Living in Italy may exempt you from a lot of responsibilities at home, but you can never escape the IRS. Whether you earn money in Italy or not, you will have to notify them, too, of your financial situation come April.
This does not necessarily mean you will have to pay any money. If you earn less than the equivalent of US$80,000 in Italy and pay Italian taxes on that income, you will not be subject to U.S. taxes on it, too. All you have to do is fill out form 2555 to file for an exclusion. But if you have retained any holdings in the United States”an interest-yielding savings account, stocks, bonds, money market account, etc.”you will need to file on those earnings, just as if you were living at home.
The IRS has made it easier in recent years to file from abroad, and the local U.S. Embassy or Consulate will also lend a hand. All of the forms you need can be picked up at the embassy or consulate. Staff are available for questions on your particular status and, come tax time, usually have a consultant on hand for more complicated matters. Additional help can be found at the mission’s website, www.embassy.it/irs.
The deadline for foreign filers is extended from April 15 to June 15. On the envelope, write filing from abroad to make sure your forms are sorted into the right pile. The envelope must be postmarked before June 15. An alternative is to pay online. The website www.irs.gov has a list of private registered companies that offer the e-file service, where you can pay with your credit card. It is advisable to pick up all the schedules and worksheets from the embassy beforehand. It can be hard to download certain obscure forms from those sites.