Like just about everything else, US tax deadlines are a little more complicated for Americans who live or invest abroad. Most know the general deadlines of April 15 for resident Americans and June 15 for those living abroad, but insuring timely compliance can be more complicated in certain situations.
These deadlines are even more important for expats and offshore investors because of the stiff penalties for not filing certain disclosure forms on time (typically starting at $10,000 per year). However, the IRS has several specific amnesty programs for taxpayers who may have outstanding filings after the applicable due date.
This article takes a deep dive into U.S. tax deadlines as they apply to expats and offshore investors.
Offshore trust structures are paperwork-generating machines. US persons who are grantors/settlors of offshore trusts must file certain forms on or before March 15. The trust itself must file IRS Form 3520-A, and the US grantor/settlor must file IRS Form 3520 (which must have attached certain parts of the IRS Form 3520-A).
These forms are filed separately—they are not included with a US tax return (although the offshore trust structure may require the US settlor/grantor to include other forms in a tax return).
Additionally, US beneficiaries of offshore trusts are also required to file IRS Form 3520 if they receive a distribution from the trust during the previous taxable year.
US corporations generally must file their US tax returns by March 15. If the US corporation owns an interest in a non-US entity, then the proper form must be included in the return depending on the US tax classification of the non-US entity (i.e., IRS Form 5471 for foreign corporations, IRS Form 8865 for foreign partnerships, and IRS Form 8858 for foreign disregarded entities)
April 15 and June 15
April 15 is of course the general return-filing deadline for Americans living in the US. Americans living outside the US receive an automatic extension to June 15 to file their returns. There is no required filing to receive this extension, it is claimed simply by attaching a statement to the original return.
But expats need to pay attention to one important nuance here: although expats have until June 15 to file, they still must pay any tax due by April 15. Unpaid tax after that date accrues a penalty of 0.5% and interest at the prevailing rate. So, expats should look at their US tax situation each year for anything that could cause a US tax payment to be due (e.g., receipt of an early distribution from an IRA or passive income that is tax-exempt in the residence country).
The rules have changed, so June 30 isn’t a deadline anymore. But I thought I’d include it in case you see references to it elsewhere.
Americans with non-US accounts may have to file a Foreign Bank Account Report (“FBAR”) each year to report those accounts. Generally, the FBAR is due if you own or have signature authority over non-US accounts with an aggregate maximum balance of more than $10,000.
Your FBAR for each calendar year is due on the same date as your tax return for such calendar year, extensions included. This “same as your tax return” deadline became effective for FBARs with respect to the 2016 calendar year. Before that, FBARs were due on June 30, with no extensions available.
All Americans, whether living in the US or abroad, can obtain an extension of the filing deadline to October 15. This extension is obtained by filing IRS Form 4868, which can be accompanied by a payment of estimated tax. Americans living in the US must request the extension by April 15, and expats have until June 15 to request the extension (but the extension still just pushes the deadline to October 15).
Again, to be clear, any tax due must still be paid by April 15 to avoid penalties—this extension moves only the filing deadline and not the payment deadline.
Special Extension for New Expats
New expats can extend their return filing deadline in their first year even further if necessary to qualify for the foreign earned income exclusion (the “FEIE”).
For example, if an American moves abroad on November 1, the expat could qualify for the FEIE by remaining outside the US for 330 days until October 31 of the next year. However, that date would be beyond even the extended due date for the return. So, the IRS allows new expats to apply for a special extension to the date necessary for them to satisfy the FEIE.
Deadlines for Amnesty Programs
On occasion, expats who need to catch up using an amnesty program (such as the Streamlined Filing Compliance Procedures) will worry about being able to meet the “deadline” to participate in that program. Well, I have good news for these folks—there’s no deadline to participate in an amnesty program!
A taxpayer can participate in an amnesty program whenever they are ready to—there is no explicit date on which any of the amnesty programs will be discontinued. Now, a taxpayer must file their submission before being contacted by the IRS about their delinquency, and the IRS can of course discontinue an amnesty program at any time. Additionally, because non-US banks have already sent FATCA reports to the IRS, it would be a good idea to get your submission to the IRS as soon as possible.
Happy filing, everyone!
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