Filing Tax Returns after the Deadline (Late Filing)

When is my income tax return due?

The US individual income tax return is due on April 15th of the year following the tax year for which you are filing. When a return is filed after this date, penalties and interest on the tax due apply. A tax payer has the option of applying for an always-granted six-month extension by filing Form 4868 “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return” by April 15. Expat Tax CPA’s file online extensions for our clients if needs be to ensure there are no late filing penalties.

Filers living outside of the US

For taxpayers living outside of the US, there is an automatic two-month extension to the April 15 deadline. This extension is effective without applying for it. However, wording should be added to the top of the 1040 notifying the IRS that the automatic two month extension applies in cases where income taxes are due.

If I have an extension to file, does that mean that I have an extension for paying my taxes as well? And what if I do not have the money to pay my taxes due on time?

Even if you are filing your return after the original April 15th deadline, you should make sure to pay your taxes due by April 15. Any amount not paid by then will be subject to “late paying” penalties and interest. If your return is prepared before the deadline, but you are unable to pay the full amount of taxes by the deadline, the best thing to do is to file the return before the deadline, paying as much of the taxes due as you can. You will then receive a letter from the IRS stating your due balance for the difference.

What happens if I file late without an extension?

If you do not owe taxes with the filing of your returns, then you will not be penalized for filing late. If you are due a refund, you have three years from the original April 15th due date of the return to file and claim your refund. If you had an automatic 2 month extension, then the three year statute of limitations (3 year period to claim your refund) only expires three years from the extended deadline. However, the IRS sometimes challenges this position.  If you do owe taxes with the filing of your return, and you missed the deadline without filing for an extension, you should file your return at the earliest opportunity in order to avoid penalties and interest from accruing even further.

What should I do if I haven’t filed for many years and would like to come clean with the IRS?

US citizens in this position are recommended to become compliant with the IRS by following the Streamlined Foreign Compliance Procedure. This is a process through which the IRS gives citizens an opportunity to come clean for past negligence and move forward as compliant filers and taxpayers. It involves filing three years of delinquent tax returns and any required information returns, six years of delinquent FBAR’s and submitting a signed certification of non-willful conduct.

On June 18th, 2014, the IRS expanded the criteria that need to be met in order to qualify to enter into the streamlined program by eliminating the requirement that the taxpayer not owe $1500 or more in taxes in any given year of the 3 years of delinquent income tax filings.

Expats living in Countries where taxes are generally higher than US taxes will usually be able to utilize foreign tax credits (form 1116) and/or foreign earned income exclusions (form 2555) to wipe out any taxes owing to the IRS. However, for those who do owe taxes to the IRS, this is truly a unique and tremendous opportunity to become compliant without incurring any, or at least minimal, penalties. It is unknown how long this program will continue to be offered by the IRS.

Call or Contact Us now for a free 15 minute consultation to see what your filing requirements are and if you qualify for the streamlined program!