filing date prior to this announcement because they are served by an IRS processing facility in Massachusetts, where Patriots Day will be observed on April 16. These individuals are still required to file on April 17.

[joey_w.hk]

Just an FYI - you are not subject to a late filing penalty if you owe taxes and file after April 17. You are though respobsible for the interest owed with the ticker starting on April 17th until they get your tax payment. Also, the rate of interest is reasonable.

[shwetapershad]

Thanks for that bit joey!

[nina_70]

Well, true...but you may still be charged a penalty if you pay after 2 months...here's the exact rules...

1/ You get an automatic 2-month extention to file/pay if you are resident outside the US on April 17th, but you are charged interest on any tax due after tax day.

2/ You get an automatic 6-month extention to file (but not to pay!) if you file form 4868 or e-File. Again, you must pay interest and you may also ALSO be assesed a penalty unless you can prove reasonable cause for not paying your tax when due.

The interest rate you pay is the federal short-term rate plus 3 percent which is decent, but still adds up!! Last time we owed interest was in 2004 and we ended up paying a rate of 5% (annualized). I just hate giving the IRS anymore money than I need....

[Jay 1]

Mobespierre:

$4,500 seems high though, I guess it depends on the complexity of one's finances and the amount of work involved for the tax preparer. I suggest Internal Income Incorporated in Chicago. The owner and proprietor, Tod Edwards, is a consumate professional who provides quality, personal service (e-mails and calls returned promptly) for a reasonable price:

Internal Income Incorporated
1317 West Taylor Street
Chicago, IL 60607
(312) 942-0850 - telephone
(312) 942-0854 - fax
iiitax@sbcglobal.net - e-mail

I have used his services since 2005 and could not be happier. This year we have until April 17, 2007.

Ajay