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What Happens if a U.S. Expat Files Their Taxes Late?

You are a US citizen living abroad (abroad in this case is anywhere outside of the united states) – A scenario commonly seen today. Are you aware that you are still liable to file tax returns the US regardless of which country you live in? If this scenario applies to you, and, if you have missed tax return filings up until now, there are steps you can take still to mitigate penalties and get up to date with your tax filings. The important aspect that needs to be pointed out here, is that one needs to file the tax return before the IRS (Internal Revenue Service) notifies you. If the IRS contacts you before you disclose you are in default, then the fines and penalties alternatives are very limited.  Below you will be provided with all necessary information concerning the late filing of taxes.

Consequences of not filing a tax return

  • Penalties- A penalty called “failure to file” will be charged by the IRS if you fail to file or delay your tax return. The longer the delay, the higher the rate of interest will be charged. The rate of interest can go up to as high as 25%
  • Statutes of Limitations- The IRS is no longer supposed to send you a cheque after the expiration of the refund statute. Another essential factor to be pointed out is that the statute of limitation to collect taxes by the IRS does not commence until the return is filed.
  • Loss of Refund- If you fail to file the tax return you are most likely to lose on a refund from the IRS. If your refund is outstanding, then you will not be fined or penalized for the failure in tax return filing. The statute of limitation provides three years for tax filing and refund, after which the IRS is not obligated to pay the refund.
  • Earned Income Tax Credit (EITC)- If you want to claim EITC you need to file tax returns within three years from the end of tax year.

Potential Fines and Penalties

There are two types of penalties that can be levied, if you fail to file US Expat taxes:

  • Failure to file- this penalty will be applied if you miss the deadline for filing taxes. If you are filing late taxes as a US expat but within sixty days of the due date, then the penalty will amount to 5% of the unpaid tax. The same percentage will be applied on top additionally, for every month the fine remains unpaid, although the interest will not exceed more than 25% of the total amount of unpaid tax. Furthermore, the lowest penalty for filing more than 60 days past the filing or extension date is 100% of the unpaid amount or $135 (whichever is smaller).
  • Failure to pay- This penalty is applied if you do not pay all of the tax amounts within the filing deadline. If you do not pay your ex-pat tax liability you will be charged a monthly rate of 0.5% of your actual or anticipated tax amount. This cannot exceed more than 25 percent. However, there is a way to avoid this penalty by applying for an extension and paying 90 percent of the tax amount which is due.

Expat Tax Services

Laws, rules, regulations concerning tax filing and tax returns are complicated. Many people in the US do not have the correct idea of the governance and compliance concerning taxes. We strongly encourage you to opt for consultation with the tax firm to better equip yourself with the rules and regulations around tax filings. This will mitigate the risk of any potential penalties and fines.


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