Filing a Tax Extension While Living Abroad: A Comprehensive Guide
- Most Americans living abroad qualify for an automatic two-month extension to submit their tax return.
- Like Americans living domestically, those living abroad can file for an extension until October 15th by submitting Form 4868.
- If you hold $10,000 or more in a foreign bank account, you will need to submit an FBAR to avoid hefty penalties.
Filing taxes can be a daunting task, and when you’re living abroad, it can become even more complex. Whether you’re an expatriate, a digital nomad, or a temporary traveler, understanding how to file a tax extension from abroad is crucial to avoid penalties and fines.
In this comprehensive guide, we’ll walk you through the process of filing a tax extension while overseas, providing you with the knowledge and resources you need to navigate the international tax landscape successfully.
Automatic 2-Month Extensions for Americans Living Abroad
You may be wondering when your taxes are due if you’re living abroad. Technically, Americans living abroad have the same April 15th due date as everyone else; however, there’s a catch!
Those who qualify can receive a two-month automatic extension to file their taxes. Therefore, those living abroad typically have until June 15th to file their taxes without needing to file a tax extension.
If June 15th falls on a weekend or U.S. Federal Holiday, then tax returns would be due by the next business day.
Who Qualifies for the Automatic Extension?
You qualify for the automatic two-month tax extension if, on the regular due date of your return (typically April 15th), you are:
- Living outside of the United States and Puerto Rico and your main place of business or post of duty is outside of the country.
- You are in the military or navy and are on duty outside of the United States or Puerto Rico.
Additionally, if you file jointly with your spouse, and one of you meets the qualifications above, then you also qualify for the extension. However, if you are filing separately, then only the individual who meets the qualifications is entitled to the two-month extension.
How Do You Apply for the Automatic Extension?
To apply for the two-month automatic extension, all you need to do is attach a statement when filing your tax return explaining which of the above two reasons allowed you to qualify for the automatic extension.
As long as your explanation is valid, you should automatically qualify to file your tax return on June 15th without receiving the failure to file penalty.
Additional Tax Extension While Living Abroad
Sometimes, two additional months just isn’t enough time to get all the documentation needed to file your taxes. Unlike Americans living stateside, Americans living abroad still have the opportunity to request an additional four-month extension.
Requesting an additional four-month extension works similarly to filing a tax extension before the April 15th deadline. The only difference is that you have until June 15th to request an extension to file your taxes.
As long as you submit Form 4868 by June 15th, you will have until October 15th to file your taxes. If it’s getting close to the June 15th deadline, get started filing your tax extension now!
A Tax Filing Extension is Not an Extension to Pay
Unfortunately, neither the automatic extension nor the additional extension is an extension to pay your taxes. Even if you are an American living abroad, any owed taxes are due no later than April 15th. If you fail to pay your taxes, regardless of whether you file a tax extension, you’ll be charged the following late penalties:
- Failure to pay – 0.5% of any unpaid taxes per month that the taxes remain unpaid. The penalty maxes out at 25% of the taxes owed.
- Interest – In addition, you are charged interest on any unpaid taxes and penalties as long as your tax debt remains unpaid.
If you’re avoiding filing your taxes because you’re worried about paying them, check out our post on handling taxes when you can’t pay by the extension deadline to learn about your options.
Do I Owe Taxes While Living Abroad?
The good news is that some Americans living and working abroad don’t end up owing taxes to the U.S. government. However, that doesn’t give you an exemption from filing a tax return.
The reasons that some people don’t end up owing taxes while living abroad include the following:
- The Foreign Earned Income Exclusion and Housing Exclusion – This allows certain Americans living abroad the option to exclude income and housing expenses from their taxes if they qualify.
- Foreign Tax Credit – This allows qualified Americans living abroad to claim a dollar-for-dollar credit on taxes that they’ve paid to foreign governments, if they’re required to pay U.S. tax on the same income.
- Tax Treaties – The U.S. has treaties with certain countries to help prevent double taxation and handle special tax situations.
It’s not always easy to know if you owe taxes while living abroad. If you need extra time to figure it out, it’s important to file an extension to avoid the late filing penalty in case you do end up owing taxes.
Do I Have to File an FBAR?
An FBAR is a Report of Foreign Bank and Financial Accounts. U.S. Citizens are required to file an FBAR when they’ve held a combined amount of $10,000 in a foreign financial account at any point during the year. Therefore, if you’re using a foreign bank while living and working abroad, you may need to file this.
The FBAR is due when your taxes are due; however, Americans living abroad get an automatic extension until October 15th if they fail to submit.
If you think you may need to submit an FBAR, it’s important to research it further, as people who unknowingly forget to file can still get hit with a significant penalty for failing
How to File an Extension While Living Abroad
As mentioned earlier, most Americans living abroad receive an automatic two-month extension to file their taxes. In order to get the extension, you just need to include a statement on why you qualify when submitting your tax return.
If you need additional time to file your taxes, then you can do so by filing for a tax extension. This can be done in three simple steps:
- Calculate how much you expect to owe in taxes
- Complete the online extension form
- Submit your extension request and pay any owed taxes
Once your extension has been approved by the IRS, you’ll have until October 15th to complete your tax return!
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