Consular Services

Taxes

Frequently Asked Questions

1. Is there an office located in Hungary, which provides assistance on American tax obligations?
2. What countries fall under the jurisdiction of the IRS office in Frankfurt, Germany?
3. Where should I file my tax return?
4. What was the average exchange rate for the Forint to the Dollar to be used when filing the 2008 tax return?
5. When is my tax return required to be filed?
6. Can I pay my taxes in other than American dollars?
7. How can I pay my taxes?
8. I am a U.S. citizen living overseas with no U.S. income but substantial foreign income. Must I file a U.S. tax return?
9. I am a U.S. citizen but had little income. Must I file a return?
10. I was transferred overseas by my employer and am filing a tax return for the first time from an overseas location. What is my tax situation?
11. I am a U.S. citizen who has lived abroad for several years and didn't know I had to file a U.S. tax return. What do I do now?
12. I am a U.S. citizen living overseas with U.S. investments. Do I need to do anything special about them?
13. I am a Hungarian citizen who recently sold U.S. real estate and a 10% amount was withheld in the U.S. from the selling price. What do I need to do now?
14. I am a Hungarian citizen who will be sent by my company to work in the United States. What are my U.S. tax obligations?
15. I am a Hungarian citizen who has investments in U.S. stocks and mutual funds. A U.S. tax of 15% was withhold from my dividend payments. Do I have to file a U.S. tax return and will the 15% be refunded?
16. I am a Hungarian citizen who has interest income from the U.S. Am I supposed to file a U.S. tax return and report this interest income?
17. I am not an American and live outside the U.S., but I have U.S. investment income. Do I need a Social Security number?
18. I am a non-resident alien but own U.S. rental income. What is my U.S. tax situation?
19. I purchased goods in the United States. Can I get the sales tax refunded?

1. Is there an office located in Hungary, which provides assistance on American tax obligations?
No, the closest Internal Revenue Service office is at the U.S. Consulate General in Frankfurt. The mailing address is:

U.S. Consulate Frankfurt
Internal Revenue Service
Giessener Str. 30
60435 Frankfurt (Main), Germany
Tel.: (49) 69-7535-3834; Fax: (49) 69-7535-3803
E-mails: *irsfrankfurtmailbox@irs.gov or  IRS.Frankfurt@irs.gov
Web site: http://berlin.usembassy.gov/germany/irs.html

2. What countries fall under the jurisdiction of the IRS office in Frankfurt, Germany?
The IRS office in Frankfurt, Germany is responsible for the following countries: Germany, Austria, Hungary, The Netherlands, Italy, Romania, Poland, Czech Republic, Slovak Republic, Estonia, Latvia, Lithuania, Former Soviet Republics (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan), Lebanon, Iraq, Qatar, Syria, Iran, and Yemen.

3. Where should I file my tax return?
All U.S. taxpayers residing outside the United States should mail their tax returns to:

Internal Revenue Service Center
Austin, TX 73301-0215, USA

4. What is the average exchange rate for the Forint to the Dollar for the tax year 2008?
The IRS has NO official exchange rate. In past years we have given an average based on the Dept. of State rates posted on their web page. Taxpayers have always been required by Internal Revenue regulations 1.905-3 and 1.988 to translate foreign income into dollars on the date of payment. As a practical matter, a wage earner can use a yearly average with no problem. A self-employed individual usually benefits by converting at the date of payment. The IRS accepts any posted exchange rate that is used consistently.
The U.S. Federal Reserve provides an exchange rate which amounts to a yearly average of HUF 171.8984. For Example, if you earned HUF 3,000,000, this amount would be divided by 171.8984 to give you the converted dollar amount of $17,452.17.

