Do you want to perks of staying overseas? Do you wish to know about income tax filing and the difference between Form 4868 vs. 2350? You have come to the correct place at USTAXFiling. We at USTAXFiling are the best tax experts who are here to help you in the best possible way. If you wish to know everything about forms 2350 and 4868, then stay tuned and continue to read this insight in more detail at USTAXFiling. You will never regret reaching out to us for expat tax filing at USTAXFiling. Read this blog in more detail about the difference between form 2350 vs form 4868.
One of the advantages of staying overseas is an automatic two-month extension to file your income taxes. While several Americans have to scramble to finish their income taxes by April each year, expats don’t have to file till June.
Also, even that might not be sufficient time to get everything ready for income tax filing. Expat income taxes are nothing if not complicated. Luckily, Americans who stay abroad may request you extra extensions by filing Form 2350 or Form 4868. But what is the exact difference between Form 2350 and Form 4868? Which one you must file?
In this blog, we at USTAXFiling.in will answer these questions and much more. Here is something that you must know:
Key Takeaways
Form 2350 and Form 4868 are both used to request an income tax filing extension for US tax returns.Americans who stay abroad may use Form 2350 to request an income tax filing extension if more time is required to become eligible for the FEIE or Foreign Earned Income Exclusion.All income taxpayers may use form 4868 to request an income filing extension to 15 October or a few days later if it falls on a holiday or weekend.
What Is the Difference Between Form 2350 and Form 4868?
Form 2350 and Form 4868 are both IRS forms that are used to request an income tax filing extension. Also, there are many key distinctions between them. Form 4868 is used to imply a standard extension to 15 October. On the other hand, form 2350 is planned to assist new expatriates to become eligible for the FEIE or Foreign Earned Income Exclusion. Let us take a look and discuss this in more detail.
Form 4868 form
Form 4868 form is the standard Internal Revenue Service form all income taxpayers may use to request a filing extension for their income tax return. If the IRS accepts the request, the income tax filing deadline might be extended to 15 October or a few days later if the 15th falls on a holiday or weekend.
It also assists income taxpayers six months to file after the April original deadline. For expats, it can be a four-month extension from the deadline of June for Americans who stay outside of Puerto Rico and the United States. Digitally everyone is eligible for an extension. To become eligible, you have to file a 4868 form by the original due date for your income tax return. You don’t have to explain why you require more time. In several scenarios, the IRS might request you with no questions asked. The Internal Revenue Service may connect with you about your request if it is denied. If you don’t get any update from the Internal Revenue Service, you may assume that they granted the extension.Pro Tip
4868 Form may automatically extend the filing deadline for the FBAR along with your income tax return. Your extension til 15 October is automatically granted for FBARs, so there is nothing to be filed. Few states, including California, automatically grant extensions to file the form.
New York returns extensions will only be filed directly on the NY Department of Revenue’s site. Several states permit an automatic extension if a federal extension is certified and filed.Form 2350
Form 2350 is only for Americans staying abroad. Using this form, expats might request more time if required to become eligible for the FEIE or Foreign Earned Income Exclusion. To claim the tax advantage, you should pass either the bona fide residence test (BFRT) or the physical presence test. Both tests need you to stay outside the United States for a specific amount of time.
If you have moved overseas recently and need some time to meet the needs of either test, you may file a 2350 form to request a filing extension. If granted, it can extend your income tax filing deadline until 30 days after you are eligible for the Foreign earned income exclusion. You may claim the FEIE or Foreign earned income exclusion on your income tax return.To file the form, you may expect to become eligible for the FEIE or Foreign earned income exclusion in the foreseeable future. Like the 4868 form, the 2350 form should be filed by the original deadline for your income tax return.
