CEO of MyExpatTaxes, the leading tax software for expats in the United States trusted by thousands of Americans.
You may be surprised to learn how common it is for U. S. citizens abroad to have to report their overall source of income to the IRS every year. it means you probably won’t bite it again later. There’s nothing fun in placing an IRS letter in your mailbox overseas, knowing that your U. S. tax return rate is not in place. U. S. is still required.
Fortunately, to not meet the deadline for filing taxes as an American abroad, there is a solution to take advantage of that can prevent you from paying a maximum penalty fee. These are called simplified procedures and can be back on the correct IRS list.
Tax deadlines
For many Americans, April 15 was etched in their brains as “tax day. “However, living Americans have more time to file their taxes in the United States. The IRS provides expats with an automatic two-month extension to claim their taxes, which means they only have to claim their overall source of income before June 15.
However, the June 15 deadline is only for filing U. S. taxes. U. S. If you owe taxes to U. S. tax authoritiesU. S. , Has paid until the deadline of April 15 (this year it was May 17 due to the coronavirus).
More importantly, it is imaginable that U. S. citizens living abroad did not even know that they had a tax liability that the United States had to meet. In fact, only two countries (the United States and Eritrea) tax their citizens, no matter where they live. Reporting the overall source of income to the IRS is required if you meet the tax return threshold.
If you need any explanation as to why you meet the June 15 filing deadline as a U. S. citizen abroad, you can register a flexible extension on any credible U. S. tax software that allows you until October 15.
Late sanctions
The Internal Revenue Service (IRS) may impose heavy burdens on your tax record if you do not complete your U. S. taxes. U. S. And he returns on time while living abroad.
Your penalty will be calculated based on the time you post your refund, plus any unpaid taxes you are due. For example, the penalty for failure to register is “5% of unpaid taxes per month or component of a month when a tax returns arrives late. “The penalty would possibly not exceed 25% of any unpaid tax.
One way to know you’ll get a penalty is to get a letter from the Internal Revenue Service (IRS), which will describe the scenario and propose answers to therapy.
You will need to read the full letter if you wish to respond before a certain date. By responding and complying with what the IRS asks of you, you can minimize additional consequences and interest.
No penalty to make up for lost years
If you ended up not filing your U. S. tax return. Come back for a variety of reasons, possibly eligible for simplified procedures for foreign nationals. This tax amnesty program only applies to U. S. taxpayers who have lost years of filing taxes without planning behavior.
Basically, with this procedure, you can record 3 years of tax returns and six FBAR (Foreign Financial and Bank Account Report) without incurring back payments or payment penalties. Please note that interest will be applied to any tax balance that is due.
Here’s a list of how to be eligible for IRS simplified procedures:
• Certifies by signing Form 14653 that your failure to report is innocent or in the course of “involuntary conduct. “
• You have not had an address or in the United States in more than 3 years.
• Has lived physically outdoors in the United States for 330 days or more.
You can also use this amnesty program in case you want to properly order your last year’s returns due to omission of a foreign source of income and/or foreign tax filing needs, such as Forms 5471, 3520, or 8938.
Once confirmed, you can start with the simplified filing compliance procedures. You’ll want to collect some documents:
• Fiscal documents and data from the last 3 years, such as data from the 2020 fiscal season.
• Monthly monetary statements that show the balances of your accounts in your foreign currency accounts. This is limited only to foreign bank accounts; it also includes foreign investment accounts, pensions, etc.
Streamlined procedures can be an expensive process, so be sure to do your studies ahead of time. You can use an expat tax software or a tax company, the fees are regularly reduced if you use software.
Breathe easy
Once you’ve met IRS tax requirements, you can breathe a sigh of relief. You may not have to worry about revoking your passport or declaring your tax registration in the system. You have time to get on with your life and just want to do it. Register once a year with your trusted tax service provider to make sure you meet your U. S. tax obligations.
The data provided herein is not an investment, tax or monetary recommendation. Consult a licensed professional to recommend you regarding your express situation.
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CEO of MyExpatTaxes, the leading tax software for expats in the United States that thousands of Americans trust. Read Nathalie Goldstein’s full executive profile here.
CEO of MyExpatTaxes, the leading tax software for expats in the United States that thousands of Americans trust. Read Nathalie Goldstein’s full executive profile here.