Are you planning to file your income tax return? Do you want to know everything about it? Then, you are at the right place! At USTAXFiling.in, all your scariest questions will be answered. In this blog, we will discuss everything about filing late taxes. So, stay tuned at USTAXFiling.in to learn insights from our USTAXFiling experts, who will provide you with all the recent updates through this blog post. Continue to read this article!
Expat taxes will be nerve-wracking at first, but you might even feel more apprehensive when you enter the process late. USTAXFiling.in experts have prepared a list of expat questions that are more concerning to them. Let us rip the bandage off together and know the answers! The more insights you will have, the better you will be relieved.
I recently got to know that I am a US citizen by birth and have never filed a United States income tax return as I have always lived abroad. What do you need to do?
As you are unaware of the obligation, you become eligible to catch up on your income tax filing with the streamlined filing system. To do so, you must file the current three years of income tax returns and six years of FBAR.
Also, you have to sign Form 14653 certifying that the lack of filing was non-willful. The failure-to-file charges, FBAR charges, and failure-to-pay fines are waived as you use this process.
My friend said I have to file even though I haven’t been staying in the United States of America for years. Is this for real, and if so, will I be penalized?
It is real in many scenarios. As an individual from the United States of America, regardless of where you stay, you have to file your federal income tax return. It also implies self-employed expats.
Although there are special deductions that are applicable to United States of America expats that might exclude or decrease paying taxes, if your income exceeds the income tax filing criteria, you still maintain an obligation to file taxes.
How do you understand if you have become eligible for the streamlined filing process?
If your lack of filing was non-willful, you might become eligible for the IRS streamlined filing process. You have to file three years of delinquent income tax returns and six years of delinquent FBARs even if you did not exceed $10,000 in the bank accounts during these years.
What if you do not become eligible for the process of the streamlined filing
If you do not become eligible for a streamlined filing system, another option is the OVDP or Offshore Voluntary Disclosure Program. It may be your best choice, as it provides reduced fines. It is risky to be non-compliant, and they must uncover the IRS delinquency you may face harsh charges, so it is best not to file at all.
Could the IRS revoke your passport if you don’t file it?
If you have more than $50,000 in back taxes that include fines, the department of the United States might revoke your passport. If you have issued a certification of individuals and cannot pay the debt completely with seriously delinquent tax debt, you can establish an offer in compromise or an instalment agreement to get the certification reversed.
My separate foreign bank account balances have never reached over $10,000. Does it mean that you don’t have to file the FBAR forms?
No! The criteria of $10,000 are for the cumulative balance of all the foreign bank account balances. Even if it exceeds $10,000 for only one day, you have to file an FBAR form. If you are filing the FBAR, you might be able to file online without charges as long as your non-compliance was non-willful.
You have to file the 8938 form apart from the FBAR report if you meet the threshold. The form is filled with the federal income tax return. You have to file the form if your foreign financial assets exceed the amounts:
- For taxpayers who are married, staying overseas, and filing jointly: $60000 at any point during the financial year or $40000 on the last day of the financial or annual year.
- For taxpayers who are single and stay overseas: $30000 at any time of the year and $200,000 on the last day of the financial year.
You must remember that: Taxpayers who are married must file an income tax return separately from their partner, who may use the single taxpayer criteria.
Can a US state income tax, although you don’t stay there anymore?
Elements that you must consider related to your domicile, we will discuss here. You can stay elsewhere; ties such as a driver’s license, voter registration, maintaining a bank account, and travel to visit family will lead to filing needs. You will still be considered a resident of your state. It is necessary to make sure that you take action or are compliant to sever ties with the state regarding income tax filing needs. You must also remember that the deadlines to file your state income tax return might differ from state to state. You must file for certifying your residence outside the state.
Will I get a penalty for filing late if I miss the 15th of April deadline?
The charges assessed vary on when you file. You get an automatic two-month extension till 15th June as an expat. If you think you cannot collate your details to meet the June deadline, you may request time by filing an extension till 15th October. It is necessary to take note of these important deadlines:
- 15th October: If you file an extension, then this is the final deadline to file. And, if you owe the IRS, it is best that you file your income tax return by this date to eliminate a failure-to-file or failure-to-pay charges on the due balance.
- 15th April: It is the federal filing deadline. Any of the taxes you have to pay must be paid by the deadline of 15th April to prevent interest penalties.
- 15th June: You can request for extension or even file your income tax return. It is the expat tax extension deadline for those staying outside the US on 15th April who had a foreign tax home or assets.
- 15th October: If you request a six-month extension, it is the last filing deadline
- 15th April: This is the deadline to file your FBAR or financial bank account report.
What are the penalties? What happens to late filers?
There are two charges for late filing of income tax returns. The failure to file charges is five percent of unpaid taxes for every month after you file your due date, up to a maximum of more than 25 percent of the total taxes unpaid. Also, the failure to pay charges is an interest charge of 0.5 percent every month of total unpaid taxes and continues until it reaches 25 percent of the total unpaid taxes.
It is best to say that you pay at least 90 percent of the expected taxes, as you should pay by the mid-April filing deadline, even if you plan on filing taxes late through the automatic two-month extension.
Also, you may lose entitlement to FEIE or foreign-earned income exclusion. It is a game changer for those who stay in a nation with insufficient foreign tax credits or where there are no taxes.
Due to the consequence of the filing date, the IRS might deny the exclusion. The IRS has all the right to revoke the exclusion, and once revoked, it cannot be claimed for five years. It is one of the advantages you should not miss out on at all.
What if you file taxes but forget to fill out a specific form?
If you have explored that you didn’t include the needed form, you have to correct the mistake and file an amended return. Here are some of the forgotten forms that you must file:
- Form 8621: Report by a shareholder of PFIC or Passive Foreign Investment Company
- Form 5471: Shareholder in a foreign corporation
- Form 8938: FATCA form to announce offshore foreign financial assets and accounts.
Also, the IRS may not enforce any charges if you file your file amended tax returns or income tax returns.
Do you have any more questions about your specific tax situation?
There is no reason to allow your unanswered questions to burn you out. Our USTAXFiling.in experts are there to guide you anytime with your income tax filing requirements. You don’t have to worry at all! At USTAXFiling.in, we first ensure to discuss all your queries and then guide you properly with possible solutions. Our USTAXFiling.in experts are highly educated and knowledgeable. They have rich years of more than a decade of experience and have all the current updates related to income tax filing. Our USTAXFiling.in is ready to aid you in getting the answers and resolving all your queries anytime. You can reach out to them whenever you want, and our Tax professionals at USTAXFiling.in are there to serve you! What are you waiting for? Call USTAXFiling.in and schedule your appointment with us right away!