As an American living abroad, it’s important to know the tax laws and deadlines that apply to you. The tax deadline of June 15th is approaching, and it’s crucial for you to be aware of the filing requirements and potential penalties. In this blog post, we’ll cover the basics of living abroad taxes and provide you with a guide on how to file them before the deadline.
Who needs to file taxes?
If you’re a US citizen or green card holder living abroad, or a foreign national who meets the substantial presence test, you may need to file taxes. People who qualify include:
1. Those whose tax home and abode are outside the United States or Puerto Rico
2. Those who are serving in the military outside the United States or Puerto Rico on the regular due date of their tax return
The tax deadline for these individuals is June 15th and even if you don’t owe any taxes, you should still file a tax return in order to claim certain credits or deductions. For example, if you paid foreign taxes on income earned abroad, you may be eligible for a Foreign Tax Credit. It’s always a good idea to consult with a tax professional or use tax software to ensure that you’re meeting all of your tax obligations and taking advantage of any available credits or deductions.
Which forms need to be filled out?
For taxpayers who have earned income abroad, Form 2555 is required to exclude Foreign Earned Income from their taxable income. Similarly, those who have paid foreign taxes on their income can use Form 1116 to claim a Foreign Tax Credit. These forms must be attached to a completed Form 1040, which is the standard U.S. Individual Income Tax return that must be filed by all taxpayers. It’s important to note that these forms can be complex and require careful attention to detail, so seeking the help of a tax professional or using tax software may be necessary. Don’t wait until the last minute to determine which forms you need to fill out — start early to ensure a timely and accurate tax filing.
Electronic Payment Options
As expected, the IRS recommends taxpayers to consider the speed and convenience of paying taxes online. This can be done via:
- IRS Online Account
- IRS Direct Pay
- Electronic Federal Tax Payment System (EETPS)
If you’re looking for more options, please visit IRS.gov/Payments.
What if I’m unable to meet the deadline?
If the June 15th tax deadline doesn’t work for you, you can request an automatic six-month extension with Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. If you prefer to file electronically, this can be done through IRS Free File. Although, special rules may apply if you are:
- Living outside the United States
- Qualify for tax relief in disaster situations
- Serving in a combat zone or a qualified hazardous duty area
Failure to file penalty
If you’re living abroad and have missed the tax deadline, it’s important to understand the potential consequences of failing to file. The failure to file penalty is a fee imposed by the IRS for not submitting your tax return on time. This penalty can be quite substantial and can add up quickly if left unpaid. Additionally, if you owe taxes and fail to file, you will also be subject to interest charges on the amount owed. It’s important to note that even if you don’t owe any taxes, you can still be subject to the failure to file penalty. To avoid this penalty, make sure to file your taxes by the deadline or request an extension if necessary.
Filing your taxes as an American living abroad can be complicated, but it’s important to do so before the June 15th tax deadline. Don’t hesitate to seek the help of a tax professional if you need assistance.