Home Tax help for US expats
Last update on July 16, 2019

As the annual deadline looms for filing your US tax return, here are a few facts to help ensure your taxes are filed correctly before the IRS catches up.

There are many misconceptions about filing and paying taxes in the United States when living and working abroad. Before you start packing your bags for a new country, you should be aware of how to handle your taxes back home. Expatica’s guide for tax help for US expats gives you a rundown of your rights and obligations.

AIT Services

AIT Services specializes in the preparation and filing of expat tax returns for US citizens, green-card holders and foreign nationals living in Switzerland, France and Germany. Since 2004, the firm has helped Americans minimize their tax payments and meet their obligations at competitive rates.

Your US tax obligations as an expat

Despite the fact that every US citizen and Green Card holder is required to file a tax return with the IRS, many expatriates still fail to do so.

There are two main reasons for this. First, many expatriates are unaware of these obligations, thinking that, as an expat, they do not need to pay or file tax returns in the United States.

Second, expatriates who have not filed a tax return for several years may be reluctant to do so now for fear of being fined for the years they missed.

Get professional tax help for US expats

For more information and help filing your US tax returns, you can contact expat-friendly US tax specialists:

Compulsory declarations with the IRS

Although many taxpayers will not owe any tax, it is nevertheless compulsory to declare your worldwide income to the IRS.

An expat can be granted the exemption from having to file each year, but only if specific circumstances are met such as filing status, age, and other particular circumstances. A professional specialist that provides tax help for US expats can guide you through the process.

For example, a single, self-supporting US citizen living in Belgium and earning a gross income of US$8,200 may not need to file. This could be the case if he or she does not have additional self-employment income of $400 or more and does not have one or more foreign financial accounts of more than US$10,000.

The foreign-earned income exclusion

The foreign-earned income exclusion is also a tricky area. Many US tax filers overseas are under the mistaken impression that, because their income is being taxed by a foreign country or their salary is below the US$103,900 foreign-earned income exclusion, there is no need to file their returns. This is incorrect.

To exclude foreign income, one must file first and then meet the requirements for the exclusion.

Amnesty for late tax returns

Expats who fail to file their tax returns can no longer benefit from the Offshore Voluntary Disclosure Program (OVDP). This program was scrapped on 28 March 2018. When in operation, the OVDP allowed full amnesty from the failure to file and disclosure penalties.

It’s not all bad news, however. Currently, the lenient and popular Streamlined Procedure Program (SPP) is in force. However, there are indications it won’t stay open forever.

This SPP is open to American citizens living abroad who didn’t know they needed to file taxes. Those accepted into the program only need to file three years of tax returns and provide six years of bank statements. These filings are protected against penalties.

Looming US tax return deadline

In 2019, US citizens and Green Card holders must lodge their tax returns by 15 April.

However, US expats living abroad automatically gain a two-month extension until 15 June.

Two more extensions can also be obtained:

  • a six-month extension until 15 October, which can be filed electronically;
  • a final extension, until 15 December, which must be requested by post.

These are the rules for filing federal return with the IRS. Extension rules for state filing are subject to variations from state to state.

Late payment and late filing penalties

In the event that the taxpayer owes any tax, interest will be calculated starting from 15 April and until the payment is received.

If the payment is not made by 15 April, there will be a penalty ranging between 0.5% and 25%. The penalty is for each month the balance remains unpaid.

Separately, if a tax return is not filed by the due date (inclusive of extensions), a far more onerous 5% failure to file penalty will also apply per month or portion thereof.