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All US citizens are required to file a US Individual Tax Return every year, wherever in the world they live. That means that, even if you pay taxes in Spain, you still have to report your worldwide income to the US government. You must file federal income tax Form 1040 if your gross income is at least $5 if you are married filing separately, or $12,400 if you are single.
This year, Tax Day is Thursday, April 15, 2021. US citizens residing in the US must file 2020 income tax returns by this date. Expats have an automatic filing extension until June 15, 2021. A further extension is available upon request, which extends the deadline to until October 15, 2021.
Additionally, if the aggregate amount of all the maximum balances of your financial accounts outside the US reached the amount of $10,000 at any point during the year 2020, then you must also file the FBAR (Foreign Bank Account Report) with the Financial Crimes Enforcement Network, FINCEN 114 before June 15, 2021.
Update for This Year on Form 1040 2020
Here are the main things you need to know right off the bat for the 2021 tax season:
- Tax Day is Thursday, April 15, 2021. US citizens residing in the US must file 2020 tax returns by this date. Expats have an automatic filing extension until June 15, 2021. A further extension is available upon request, moving the deadline to October 15, 2021, which is a service provided automatically to all clients at US Tax Consultants.
- The standard deduction for 2020 increased to $12,400 for single filers and $24,800 for married couples filing jointly.
- Income tax brackets increased in 2020 to account for inflation.
Do you know if you need to file Spain's Modelo 720? If you are a Spanish tax resident and have assets outside of Spain valued at €50,000 or more, then you most likely do. Find out what the filing retirements are in our article Spain’s Modelo 720: What You Need to Know.
Form 1040 for 2019 Taxes
The IRS has announced that it is currently opening and processing 2019 tax returns, payments, refunds and correspondence. During 2020, the IRS experienced delays in processing paper tax returns due to limited staffing. COVID-19 continues to cause delays in some of their services. We estimate that at this point the IRS has processed around 50% of the 2019 tax returns received on paper.
New Things Taxpayers Should Keep in Mind for Form 1040 2020
This year, there are some key items to consider involving credits, deductions and refunds:
Recovery Rebate Credit/Economic Impact Payment
Taxpayers may be able to claim, within the Form 1040 2020, the Recovery Rebate Credit if they met the eligibility requirements, for both the first and the second stimulus check.
Interest on Refunds Taxable
Taxpayers who received a federal tax refund in 2020 may have been paid interest. Refunded interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.
Child Tax Credit
Got kids? Families can claim up to $2,000 per qualified child with this tax credit and since this is a refundable credit, your family can receive up to $1,400 per child as a refund.
Strong Recommendation for 2021
Contact your tax preparer to check what other forms you must attach to your Form 1040, especially those connected with the automatic exchange of information between both tax agencies in the US and Spain. These can include: Form 8938 report of the financial accounts abroad; Form 5471, Information Return of US Persons with Respect to Certain Foreign Corporations; or Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company (PFICs). Penalties for not filing the required forms are $10,000 per year not filed.
What U.S. Tax Consultants Needs to Prepare Your Form 1040 and FBAR
For U.S. Tax Consultants to prepare your tax return this year, you should upload all important tax records as soon as possible. These include: W-2 forms from employers, 1099 statements from banks and other payers, other income documents and virtual currency transaction records, even if we need to file first your Spanish tax return from April to July, 2021.
If you have doubts or questions about your filing obligations, please do not hesitate to contact the professionals at U.S. Tax Consultants. With over 50 years of experience helping US citizens with tax preparation, they will make sure that you and your company comply with all the legally established tax filing requirements.
You can learn more about U.S. Tax Consultants online at ustaxconsultants.net, or follow on Facebook: @USTaxConsultants and Instagram: @ustaxconsultants.
Sponsored by U.S. Tax Consultants.