Living and working abroad as a U.S. citizen while needing to file taxes can be a complex process. The regular tax deadline for most taxpayers was April 15th, but there is an automatic two-month extension to June 17th for U.S. citizens residing outside the country. This extension also applies to resident aliens, including dual citizens. To qualify for the June 17th deadline, you must either live outside of the U.S. and Puerto Rico or serve in the military outside the country during the regular tax deadline.
While the two-month extension is automatic, attaching a statement to your return that explains your situation is necessary, according to the IRS. It is advised to pay any balance due as quickly as possible, as interest accrues after the original April 15 deadline. The IRS recommends making payments through an IRS Online Account, Direct Pay, or the Electronic Federal Tax Payment System for the fastest and easiest process. However, there are additional payment options available. If the June 17th deadline cannot be met, filing for a tax extension is still an option. By submitting Form 4868 by June 17th, the filing due date can be extended to October 15th, providing an additional four months.
In addition to income tax filings, some American expats have added reporting requirements which can be complicated and costly if mistakes are made. Roughly 1 in 5 American expats do not feel comfortable filing U.S. taxes while living abroad, according to a recent survey. For example, expats may need to report foreign bank accounts by filing the Report of Foreign Bank and Financial Accounts (FBAR) if the combined account value exceeds $10,000 at any time during the year. The deadline for this report is normally April 15th, but it is automatically extended to October 15th, providing expats with more time to complete this requirement.
Some expats may also have to complete and attach Form 8938 if certain foreign assets exceed yearly thresholds. Failing to file the FBAR or Form 8938 can result in penalties of up to $10,000 or more, depending on the situation, as outlined by the IRS. It is crucial for American expats living abroad to be aware of these additional reporting requirements and deadlines to avoid penalties and ensure compliance with U.S. tax laws.
Living and working abroad as a U.S. citizen comes with specific tax obligations and deadlines that must be met. By understanding the extension options, payment methods, and additional reporting requirements, American expats can navigate the tax filing process successfully. Seeking advice from tax professionals or expat tax services can also provide guidance and assistance in meeting these obligations accurately and on time.