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Do you need to file a return?

If you are a US citizen or green card holder, your requirement to file an annual return does not change just because you are living out of the country.

Many Americans who are abroad for long periods of time simply stop filing returns. The IRS does not know where they are, so they never receive any warning notices, but the "out of sight, out of mind" rule does not apply. When these people return to the US, they may find that legal proceedings have already been started against them. In some cases, they may have difficulty renewing their passports. If they maintain bank accounts in the USA, these could be in jeopardy as well.

The only way to avoid this requirement is to abandon US citizenship (a drastic and difficult process) or green card status.

Please consult the chart below to determine whether you are required to file taxes (information is for the 2007 filing year; the numbers for 2008 will be similar and the chart will be updated when they are available). Please note that the Foreign Earned Income Exclusion should not be taken into account when using this chart; even if you will be able to decrease or eliminate your tax obligation, the filing requirement still applies.

Filing statusAge at the end calendar year 2007You MUST file if your gross income is at least
SingleUnder 65$8,750
Single65 or over$10,050
Married filing jointlyUnder 65 (you and spouse)$17,500
Married filing jointly65 or over (you or spouse but not both)$18,550
Married filing jointly65 or over (you and spouse)$19,600
Married filing separatelyAny age$3,400
Head of householdUnder 65$11,250
Head of household65 or over$12,550
Widow(er) with dependent childUnder 65$14,100
Widow(er) with dependent child65 or over$15,150

Regardless of the table above, you must also file a return — no matter what your age, income, or filing status — if any of the following conditions apply for the tax year:

  • You owe Alternative Minimum Tax (AMT)
  • You owe tax on an IRA or other tax-favored account
  • You owe household employment taxes
  • You owe Social Security and Medicate tax on tips you did not report to your employer, or on wages from which your employer did not withhold these taxes
  • You owe write-in taxes, including uncollected Social Security and Medicare or RRTA tax on tips you reported to your employer, group-term life insurance, or health savings account distributions
  • You owe recapture taxes
  • You received advance Earned Income Credit (EIC) payments from your employer
  • You had net earnings from self-employment of at least $400
  • You had wages of $108.28 or more from a church or church-controlled organization that is exempt from employer Social Security and Medicare taxes

Please consider these issues carefully, as the consequences for failure to file can be severe.