2350 form cannot be filed electronically- it should be sent via postal mail. Approval extensions are also sent by postal mail. One best thing about an extension is that you may request the approval be directly sent to your income tax expert.Requesting an Extension to 15 December Without the 2350
Form2350 Form is only for Americans who need time to become eligible for the FEIE (Foreign earned income exclusion). If you need time to prepare your income tax return after the 15th October extension, Americans abroad may request an extra discretionary two-month extension from the Internal Revenue Service. It might extend the income tax filing deadline to 15 December.
To become eligible for the extension, you should first file a 4868 form for the 15th Standard extension. When you file Form 4868, you should mail a letter to the Internal Revenue Service before 15 October explaining why you need mother two months to file. For instance, you may inform the Internal Revenue Service that you are waiting to get documentation about an investment. Also, you may require more time as your host country’s tax assessment may not be available after 15 October.You can mail your letter to the following address:
Department of the TreasuryInternal Revenue Service CenterAustin, TX 73301-0045
As the extension is discretionary, income taxpayers are not at all guaranteed an extra two months as they ask for more time. You have to provide a valid reason in your letter to explain why you are delayed to complete your expatriate income tax return. The Internal Revenue Service may only connect with you if your request is denied when it comes to the 4868 form.You should not request the discretionary extension if you have filed the 2350 form. The extension also does not imply the FBAR.
What If You Owe Money on Your Expat Tax Return?
It is necessary to note that an extension to file income tax is not an extension to pay. You should estimate and pay your income taxes by the original filing deadline in April. It is true regardless of whether you stay overseas or in the United States. The two-month extension is automatic to June and does not imply the deadline for payment.
When you fail to pay your income taxes on time, it might result in interest and penalties. The best thing is that if you overestimate your income taxes and pay more than you end up owing, you can get a refund once you file your income tax return. If you are not aware of how much tax you have, it is best to know conservatively and know the details. You may always amend your return later if the figures vary from your estimation.
What happens if you don’t file an extension or your extension is denied?
If you miss any deadline filing without an extension granted, you may be subject to late filing interest and charges on any taxes you owe. If you think you require more time to file, request an extension as fast as possible to eliminate this.
If, due to any reason, you get a penalty, there is a first-time penalty abatement or FTA waiver. The Internal Revenue Service may grant relief to income taxpayers from failure-to-pay, failure-to-file, and failure-to-deposit charges if the eligibility is met. The policy behind this process is to award income taxpayers for having a better compliance history; everyone is entitled to one error. Beyond this, you may use the streamlined filing compliance procedure. The tax amnesty program helps a few Americans staying abroad to catch up on their income tax obligations without facing the usual charges.To become eligible for the Amnesty program, all you have to do is:
You can file the last three delinquent income tax returns and pay any income taxes you owe during that particular period.You may file FBARs for the past six years.Self-certify that you failed to file as you are not aware you were supposed to.
Once you complete these steps, you may comply with the Internal Revenue Service laws. In a few scenarios, you might even get a refund for past years.Pro Tip
You don’t have to wait to use the streamlined filing compliance process. If the IRS connects with you about your delinquency before you begin the process yourself, you might lose the amnesty privilege. In that scenario, you might have to pay the standard charges.
Filing an extension does not need to be complicatedSeveral individuals think that filing an extension might somehow negatively impact their income tax situation. It does not. Several Americans have to file extensions every year, though it is always suggested to file as soon as you get your income taxes done for the financial year.
Even if you do need to file an extension as you are waiting for additional details, you might have most of your income tax return prepared while waiting. In this guide, we at USTAXFiling have helped you to know the in-detail distinctions between Form 2350 and Form 4868At USTAXFiling, you get the best income tax filing assistance. Our USTAXFiling team experts are highly educated and qualified. They make sure to discuss everything in detail related to Form 4868 and Form 2350 and resolve your issues at the earliest. Our dedicated and highly talented team is here to help you with income tax filing for expats. You can relax while our USTAXFiling team is here to assist you! You can connect with your USTAXFiling team anytime. So, what are you waiting for? Schedule a call with USTAXFiling right away. If you have any questions on expat taxes or working with USTAXFiling, contact USTAXFiling experts anytime!