Expat Tax Extensions: A Guide for Americans Living Abroad
Every US citizen is required to file a tax return regardless of where they live in the world. For Americans living overseas, tax season can be a difficult time.
Fortunately, the IRS lets most expats extend their filing deadline. This helps ease the burden of filing while abroad.
So what expat tax extensions are available—and how can you use them? Here’s what you need to know.
Key Takeaways
- Americans living overseas receive an automatic two-month extension to file their Federal Tax Return. This moves the expat tax deadline to June 15.
- If necessary, you can request a further extension to October 15 or December 15.
Automatic Tax Extension While Living Abroad
For most Americans, the annual tax deadline is April 15. However, Americans living outside the US and Puerto Rico get an automatic two-month extension, pushing the filing deadline back to June 15.
If necessary, there are other options for extending your expat taxes, as well.
If you’re behind on your US taxes, you may qualify for a special compliance program to get back on track without penalties. Download our Streamlined Filing Eligibility guide to understand if you qualify.
Tax Extensions Available to US Expats
1. Automatic Expat Tax Extension
As mentioned above, if you live outside the United States and Puerto Rico, your tax deadline is automatically extended to June 15.
2. Optional Extension
If you need more time to prepare your expat taxes, you can request a further extension to October 15. This would set your deadline at six months past the original deadline of April 15. To request this extension, you must file Form 4868 before June 15.
3. Additional Extension
For most Americans living abroad, the six-month extension to October 15 will be sufficient. However, if you still need more time after that, you can request an additional two-month extension to December 15.
To request this extension, you must write a letter outlining your justification for the additional two months and then mail it to the IRS by October 15. If your request is approved, you won’t receive a notification from the IRS. You will only hear back if your request has been denied.
This is the final expat tax extension available. Once the December 15 deadline has arrived, you will not be able to request any further extensions.
The IRS provides several tax benefits for Americans living abroad. By using these credits and deductions, many expats are able to erase their US tax bill entirely.
An Extension to File Is NOT an Extension to Pay
The IRS does not grant extensions for paying your taxes—only filing your return. Even if your filing deadline is extended, you still have to pay any taxes you owe by the original due date of April 15.
If you aren’t sure what your tax liability will be, you will have to estimate what you owe. We recommend consulting an expat tax professional to help you make a reasonable estimate. It’s always better to be safe than sorry—especially when the IRS is involved.
Penalties and Interest
Failing to file or pay your taxes will generally result in penalties. Let’s look at the details for each.
1. Failure to File Penalty
If you fail to file your expat tax return by the appropriate deadline, the IRS may impose a penalty of 5% of any unpaid taxes per month overdue. The maximum penalty is 25% of the total amount of unpaid taxes. In addition to this, your unpaid taxes will begin accruing interest as soon as the April due date has passed.
2. Failure to Pay Penalty
- The IRS imposes a penalty of 0.5% of the unpaid taxes per month or part of a month, up to a maximum of 25% of the unpaid taxes.
- If you fail to pay after receiving a notice of intent to levy, the rate may increase to 1% per month.
3. Interest on Unpaid Taxes
- Accrual of Interest: In addition to the penalty, interest accrues on the unpaid tax amount. The interest rate is determined quarterly and is equal to the federal short-term rate plus 3%.
- Interest is compounded daily and applies to both the unpaid taxes and any penalties.
If you failed to pay or file your expat taxes because you were unaware that it was required, don’t panic. The IRS provides a tax amnesty program called the Streamlined Filing Compliance Procedures that might allow some Americans living abroad to come into compliance without facing any penalties.
Other Tax Extensions
FBAR Automatic Extension
Expats with a combined total of at least $10,000 in non-US bank accounts must report this by filing FinCEN Form 114, better known as FBAR. (This applies whether the money is deposited in a single account or spread out over several.)
If you are required to submit an FBAR, you must file it electronically using the FinCEN BSA E-Filing System. The standard due date for the FBAR is the same as your tax return (April 15 in most years). However, if you miss that deadline, there’s an automatic extension to October 15. You won’t even need to file a request.
Failing to file an FBAR can result in severe penalties. If your failure to file is considered non-willful, the annual penalty is $10,000 per account. If your failure is considered willful, the penalty is $100,000 per account per year or 50% of the total amount in a given account, whichever is greater.
Special Extensions to Qualify for the Foreign Earned Income Exclusion
Americans living overseas can use Form 2350 to request a filing extension if more time is needed to qualify for the Foreign Earned Income Exclusion. This could extend the time your return is due by one to about two years, depending on the specifics of your situation. If you missed the June 15 deadline to file this special extension, you should file your return so as not to be subject to late filing penalties. Later, you can always file an amended return to claim the benefits of the Foreign Earned Income Exclusion, which almost always results in a refund.
State Tax Return Extensions
In addition to filing a Federal Tax Return, some expats are also required to file a State Tax Return. Unfortunately, the automatic expat tax extension only applies to your federal return. While you may still be able to extend your State Tax Return, the rules will vary from state to state. To learn more, review the details provided on your state’s website.
Get Help Filing Your Tax Extension
We hope this guide has helped you understand the expat tax extensions available for Americans living overseas. If you need help with your expat taxes, we’d be happy to help.
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.
