US Tax Services AGFAQ & Tax Resources
Filing Due Dates
Taxpayers living abroad receive an automatic extension until June 17, 2019 to send in their 2018 income tax returns. This due date can be extended to October 15, 2019 if a request form is filed. Finally, it’s possible to send a letter to the IRS asking for a second and final extension to December 15, 2019.
However, if tax is due it must be paid by April 17, 2019 in order to avoid interest charges. You may make a prepayment by April 16th and only file your tax return by the extended due date.
The Report of Foreign Bank and Financial Accounts (FBAR) must be electronically filed by April 17, 2019 with an automatic extension possible until October 15, 2019. There can be severe penalties for late filing of the FBAR so it’s very important that it be filed on time.
The IRS has become much stricter about when and how tax returns must be sent from abroad to be considered as timely filed. Please find further information in our flyer «Mailing Your Tax Return».
Who must file a U.S. tax return?
American citizens and green card holders are taxed on their worldwide income, regardless of where they live or where their income is derived. Whether or not an American taxpayer actually needs to file depends on their level of income and filing status, such as single, married filing jointly, head of household, etc.
For tax year 2018, the income threshold is $5 if you are Married Filing Separately, $12,000 for a Single filer, $18,000 for a taxpayer who files as Head of Household and $24,000 for Married Filing Jointly status. These amounts also increase for taxpayers who are 65 or older.
Unlike Switzerland, the IRS filing requirements are based strictly on income and not age. Thus, turning 18 does not automatically oblige a child to begin filing a tax return. However, earning income or having ownership of or access to foreign financial accounts may also cause someone below the age of 18 to be obliged to file a tax return or FBAR. Please find further information in our flyer «Child Required to File?».
What is the Report of Foreign Bank Accounts (FBAR)?
Americans and green card holders who have foreign (non-U.S.) bank or financial accounts with an aggregate value of $10,000 or more at any time during the year must file an FBAR to declare their ownership over the accounts. Generally, all bank accounts, securities accounts and 3rd Pillar accounts must be declared. These accounts must be declared even if you own them jointly or only have signatory authority over them. The rules are complex and penalties for non-compliance are severe, beginning at $10,000 per year.
What if my income level is less than the Foreign Earned Income Exclusion?
Even if your income from employment is below the exclusion amount of $103,900 for 2018, you must still file a tax return if your total earnings are greater than the income thresholds mentioned above. It is also important to keep in mind that the exclusion applies only to earned income. This means that income from pensions and social security, for example, does not qualify for the exclusion.
What about the double-taxation treaty between the United States and Switzerland?
The treaty has provisions in place to ensure that taxpayers will not pay tax twice on the same income. However, that does not mean that if you pay Swiss tax on your income you will never pay U.S. tax. For example, if someone pays income tax at a 15% rate in Switzerland and that same income would be taxed at 20% in the U.S., the difference of 5% will still have to paid to the U.S.
Anything else I should know?
If you own, or have an ownership interest in a foreign corporation, you may be required to file a Form 5471 to declare your ownership interest. Failure to file the form can result in a penalty of $10,000 per year.
If you received a distribution from a foreign trust or a gift of $100,000 or more from a nonresident alien (non-U.S. Citizen or Green Card holder) you must file Form 3520 to declare the receipt of the distribution or gift. Unsurprisingly, the penalties for failure to file can be severe.
If you are liable for U.S. taxes you should not own non-U.S. mutual funds. These qualify for U.S. tax purposes as PFIC’s (Passive Foreign Investment Company) and ownership can result in increased filing requirements as well as very high effective tax rates when sold.
Internal Revenue Service
ITIN Acceptance Agents - Switzerland
Report of Foreign Bank Accounts (FBAR)
Currency Tools (OANDA)
U.S. Embassy Switzerland
American Citizens Abroad
American Club of Zürich
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