5. When is my 2008 tax return required to be filed?
- U.S. citizens and resident aliens - April 15th, 2009
- U.S. citizens residing outside the United States on April 15th - June 15th, 2009
To use this automatic two-month extension you must attach a statement to your return explaining that you are an overseas filer. Any tax due though must be paid by April 15, 2009 to avoid being charged penalties and interest. 
- Non-resident alien with U.S. wage income - April 15th, 2009
- Non-resident alien with no U.S. wage income - June 15th, 2009

To request an extension to October 15, 2009, complete and mail Form 4868 before the return due date to the address designated on the form (to determine if further extensions are availabe, go to www.irs.gov)
Please remember: Extensions of time to file are not extensions of time to pay. IRS must receive payment of tax due by 15 April 2009.

6. Can I pay my taxes in other than American dollars?
No. Tax payments must be made in U.S. currency, using a check or money order.

7. How can I pay my taxes?

Your payment options are:

1. Electronic Funds Withdrawal. You may authorize an electronic funds withdrawal from your checking or savings account using tax preparation software or professional tax preparers. If you select the electronic payment option, you will enter your financial institutions routing number, your account number, and the account type (cheking or savings). Check with your financial institution for the correct routing and account numbers.
   
   
2. Credit Card. You also may pay by credit card using any major credit card, including American Espress, Via, Mastercard, and Discover. For more information on paying your taxes by credit card, contact the following service providers.
   
   Official Payments Corporation: +1-800-272-9829 or +1-877-754-4413, www.officialpayments.com or
   
   Link2Gov Corporation: +1-888-729-1040 or +1-888-658-5465, www.pay1040.com
   
   Although the IRS does not charge a fee for credit card payments, most service providers do charge a convenience fee of 2%-3%.
   
   
3. Electronic Federal Tax Payment System (EFTPS). You may pay your federal taxes using the EFTPS system at www.eftps.gov. This payment option is available to both individual taxpayers and businesses. For details on how to enroll, visit www.eftps.gov. Alternatively, you may call EFTPS Customer Service at +1-800-555-4477 for businesses, or +1-800-316-6541 for individuals.
   
   
4. Check. All checks must be in U.S. dollars made payable to the United States Treasury. You should print on the front of your check your Social Security Number or ITIN, the tax return form number, and the tax year.

Note: The IRS does not accept cash payments.

8. I am a U.S. citizen living overseas with no U.S. income but substantial foreign income. Must I file a U.S. tax return?
Yes. U.S. citizens must report their worldwide income on their U.S. tax returns. If you paid income taxes to a foreign country, you may qualify for
a foreign tax credit. IRS Publication 514 "Foreign Tax Credit for Individuals" explains how to calculate this credit. You may also qualify for a foreign earned income exclusion of up to $87,600 for 2009. Qualification requirements and forms to be completed are explained in IRS Publication 54 "Tax Guide for U.S. Citizens and Resident Aliens Abroad."

9. I am a U.S. citizen but had little income, must I file a return?
That depends on the level of your income. Please see the amounts listed below to determine if you have a filing requirement or you may call IRS for assistance in determining if you are required to file.

10. I was transferred overseas by my employer and am filing a tax return for the first time from an overseas location. What is my tax obligation?
Obtain and read Publication 54, "Tax Guide for U.S. Citizens and Resident Aliens Abroad". This publication explains your filing requirements. Forms and Publications are available on the IRS website www.irs.gov or from the IRS office in Frankfurt. Some forms and publications are also available at U.S. embassies and consulates.

11. I am a U.S. citizen who has lived abroad for several years and didn't know I had to file a U.S. tax return? What do I do now?
American citizens living outside of the U.S. are subject to the same filing requirements that apply to American citizens living in the U.S. The U.S. tax-filing requirement is based on worldwide income from all sources irrespective of residence. Special benefits, such as the foreign earned income exclusion and foreign tax credit, may only be claimed if an income tax return is filed.

If you have not filed a U.S. income tax return for one or more years and no money is due, you should file returns for the current year and three prior years (i.e., 2005-2008).

