Americans Abroad: October 15 Tax Filing Deadline – Not Ready? Don’t Panic

US persons living and working overseas often find it more difficult to meet the deadlines for their tax returns. This is so because they may have foreign financial assets that require a more extensive tax analysis to prepare the return. Just think about the work required to figure out the “transition tax” or “deemed repatriation tax”.  In some countries, finding adequate US tax assistance is very difficult if not impossible, and I have met clients who have traveled from other nearby countries to find the help they need.

It is getting very close to the October 15 filing deadline for income tax returns that have been properly put on extension.  What if you cannot get your tax return prepared by the 15th?

Additional Extension of Time for Taxpayers Out of the Country

Taxpayers who are out of the USA can request a discretionary 2-month additional extension of time to file their returns (that is, returns are due by December 17 for calendar year taxpayers).

To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Send the letter no later than the extended due date (October 15 for calendar year taxpayers) to the following address:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 73301-0045

USA

You will not receive any notification from the Internal Revenue Service unless your request is denied. Since the IRS can possibly deny the request, you should make the request as early as you can so you will have time to prepare your return in the event permission is denied.  Given the complexity of tax returns for overseas Americans, and the very harsh penalties that can apply for improper reporting of overseas accounts and assets, many taxpayers are seeking professional advice. Tax return preparers are on overload and cannot get all the returns done by October 15th. This may be a good reason to explain your request for additional time.

The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350, discussed below.

Form 2350 – Extra Time Needed to Meet Foreign Earned Income/Housing Exclusion

This form is limited in its application.  Certain Americans abroad who expect to qualify for the foreign earned income exclusion (FEIE) and/or foreign housing exclusion (FHE) may obtain additional time to file their tax returns specifically in order to meet the qualification tests imposed for those exclusions. This is accomplished by using Form 2350.  Special rules apply and one should read the instructions carefully. This extension is meant for the following individuals who meet all 3 requirements –

  1. The taxpayer is a US citizen or resident alien.
  2. The taxpayer expects to qualify for the FEIE and/or the FHE (or deduction) by meeting either the bona fide residence test or the physical presence test but not until after the date that the tax return is due.
  3. The individual’s tax home is in a foreign country (or countries) throughout his period of bona fide residence or physical presence, whichever applies.

The IRS will provide an approval or rejection of the extension request.   If the extension is approved, it will generally be to a date 30 days after the date on which the taxpayer expects to meet either the bona fide residence test or the physical presence test.

Posted October 1, 2018

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