It can be rather difficult for U.S. expat taxpayers to remain informed and aware of the numerous tax obligations they have to satisfy. Expats are not present in the United States and therefore miss the barrage of tax reminders that precede every tax day. However, even if these reminders and messages were transmitted to expat taxpayers regardless of whether they were in Brazil, China, the U.K. or some other nation, the information would likely only be of limited use because certain tax deadlines differ for taxpayers who are not physically present in the U.S.
Ted Kleinman is an experienced CPA who focuses on handling international tax obligations and issues for expats and other parties. At U.S. Tax Help Ted can provide clear guidance as to your tax duties and foreign disclosure obligations under Report of Foreign Bank and Financial Accounts (FBAR) and Foreign Account Tax Compliance Act (FATCA).
Expat Tax Deadline #1: Tax Filing and Payment Deadline
For taxpayers living in the United States, the tax filing and payment deadline has already passed. This was an interesting year because taxpayers received an extra three days to file due to the combined effects of the Emancipation Day holiday and the weekend. Thus, for domestic filers, the tax deadline was April 18, 2016.
However, expats and others who are not physically present in the U.S. still have time to file their taxes in a timely manner provided that they do not owe the IRS money. This is because all expat taxpayers receive an automatic two-month extension in time to file. Thus, the filing deadline for expats is June 15, 2016. This date is also the latest an expat can timely file for an extension of time to file. Should an expat file for an additional extension of time that is accepted by the IRS, he or she will need to file by October 15, 2016.
However, it is worth mentioning once more that the duty to file taxes and the duty to pay taxes is separate, independent duties. An IRS allowance of additional time to file does not grant the taxpayer additional time to pay his or her taxes. Rather, the taxpayer must make a sufficient payment of tax to ensure that he or she is not penalized on the unpaid portion of the tax.
Expat Tax Deadline #2: FATCA
Many expats have a duty to file FATCA. FATCA was intended to close the tax gap that Congress perceived as being created by wealthy Americans concealing assets and income in offshore entities. Unfortunately, the law was written in such a way that expats are also often swept up in its requirements to disclose. While expats are granted a greater allowance of assets before they are required to disclose, any expat holding foreign bank accounts, foreign pensions, foreign stocks, and other foreign assets should inquire as to whether they must satisfy this duty.
If you are required to file FATCA, you do so by filing IRS Form 8938. This form is filed at the same time as when you file your income tax return.
Expat Tax Deadline #3: FBAR
Aside from FATCA, expats often also have a duty to make disclosures under FBAR. The FBAR duty also applies to foreign assets and includes assets that the taxpayer owns or holds signature authority over. Due to the low asset threshold that triggers a disclosure duty – just $10,000 – most expats will be required to file FBAR. Furthermore, this $10,000 is an aggregate amount across all of your foreign accounts so a filing obligation is extremely likely.
The filing deadline for FBAR is June 30, 2016. FBAR can only be filed electronically through FinCEN’s web portal. On this web portal an expat taxpayer can access FinCEN Form 114 and submit it. There is no extension of time available for unfiled FBARs and penalties can be extremely harsh. In fact, penalties for non-willful violations can reach up to $10,000 for a single error. Compliance failures that can be attributed to willfulness can be punished even more harshly. Therefore, all expats should ensure that their FBAR duty is fully satisfied.
Questions About International Tax Obligations as an Expat?
If you have questions about your tax payment and filing obligations as an expat, skilled CPA Ted Kleinman of U.S. Tax Help can assist you in understanding and satisfying these duties. To schedule a no-cost review of your tax situation call (541) 923-0903 today or contact U.S. Tax Help online.