However, if you have not filed a U.S. income tax return for one or more years and money is due, you should file returns for the current year and five prior years (i.e., 2003-2008). Instructions for getting prior year forms can be found on www.irs.gov.

Note: The statute of limitations for tax assessments does not begin to run until a tax return is filed. Therefore, the statute remains open on any tax year for which a tax return has not been filed.

12. I am a U.S. citizen living overseas with U.S. investments. Do I need to do anything special about them?
Yes, since your investment institution may not know that you are a U.S. citizen living overseas, you must notify them of this fact, using Form W-9 "Request for Taxpayer Identification Number and Certification". Otherwise, the investment institution may think you are a non-U.S. citizen and withhold taxes from
your investment income.

13. I am a Hungarian citizen who recently sold U.S. real estate and a 10% amount was withheld in the U.S. from the selling price. What do I need to do now?
You must file Form 1040NR "U.S. Nonresident Alien Income Tax Return" with Schedule D for the year of the sale and attach Form 8288-A which documents the 10% tax withheld. If the sale involved a rental or business property, Form 4797 must also be completed. You must have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) in order to file the 1040NR. If you do not have an ITIN, you must fill out the Form W-7, attach your certified documentation and income tax return to it and mail everything to the ITIN Unit address given in the Form W-7 instructions.

14. I am a Hungarian citizen who will be sent by my company to work in the United States. What are my U.S. tax obligations?
IRS publication 519, "U.S. Tax Guide for Aliens," explains your situation. Contact IRS if you have further questions.

15. I am a Hungarian citizen who has investments in U.S. stocks and mutual funds. A U.S. tax of 15% was withhold from my dividend payments. Do I have to file a U.S. tax return and will the 15% be refunded?
No to both questions. U.S. dividend income paid to Hungarian citizens is subject to a 15% withholding tax. If that amount has been withheld, you do not have to file a U.S. return as the correct tax liability has been paid. By the same reasoning, no refund is due.

16. I am a Hungarian citizen who has interest income from the U.S. Am I supposed to file a U.S. tax return and report this interest income?
No. Interest income from the following sources paid to non-resident aliens is tax exempt from U.S. taxation. You do not need to file a U.S. tax return or pay U.S. income taxes on bank deposits, checking and savings accounts, certificates of deposit deposits at credit unions and savings association.

17. I am not an American and live outside the U.S., but I have U.S. investment income. Do I need a Social Security number?
No, not at present, but you must send Form W-8BEN "Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding" to the financial institution which holds your investment to notify them of your residency and citizenship so that they will withhold the correct U.S. income tax. If an Individual Taxpayer Identification Number (ITIN) is required and you do not have one, you must fill out the Form W-7 in order to receive one.

18. I am a non-resident alien but have U.S. rental income. What is my U.S. tax situation?
You have two choices. You can have your U.S. rental income subject to a 30% withholding tax and you have no further requirement to file a U.S. tax return or pay additional U.S. taxes.
You may, however, choose to consider your rental income as an effectively connected U.S. business activity. That requires you to file a U.S. tax return and itemize your rental income and expenses. See Publication 519, "Tax Guide for Aliens", for information. Remember, filing a U.S. return requires an Individual Tax Identification Number (ITIN - Form W-7).

19. I purchased goods in the United States. Can I get the sales tax refunded?
There is no national sales tax system, such as Value Added Tax - VAT (Általános Forgalmi Adó) in the United States. Sales taxes are assessed by the individual states and cities, and as such each has complete autonomy in administering its taxes. Most states have no provision for sales tax refunds. There is no office in the U.S. Embassy which can provide any assistance in this matter.

We have been advised that Louisiana is the only state which provides a refund of sales tax for international visitors on goods purchased at participating stores. You may contact the State of Louisiana at:

Louisiana Tax Free shopping
P.O. Box 20125
New Orleans, LA 70141
Tel: 001 - (504) 467-0723
Fax: 001 - (504) 568-6670

Last updated: 01/09/2009