Accountant for Late Filing of U.S. Taxes by Expats
With all the myriad concerns facing an American living overseas, it can be easy to forget about your tax obligation to the country you left behind — especially since most governments tax based on location, rather than citizenship. Unfortunately, no matter where you happen to live, all United States citizens are required to submit a tax return to the Internal Revenue Service, even if the filing is done past the April 15 deadline.
This may, understandably, generate some questions for expats who forgot or never knew that they owed this debt to the IRS. Luckily, the team at U.S. Tax Help is ready and willing to guide you through this tough time, no matter where you are located. Led by experienced CPA Ted Kleinman, an accountant with more than 30 years’ experience and a specialty in international tax law, the experts at U.S. Tax Help have the knowledge and versatility to help with any tax issue an expat may have. Contact us today at (541) 923-0903 to set up your first consultation.
U.S. Tax Filing Deadline for Expatriates
While expats are beholden to many of the same codes and requirements as any other American citizen, there are some instances where a certain level of flexibility are allowed with regard to deadlines. Typically, an expat faces the same April 15 tax filing deadline familiar to those living domestically, but the law does incorporate some automatic extensions for expats where specific types of filings are concerned.
One example of this is in the filing of a Report of Foreign Bank and Financial Accounts, better known as an FBAR. The deadline for this paperwork is April 15, but there is a provision that automatically extends the deadline by six months to October 15, without any need to submit a formal request for an extension. Similarly, an American living abroad is allowed an automatic two-month extension on filing individual tax returns, moving that deadline to June 15.
While it is still advisable to aim for the April 15 deadline, you may be able to meet your filing obligations without penalty after that date has passed. A knowledgeable certified public accountant with experience in this area can further explain your options.
Penalties for Late U.S. Tax Filing by Expats
Everyone knows that failing to file your taxes on time can lead to serious trouble with the IRS, but many are unaware of what exactly that scenario entails for those involved. Filing a late tax return or payment can significantly increase the amount you owe the government and inflict severe financial harm.
The penalty for filing a tax return after the prescribed deadline is steep: the fee is 5 percent of the total amount you owe for each month or part of a month that passes after the deadline, capped at 25 percent. On top of that, interest is assessed on the total amount owed plus any penalties, which can further compound the financial crisis. The interest rate is set by the IRS at three-month intervals and is equal to the current federal short-term rate plus 3 percent.
This isn’t the only penalty you have to worry about, however. A separate fee may be assessed for a late payment, which is considered separately from any late filing penalty. This fee increases at half of one percent per month on the unpaid tax debt and is also capped at 25 percent. Combined, all the penalties can add up to a significant sum for anyone who misses their tax deadline by even just a few months.
Avoiding Late Fees Through Streamlined Foreign Offshore Procedures
If you live overseas and find yourself past the deadline to file your taxes, whenever that date may be, don’t panic. There is an option available to you that is not widely known among those living within the United States — the Streamlined Foreign Offshore Procedures. This process is generally reserved for Americans living abroad who may have failed to meet their filing or payment obligations on time and who want to rectify that mistake.
The requirements to be eligible are spelled out by the IRS: you must certify that the lapse in filing obligations was accidental, you must not be under investigation by the IRS, you must pay any previous penalty assessments, and you must have a valid Social Security Number or Taxpayer Identification Number. If you meet these requirements, you may be able to avoid additional fees and penalties.
Speak to the Experts on Expat Tax Law and Late Return Filing
Over the past three decades, Ted Kleinman has established himself as one of the industry’s foremost experts on income tax law for expatriates. Today, Ted and his team of certified public accountants are available to address any problems you may have at a time that is convenient for you, no matter where you may live. Access their expertise today by calling (541) 923-0903 and setting up your first consultation.