Innocents Abroad, Beware of the Tax Man

Nowadays, if you want to properly climb the corporate ladder, it's almost a prerequisite that you go overseas for a few years to learn your company's global business.

And since the decision to uproot your family for the sake of your career takes much pondering, it's no wonder that the tax implications are the furthest thing from your mind.

That's OK. Most companies will make sure that while you are, for instance, on assignment in Britain, your tax bill costs you no more than if you stayed at home in New Jersey.

In some cases, your salary will be padded. You'll get extra money for housing and other goods and services, if you're sent to a place that's more expensive than where you live now, as well as for the extra out-of-pocket costs you incur by moving your family overseas.

And while the tax rules for Americans abroad are thorny, help is available. Many companies will pay an outside accounting firm to prepare your tax return for you. If not, go to your local embassy and ask for help. The IRS has representatives all over the world.

But whether your return is prepared by a professional or you do it yourself, there are certain issues that you should know about.

To start, you get an automatic two-month extension on your tax-filing deadline until June 15. So you don't have to file a form to qualify for this extension. But when you eventually file your return, attach a statement to the back of it explaining that you're filing two months later because you live and work abroad. Be sure to include your foreign address and the reason you are living there.

But just because your tax return isn't due, doesn't mean you don't have to pay your tax bill. If you owe U.S. tax, you'll owe interest on that amount from April 15 until you file your return.