Tax changes could delay filing for some overseas
January 23, 2008
Like their stateside counterparts, some Americans stationed overseas might have to delay electronically filing their taxes until Feb. 11.
A last-minute fix to the Alternative Minimum Tax forced the Internal Revenue Service to change five credit claim forms, and also to make changes to its computer systems that process electronic returns.
While the paper forms are ready, the computers won’t be ready to go until Feb. 11, according to the IRS.
Only those taxpayers who want to claim certain credits are affected by the fix.
Those credits include:
Education creditsResidential energy creditsChild and dependent care expensesMortgage interest creditDistrict of Columbia first-time homebuyer creditOf those, the education credit is what overseas Americans should be on the lookout for, according to Eric Smith, an IRS spokesman in Washington.
“Likely, this is the credit most affected for members of the military and others outside the United States,” he wrote in an e-mail to Stars and Stripes.
However, he noted, the IRS hasn’t kept track of how many overseas Americans in particular countries claimed each credit in the past, so it’s hard to say just how many might be impacted this year.
The child care credit is another popular credit affected by the tax fix, but only those filing a short-form return are affected, he said.
“The good news is that for this credit, there is an alternative that easily avoids any delay.”
Smith said those filers who want to claim the child care credit should switch to the regular 1040 tax form and attach Form 2441.
It’s a “particularly easy change to make if, like most early tax filers, you are filing electronically or using tax-preparation software to fill out your return,” he said.
Few overseas Americans are likely eligible for the residential energy credit, because “It has to be your own home in the U.S.,” not overseas, said Capt. Becky Evans, who is in charge of the 21st Theater Sustainment Command’s tax center in Kaiserslautern, Germany.
The IRS won’t start processing returns affected by the AMT fix until Feb. 11, regardless of whether the taxpayer filed a paper or electronic return.
However, many overseas taxpayers might not be ready to file by then anyway.
“A lot of people will have their W-2s, but that doesn’t mean they’ll have everything they need to file,” said Stephen W. Smith, special assistant to the staff judge advocate for 21st TSC, who has spent 20 years handling overseas tax issues.
He noted that banks and other financial institutions usually take longer than that to mail out 1099 forms, which filers are likely to need for investment and interest income.
While civilians and Marines should have gotten their W-2s by now, all other active-duty servicemembers won’t get theirs until Jan. 22, according to the Defense Finance and Accounting Service.
According to Smith, the delay caused by the AMT fix won’t likely cause many headaches.
“The worst that’ll happen is that people who want to claim the education credit won’t be able to e-file until Feb. 11,” he said.