Paying Late US Expat Taxes as an American Abroad in 2022
January 31, 2022 | Paying Taxes | 3 minute read
Expat Tax Blog. Tax Tips for US Americans abroad.
All blogs are verified by IRS Enrolled Agents and CPAs
All blogs are verified by IRS Enrolled Agents and CPAs
It’s no question that filing a tax return can be a headache, and the situation of paying late US expat taxes as an American abroad only gets more complicated. When do you have to pay whatever you owe? What happens if you just don’t pay? We’ve got all those answers and more right here.
US Expat Tax Payment Deadlines
Despite the stresses of paying your taxes, the good news is that US expats have a little extra time to pay their taxes in 2021.
Because of the coronavirus pandemic, the IRS has extended the American abroad tax payment deadline from April 15 to May 17. This gives you an additional month to get everything taken care of.
Do Expats Need to Pay US Taxes?
We know what you’re probably wondering: “Do I even need to pay taxes as a US expat?” More than likely, the answer is no.
US citizens abroad are still required to file their taxes with the IRS, but the vast majority of expats aren’t required to pay anything. Tax benefits such as the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC) typically cover all the income you earn. Through them, you probably won’t owe anything.
However, benefits like the FEIE only go so far. If you have a particularly high global income (over $112,000 in regard to FEIE), then you may owe taxes to the IRS.
What if I Can’t Pay Owed Taxes by May 17?
If you’ve determined that you do, in fact, owe taxes to the IRS, pay them by May 17. But what if you already know you’re not going to be able to make that deadline? You’ve got a few options.
First, you should definitely go ahead and file as an American living abroad. You can incur extra fines or penalties for not filing your US expat taxes on time, so don’t hesitate!
However, you can request an extension to file until October 15. Keep in mind, though, that this is only an extension to FILE your taxes, not to PAY them. Any taxes you owe still need to be paid by May 17.
If you’re not able to pay the full amount of taxes that you owe by May 17 but can pay a portion of them, go ahead and do so. Paying even a small amount of your owed taxes can help to reduce any penalties that you may incur. It will also let the IRS know that you’re not simply avoiding paying.
On that same note, contact the IRS and set up a payment plan as soon as possible. You don’t have to wait for a tax bill to come in in order to set up a payment plan! Either submit a Form 9465 (also known as an Installment Agreement Request) or apply for a payment plan on the official IRS website.
Consequences for Paying Late Expat Taxes
At this point, you’ve probably got another question: “What will actually happen if I pay what I owe on my tax return late as a US expat abroad?” There are quite a few consequences you could find yourself facing if you don’t manage to pay your taxes on time.
If you don’t pay by the return date, you could be struck with the following penalties:
- “Failure to pay” penalty if you don’t pay on time
- “Failure to pay properly estimated tax” penalty if you miss your quarterly estimated tax payment
- “Dishonored check” penalty if your bank doesn’t honor your form of payment
Basically if American expats don’t make their payments on time, they’ll get struck with penalties.
What many people don’t realize is that that penalty increases the longer you go without paying. If you really wait a long time, you could pay up to 25% of the amount you owe in penalties alone. This is on top of the tax amount you already owe!
Solution for Paying Late US Taxes
At this point, it should go without saying that you should pay as much as possible, and as soon as possible. This will help avoid or reduce penalties and fees.
If you’re worried about not being able to pay your US expat taxes on time, or if you’re dealing with trying to catch up on your back taxes, the ordeal can be even more overwhelming than your usual filing. Luckily, we at MyExpatTaxes can help!
Our expat tax software makes it quick and easy to get started with determining how much you need to pay and how to pay it to the IRS. Even if you’re dealing with back taxes as an American expat. You can work through your taxes on your own with our intuitive software. Or if you need a little more help, we’ve got a team of experts standing by who can walk you through the process.
We’ll make sure you can take advantage of as many tax benefits as are available to you. Plus, we’ll help reduce the amount you owe overall and keeping more money in your wallet where it belongs!
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