October 15th not enough time to file your taxes? No problem for US expats.
Are you still missing the foreign documents you needed for your US tax return?
If the looming October 15th filing deadline is causing you stress, do not panic.
You can request two extra months to file.
Keep reading to learn how!
US federal tax returns are due on April 15th. US taxpayers living in the USA can request an extension of six additional months by filing Form 4868.
US taxpayers who live overseas automatically get two additional months, from April 15th to June 15th, without needing to file any forms. To secure the two extra months, they need to write the following note on their tax return if they file by June 15th:
Under Treasury Regulations 1.6081-5(a), taxpayers are granted an extension of time to file their 20XX income tax return until June 15th, 20XX. I/We have a tax home and abode outside the United States and Puerto Rico on April 15th, 20XX, and qualify for this automatic extension.
On top of the first page of their Form 1040, they must also write: TAXPAYER ABROAD
If the automatic two months extra do not provide enough additional time to finish and file the tax return, Americans abroad, like Americans in the USA, can also file Form 4868 to request an extension to October 15th. Americans abroad must check the box at the bottom left of this form to indicate that they are “out of the country” when the extension is filed.
To summarize, US expats get two months extra automatically, plus four months extra through Form 4868, six months total. This is the same number of extra months that tax filers living in the USA get.
US expats may think this is not quite fair. The reason US expats get the additional two months automatically, presumably, is because the IRS recognizes that it is harder to gather tax documents abroad; that most US citizens overseas need to file two complete sets of tax returns, not just one and that finding US tax professional help is harder when living overseas. It is harder to file a US tax return from abroad than from the comfort of the USA.
So, if US resident taxpayers can ask for six additional months, and US expats have a harder time filing their taxes, shouldn’t they get more time than the time granted to US residents?
The answer is yes, and this is how to do it.
REQUESTING AN ADDITIONAL EXTENSION TO DECEMBER 15
For US taxpayers living outside the USA, the solution comes courtesy of Treasury Regulation Sections 1.6081-1(a) and (b).
These regulations allow taxpayers residing abroad to request, in writing, two additional months beyond October 15thto file their tax return. The written request must be submitted to the IRS and include the following information:
- The specific tax return for which you are requesting the extension (Form 1040, for example)
- The year for which you are requesting the extension
- And the reason why you need this extra time (for example, because due to disruptions caused by the coronavirus global pandemic you need additional time to collect the documents needed to prepare a complete and accurate US tax return)
Below is an example of what this written request may look like during the Covid-19 pandemic:
I request an extension of time to file my 20XX Form 1040 until December 15th, 20XX. I need this additional time to gather (name your foreign country of residence) tax documents and US tax documents to prepare a complete and accurate US tax return. I live in (name of your country of residence) and due to disruptions in international travel, communications, and mailings because of the pandemic, this process is taking longer this year.
With kind regards,
It is important to include the taxpayer identification information in the letter: full name, Social Security Number, address, and spouse information if a joint tax return. The letter must be signed and dated and mailed to the IRS Service Center where the tax return is filed.
Currently, for Americans abroad, the IRS filing address is:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215
If you know that you will need this extra time, do not wait until October 15 to mail this letter. We highly recommend that you prepare it and mail it immediately.
We also highly recommend that you take a photo of your letter, of the envelope with the letter in it, the postmark on the envelope, a photo of you at the foreign post office holding the envelope, and any other photographic (appropriate please!) that you can think of.
To any extent possible, please mail the letter by registered mail. You will want to track the envelope and confirmed that it was delivered. Save a copy of the delivery confirmation and file all the supporting documents, including the delivery confirmation, in a safe place.
Why all these precautions? Because sometimes, and especially during pandemics, letters get lost in the mail or they get lost within the IRS service centers after arrival. You may also need to prove when the letter was mailed if the IRS receives it after October 15th.
You will be grateful to have evidence that the extension request was filed timely if something goes wrong. Expat tax returns many times include information returns that carry automatic $10,000 or $25,000 late filing penalties, like Form 5471, Form 8938, or Form 5472.
Saving documentation to prove the timely request can save you tens of thousands of dollars in penalties.
We hope that you find this information helpful and good luck with your tax filing!
This commentary is provided for informational and educational purposes only. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. To the extent that this material concerns tax matters, it is not intended to be used by a taxpayer as tax advice. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. Dynamic Wealth Advisors does not provide tax advice or services, Marina Hernandez offers tax preparation services under MHTax, this is considered an outside business activity from Dynamic Wealth Advisors and is separate and apart from Ms. Hernandez’s activities as an investment advisor representative of Dynamic Wealth Advisors.