Tax Filing Primer For The American Abroad
The second U.S. tax filing season is under way.
If you filed an extension back in April (like I did), you have until Oct. 17 to file your tax return… and (don’t forget) your Foreign Bank Account Report (FBAR).
While the United States’ approach to taxing income is the most complicated in the world, at least the IRS gives you plenty of time to file.
In some countries, you have just 45 days. The filing deadline in Costa Rica is Feb. 15, with no opportunity for extending it. In Panama, the deadline is March 15. Panama will give you a one-month extension, which, speaking from experience, is not very helpful.
I admit I’ve come to count on the six-month extension the IRS allows.
Of course, extending your filing deadline doesn’t extend your payment deadline. You should have paid any estimated tax due when you filed for your extension back in April.
To remind you, if you’re not physically present in the United States on April 15 (in other words, if you’re an expat living overseas, as I am), your filing date is automatically extended to June 15.
Still, I file an extension every year by April 15 to extend my filing date until October for filing. You can’t request an extension to October after the April 15 filing deadline has passed.
One key reason that, as an expat, you should hold off filing your U.S. tax return as long as possible is to give you a chance to finalize and file any foreign tax returns. You want to know the amount of any foreign taxes paid so you can take that amount as a credit on your U.S. return. Waiting to file with the IRS is easier than filing an amended return after the fact to be able to take advantage of the foreign tax credit.
Whatever the reason, if you haven’t filed your U.S. tax return yet, you have but a few weeks to remedy that. Get to it.
Lief Simon