Most Americans are accustomed to the standard United States tax deadline of April 15, but Americans living overseas are automatically granted a filing extension to June 15. As it turns out, though, sometimes this extra 2 month extension is not a sufficient amount of time to gather required tax documentation. There are a variety of reasons for this which has to do with other countries’ reporting methods and timelines, waiting for correspondence to travel overseas from the US, and a wide variety of other circumstances which make it difficult for some American Expats to have their US expat tax return prepared by June 15.
If you’re not ready to file a return by June 15 for whatever reason, the IRS understands your level of difficulty. That is precisely why there is yet another extension available to US Expats who take the time to request it. By filling out and submitting Form 4868, you may be able to receive an extension all the way to October 15. This form is available in both hardcopy and electronic format and can be submitted to the IRS either way. Because of the detail involved with this form, many US Expats opt to have a professional tax advisor prepare and submit it to the IRS electronically on their behalf. If you want to prepare your own Form 4868, here are a few suggestions to help you complete the form with as little difficulty as possible:
- Make sure to have your previous year’s US expat tax return – This will be helpful in determining an estimate of that which you owe or which is owed to you by the IRS.
- Make sure to have all relevant tax documents for the current year – This will help you calculate any estimates required if your financial situation had changed since the previous year. Remember when calculating payments and liability to include any and all deductions you’re planning on using like theForeign Tax Credit and the FEIE (Foreign Earned Income Exclusion).
- If you have already made an estimated tax payment to the IRS, make sure you have the confirmation number with which you were provided by the IRS to include on Form 4868.
What If You Owe the IRS Additional Taxes?
Because of the many deductions and exclusions made available to US Expats, most international taxpayers wind up at least breaking even – not owing the IRS anything additional upon filing a tax return. There are situations, however, in which a US Expat has additional tax liability after all is said and done. If this is the case, it’s imperative that any tax obligations are paid before April 15. Remember that the extensions mentioned earlier only apply to filing a return – not paying tax debt. If you owe the IRS and you wait until you file your return to make a payment, you will be charged a significant amount in late penalties and interest.
In order to avoid becoming delinquent with IRS payments, make sure to pay close attention to your estimated taxes when preparing Form 4868. Better yet, use Form 1040-ES before April 15 to determine whether or not you will owe the IRS money. Remember that you can file these forms and pay electronically if you sign up for the Electronic Federal Tax Payment System or you can take advantage of our electronic platform and hire us at Taxes for Expats to file forms electronically on your behalf.
Estimating taxes and staying within the guidelines of the US tax code can be an overwhelming process, and you don’t have to do it alone. Whether you need guidance in the form of having a series of questions answered or you simply need a professional to take over the task of your tax return altogether, we have qualified tax professionals available to provide you with the help you need.
I.J. Zemelman, EA is the founder of Taxes for Expats