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Every citizen of the United States has to file an income tax return regardless of their residency. For Americans living abroad, tax season might be a tough time.
Luckily, the Internal Revenue Service allows several expats to extend their income tax filing deadline. It eases the burden of filing while overseas.
So, what expat income tax extensions are available for Americans, and how can they use them? Here are all the details that you must know regarding expat tax extensions.
- Americans staying abroad get an automatic two-month extension to file their income tax return
- The expat tax deadline has been extended to 15th June
- If required, you have to request a further extension to 15th October or 15th December
Automatic Expat Tax Extensions of Income Tax While Residing Overseas
For many Americans living overseas, the income tax deadline yearly is the 15th of April. Also, Americans residing outside Puerto Rico and the United States get an automatic two-month extension. It pushes the deadline to file the income taxes back to 15th June. If required, there are other options to extend your expat income taxes, too.
Expat Tax Extensions Available for Americans residing abroad
Here are the different tax extensions that are available for Americans residing abroad:
If you think you need time to prepare for your expat taxes, you may request an extension to 15th October. This will help you to set your extension for six months past the original one of 15th April. You have to file Form 4868 before 15th June to request the extension.
Automatic Expat Tax Extension
As discussed above, if you reside outside Puerto Rico and the United States, your income tax extension is extended automatically to 15th June.
Additional Expat Tax Extensions
For many Americans residing overseas, the six-month extension to 15th October is sufficient. Also, if you think you need time after that, you may request an additional two-month extension, and then you can file the income tax returns till 15th December.
You have to write a letter requesting the additional two-month extension and send it to the Internal Revenue Service by 15th October. If your request gets approved, you won’t get a notification from the Internal Revenue Service. You may only hear back if the request is denied.
It is the final income tax extension available. Once the 15th December deadline arrives, you cannot request any further extensions.
The Internal Revenue Service offers many income tax benefits for Americans staying overseas. By using these deductions and credits, several expats can erase their tax bills in the United States completely.
No Extensions to Pay Your Taxes
The Internal Revenue Service does not grant any extensions to pay your income taxes-only filing your income tax return. Even if your income tax filing deadline is extended, you have to pay the income taxes that you owe by the due date of 15th April.
If you are not aware of what your income tax liability is, you may have to estimate what you owe. We would suggest you consult an expat tax consultant to assist you in making a reasonable estimate. It is always wise to be safe than sorry when the Internal Revenue Service is involved.
Interest and Hefty Penalties
If you fail to pay or file your income taxes, it might result in fines. Let us know more about it:
Failure to File a Hefty Penalty
If you fail to file your expat income tax return by the deadline, the Internal Revenue Service might impose a hefty fine of five percent of any unpaid taxes every month overdue. The maximum hefty charge is 25 percent of the total amount of unpaid income taxes. Also, your unpaid income taxes may start adding interest as soon as the April due date is passed.
What If You Fail to Pay Penalties?
What if you fail to pay your expat tax return and the entire amount that you owe? The Internal Revenue Service might impose a serious charge of .05 percent of any unpaid income taxes. You may also have to pay interest on the taxes you owe. The maximum charge is 25 percent of the total amount of unpaid income taxes.
If you fail to file or pay your expat income taxes as you were unaware that it was needed, don’t worry! The Internal Revenue Service offers a tax amnesty program known as the streamlined filing compliance process that may help a few Americans staying overseas to come into compliance without facing any charges.
Other Expat Tax Extensions
Automatic Extension Foreign Bank Account Reporting
Expats with a combined amount of $10,000 in a non-US bank account should report this by filing FinCEN Form 114, which is also called foreign bank account reporting or FBAR. This implies whether the amount is spread out in several accounts or the money is deposited only in a single account.
If you have to submit a foreign bank account report, you should electronically file using the FinCEN BSA E-Filing system. The due date for the FBAR or foreign bank account reporting is similar to your income tax return. Also, if you miss that deadline, there will be an automatic extension to 15th October. You don’t have to file a request.
If you fail to file a foreign bank reporting account, it might result in serious charges. If you fail to file, it is considered as non-willful; the yearly charge is $10,000 for every account every year or even 50 percent of the entire amount in a given account, whichever is greater.
Special Extensions to Become Eligible for the Foreign Earned Income Exclusion
Americans staying abroad may use Form 2350 to request an income filing extension if more time is required to become eligible for the Foreign Earned Income Exclusion. They might extend the time your income tax return is due by one to about two years, based on your situation. If you missed the 15th June deadline to file the special extension, you have to file your income tax returns so as not to be subject to late filing charges. Also, you may always file an amended income tax return to claim the income tax benefits of the foreign-earned income exclusion, which always results in a refund amount.
State Income Tax Return Extensions
Also, to file a federal income tax return, few expats have to file a state income tax return. Also, the expat income tax extension that is automatic only applies to your federal income tax return. While you can extend your state tax return, the regulations might differ from state to state.
Get Assistance To File Your Income Tax Extension
In this guide, we have discussed in detail the expat tax extensions available for Americans staying abroad. If you want assistance with your expat taxes, USTAXFiling.in will be happy to lend a hand.
Our USTAXFiling experts have years of rich experience and are highly qualified to help you. They ensure to discuss with you and resolve all your doubts related to expat tax extensions. Trust makes us stand apart from other tax expat professionals. USTAXFiling.in your tax expat professional from India will help you with income tax filing while you can sit back and enjoy! Don’t worry at all! Our USTAXFiling experts will take care of everything. They keep themselves updated to guide you properly with all the income tax return details. Call USTAXFiling now to file your income tax filing!