February 2018
US citizens residing in Finland
US citizens and US tax residents ("US Persons") are taxed in the United States on their worldwide income no matter where in the world they reside. The US taxes based on citizenship, which is different than almost all other countries in the world that tax based on residence. This often catches US Persons who have never lived in the US or have lived abroad for a number years by surprise. Any US Person living abroad with income for tax year 2017 above specific income thresholds must file a US tax return. E.g. for a single person under 65 years of age the income threshold is only USD 10,400.
A US Person has a US tax filing obligation even if the US Person has never lived in the US or left several years ago and their income is from foreign (non-US) sources. The US Person has a US tax filing obligation even if some or all of the income was taxed at source or is going to be taxed by the resident foreign country, e.g. by Finland.
The IRS also wants to know about money US Persons have in foreign bank accounts. There are now two different reporting requirements for foreign bank accounts, the Foreign Bank Account Report (“FBAR”) and the individual reporting requirement under the Foreign Account Tax Compliance Act (“FATCA”). The penalties for not filing are significant.
The due date for a US personal income tax return (Form 1040) is April 15 of each year. US Persons living in Finland receive an automatic extension of time to file the tax return and pay any taxes due without penalty until June 15. However, if there are taxes due, interest will be calculated starting on April 15. A US Person can receive an automatic extension of time allowing until October 15 to file their US tax return. This extension does not extend the time to pay the tax due, so penalties and interest will be added for payments received after the tax filing deadline. US Persons who are outside the US can request a discretionary 2-month additional extension of time to file their US tax return allowing until December 15 to file. The failure to file an informational filing carries significant penalties.
US tax filings for US Persons residing abroad are often complex and require numerous informational filings. Since US Persons living in Finland are tax resident both in Finland and in the US, mitigation of double taxation should also be carefully reviewed.
Please contact us if you need further information or help with the tax return filings in Finland or in the US.
A US Person has a US tax filing obligation even if the US Person has never lived in the US or left several years ago and their income is from foreign (non-US) sources. The US Person has a US tax filing obligation even if some or all of the income was taxed at source or is going to be taxed by the resident foreign country, e.g. by Finland.
The IRS also wants to know about money US Persons have in foreign bank accounts. There are now two different reporting requirements for foreign bank accounts, the Foreign Bank Account Report (“FBAR”) and the individual reporting requirement under the Foreign Account Tax Compliance Act (“FATCA”). The penalties for not filing are significant.
The due date for a US personal income tax return (Form 1040) is April 15 of each year. US Persons living in Finland receive an automatic extension of time to file the tax return and pay any taxes due without penalty until June 15. However, if there are taxes due, interest will be calculated starting on April 15. A US Person can receive an automatic extension of time allowing until October 15 to file their US tax return. This extension does not extend the time to pay the tax due, so penalties and interest will be added for payments received after the tax filing deadline. US Persons who are outside the US can request a discretionary 2-month additional extension of time to file their US tax return allowing until December 15 to file. The failure to file an informational filing carries significant penalties.
US tax filings for US Persons residing abroad are often complex and require numerous informational filings. Since US Persons living in Finland are tax resident both in Finland and in the US, mitigation of double taxation should also be carefully reviewed.
Please contact us if you need further information or help with the tax return filings in Finland or in the US.
Legal Disclaimer
The information in this site has been prepared for general informational purposes only and it should not be used as a substitute for consultation with a professional tax, legal or other competent advisor. While we have made every attempt to ensure that the information contained in this site has been obtained from reliable sources, Effektiivi Oy is not responsible for any errors or omissions, or for the results obtained from the use of this information.
The information in this site has been prepared for general informational purposes only and it should not be used as a substitute for consultation with a professional tax, legal or other competent advisor. While we have made every attempt to ensure that the information contained in this site has been obtained from reliable sources, Effektiivi Oy is not responsible for any errors or omissions, or for the results obtained from the use of this information.
