16 January 2010

Backdated Taxation - The Problem of Many

If you are an American citizen living aboard you have to file a tax return every year if the income meets the minimum income filing requirements for filing status and age. You will need to report all income earned in Malta and elsewhere. These requirements are the same irrespective of whether or not you are living in the United States.

Table: Minimum Income Filing Requirements for Filing Status and Age

IF your filing status is...
AND at the end of 2009 you
THEN file a return if
your gross income
was at least...**
under 65

65 or older

married filing jointly***
under 65 (both spouses)

65 or older (one spouse)

65 or older (both spouses)

married filing separately
any age

head of household
under 65

65 or older

qualifying widow(er) with
under 65

dependent child
65 or older

Source : http://www.irs.gov/publications/p17/ch01.html

Until the year 2000, a number of our members were coerced to lose their US citizenship. This happened during a time when Malta did not tolerate dual citizenship. After the year 2000 Malta passed legislation that allowed people its citizens to also be citizens of another country. Many of those who had been coerced to lose their US citizenship made use of the services of Stars And Stripes Malta (SASM) to present their case so that their US citizenship is given back. The absolute majority were successful.

The positive outcome letter from the Department of States informs the applicant that he had “never ceased to be a US citizen”. This means that all of a sudden the person is faced with a situation in which he has not filed the annual 1040 tax declaration ever since he had lost his US citizenship. This would be at least 10 years (when Malta changed its legislation), but for many some members more than 35 years had passed since they had lost their citizenship.

Many of SASM’s members who have gotten back their US citizenship are not sure what they are supposed to do. While they do not want to get into trouble and have problems with the IRS, filing 20 years of back taxes is a daunting task especially when one takes into account the fact that tax legislation changes annually. Since the wages in Malta are considerably less than those in the US, many people will not be eligible to pay US taxes. For example, the maximum income exclusion for individuals residing abroad for 2009 is $91,400. But not paying taxes is different from not filing in the necessary forms!

SASM will be presenting its member’s case to the IRS in order to find a solution that is workable and that will benefit its members.

If you would like to voice you opinion on the matter, please send an email to infor@StarsAndStripesMalta.com.

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