Expats Who Missed the Tax Deadline

Expatriate Tax Returns is here to assist expatriates living abroad who missed the April deadline to file their 2023 federal income tax return. Our team understands the unique challenges faced by expats and offers tailored solutions to ensure compliance and minimize penalties.

Options for Struggling Taxpayers

For expats struggling with their tax obligations, we offer essential payment programs that can help manage the amount owed, including special first-time penalty relief for those who qualify. Paying what you can as soon as possible will limit penalty and interest charges, which can grow quickly under the tax laws. Currently, the interest rate for unpaid taxes is 8%, compounded daily. The late-filing penalty is generally 5% per month, and the late-payment penalty is 0.5% per month, both of which max out at 25%.

If a return is filed more than 60 days after the due date, the minimum penalty is either $485 or 100% of the unpaid tax, whichever is less. The failure to pay penalty rate is generally 0.5% of unpaid tax owed for each month or part of a month until the tax is fully paid or until 25% is reached. This rate is subject to change. For more detailed information, visit the Penalties section on IRS.gov.

Electronic Payments to Limit Penalties and Interest

Expats can reduce late-payment penalties and interest charges by paying their taxes electronically. The fastest and easiest way is with IRS Direct Pay, a free service available only on IRS.gov. Other electronic payment options are also available. For more details, visit the Make a Payment section on IRS.gov.

File and Pay to Reduce Penalties and Interest

We advise expats to file their tax return and pay any taxes owed as soon as possible to reduce penalties and interest. An extension to file does not extend the deadline to pay. While an extension provides an additional six months with a new filing deadline of Oct. 15, penalties and interest apply to taxes owed after April 15 and will accrue until the balance is paid in full.

Potential for Penalty Relief

Anyone receiving a penalty notice from the IRS should read it carefully and follow the instructions for requesting relief. Visit the Penalty Relief section on IRS.gov for information on the types of penalties, requesting penalty relief, and appealing a penalty decision.

Taxpayers who have filed and paid on time and have not been assessed any penalties for the past three years often qualify to have the penalty abated. See the First-Time Penalty Abatement page on IRS.gov for more details. Even if a taxpayer does not qualify for this relief, they may still be eligible if their failure to file or pay on time was due to reasonable cause and not willful neglect.

Payment Options for Expats

By filing on time, expats can avoid failure-to-file penalties, even if they are unable to pay in full. For those who owe federal taxes, Expatriate Tax Returns offers a variety of payment options to meet your tax obligations, including applying for an online payment plan.

Online Payment Plan Options

• Short-term Payment Plan: For balances less than $100,000 in combined tax, penalties, and interest, allowing up to 180 days to pay the balance in full.
• Long-term Payment Plan: For balances less than $50,000 in combined tax, penalties, and interest, with monthly payments for up to 72 months. Direct debit is required for balances between $25,000 and $50,000.

While interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure-to-pay penalty is reduced by half while an installment agreement is in effect. Find more information about payment plan costs on the IRS’ Additional Information on Payment Plans webpage.

Automatic Extensions for Some Taxpayers

Certain expats automatically qualify for extra time to file and pay taxes without penalties and interest, including:

• Taxpayers in disaster areas
• U.S. citizens and resident aliens living and working outside the U.S. and Puerto Rico
• Military members on duty outside the U.S. and Puerto Rico, and those serving in combat zones

Adjust Withholding to Prevent Future Tax Issues

Expats should check their withholding each year to prevent unexpected tax bills or penalties. The Tax Withholding Estimator on IRS.gov helps individuals assess their income tax, credits, adjustments, and deductions. Wage earners can use this tool to determine whether they need to change their withholding by submitting a new Form W-4 to their employer.

For more personalized assistance and to navigate these options, contact Expatriate Tax Returns. Our experts are ready to help expats comply with tax laws and minimize any penalties.