Now that the June deadline has passed, if you haven’t yet completed your US expatriate taxes, it’s time to get serious about filing. Whether you simply missed filing this year or you’re several years behind, it’s never too late to get caught up. Here’s what you should know about becoming and staying compliant on your US expat tax obligations.
First Things First
If you’ve found yourself behind on filing, a good place to start is by gathering important documents that will be needed in order to file your US expatriate taxes. These may include:
- Prior year tax return
- Travel calendar
- Record of wages, compensation/tips or taxes paid to your resident country
- Record of interest/dividends
- Record of any mortgage interest
- Record of distributions from retirement accounts
- Record of Social Security benefits paid to you
- Record of business income and expenses if you’re self-employed
Having all of these handy will make the process of filing quicker and easier, whether you file on your own or work with a tax professional.
Understand Late Filing Penalties
In most cases, the IRS isn’t as harsh as you might expect when it comes to filing your US expatriate taxes late. However, if you have a balance due on your tax return and you fail to file by the deadline, there are three types of penalties that can be assessed. These include:
- Failure to File: Expats receive an automatic two-month extension and have until June 15th to file, unless an extension is requested, which would make your taxes due October 16th. However, if you owe taxes, haven’t filed and didn’t request an extension, a late payment penalty of 5% may be assessed each month until the tax is paid.
- Failure to Pay US Tax Penalty: This penalty is 0.5% of your tax due for each full month the tax isn’t paid – and there is no maximum.
- Assessment of Interest on US Taxes: This rate changes every three months (based on market activity). The interest is charged every day that the balance isn’t paid in full – and again, there is no maximum.
Though, if you have no balance due to the IRS and will receive a refund, you won’t have interest or penalties.
How to Get Caught Up
Depending on your situation and how far behind you are on filing your US expatriate taxes, there are several methods for getting caught up. In fact, if you just missed the June deadline this year, it’s not too late to get caught up by simply following the normal filing process. However, if you find yourself several years (or more) behind on filing expat taxes, there are two IRS amnesty programs that can help you become compliant
Streamlined Filing Procedures: Streamlined Filing is for taxpayers who were unaware of their filing obligation and did not willfully avoid filing. If you qualify for this program, you won’t face penalties – but you must submit the past three years of delinquent taxes and past six years of FBARs in order to catch up.
Offshore Voluntary Disclosure Program: This program is for taxpayers who were aware of their filing obligation, yet willfully failed to do so. While using this program doesn’t exempt taxpayers from penalties, it does prevent criminal prosecution, since you chose to voluntarily come clean before the IRS finds the delinquency.
In any situation, becoming compliant as soon as possible is key. To learn more about getting caught up, be sure to download our guide to US taxes.
Ready to Get Caught Up On Late Taxes?
Our team of expert accountants is here to help – get started with us today and gain unbeatable peace of mind knowing you’re becoming and staying compliant on your tax obligations.