As an expat, no matter where you live, you still have to file US taxes every year, reporting your total worldwide income. This is because the United States taxes its citizens and its permanent residents (Green Card holders) on a worldwide basis, irrespective of their residence. US filing deadlines are different for Americans living abroad though, and in this article, we aim to give clarity to US tax deadlines for expats in 2024 to help you fulfill your obligations and file on time.

Federal tax return deadline for expats: June 17th, 2024

If one lives in the. US, the deadline for filing a federal tax return is April 15th. Expats get an automatic extension though, providing an additional two months to file. For the tax year 2023 (filing in 2024), the filing deadline for US taxpayers living abroad is June 17th, 2024, due to June 15th falling on a Saturday.

Expats must complete Form 1040 to report all of their global income, including both income earned abroad and any income from US sources. Failing to file by the deadline can result in late filing penalties, so, it's essential to gather all necessary documents and information and file your return to avoid any potential repercussions.

Note that when you file, you can claim the Foreign Earned Income Exclusion or the Foreign Tax Credit to reduce your US tax bill. Seek advice from a US expat tax professional for further information and guidance to be sure you minimize your US tax liability.

Filing extension: October 15th, 2024

In common with Americans in the States, expats can request a filing extension if you aren’t ready in time or if you miss the June 15th deadline.

If you require more time to prepare your tax return (this is sometimes necessary to qualify for the Foreign Earned Income Exclusion for example), you can request an extension until October 15th. You can request this extension by submitting Form 4868 online.

It's important to remember that while the extension allows for more time to file, any taxes owed must still be paid by the original April 15th deadline to avoid interest penalties. Therefore, if you anticipate owing taxes, it's advisable to estimate your tax liability and make payments by the April deadline to minimize any potential interest and late payment charges.

Further extension: December 16th, 2024 (IRS discretionary)

In certain circumstances, the IRS may grant an additional extension until December 15th, 2024. However, this extension is at the discretion of the IRS and is typically granted in exceptional cases. December 16th, 2024, (December 15th falls on a Sunday) will be the last deadline for expats filing their US taxes abroad. However, unlike electronic requests, there's no online option available for seeking this extension from the IRS, so you must submit it in writing. We don’t recommend resorting to this option.

Estimated tax payments

Some expats will have to pay US taxes, and so will have to pay estimated amounts quarterly. The most common categories of taxpayers who should consider filing estimated quarterly taxes are: 

• Taxpayers who are self-employed  
• Taxpayers with significant investment or retirement income  
• Taxpayers who receive a large windfall, such as from the sale of a major asset  
• Taxpayers who receive alimony income  
• Taxpayers who receive income distributions from a partnership or S corporation 

Estimated tax payments are typically due quarterly. Quarterly payments in 2024 are due on the following dates:

• April 15th, 2024
• June 17th, 2024
• September 16th, 2024
• January 15th 2025

 Failure to pay estimated taxes on time can result in penalties and interest charges.

FBAR deadline 

FBAR stands for Foreign Bank Account Report, and it must be filed by US taxpayers who hold foreign accounts with a combined value exceeding $10,000 at any time during the year. FBAR isn't a separate tax form and isn't submitted to the IRS; rather, it's an electronic report filed with the Department of the Treasury using FinCEN Form 114. 

The deadline for filing FBAR is April 15th, 2024. However, there is an automatic extension until October 15th, 2024. The great majority of expats will therefore file their FBAR at the same time as their tax return.

Consulting with a tax professional who is experienced in working with expats is invaluable when you’re facing the complexities of filing US taxes while living abroad. Staying informed and proactive is the best way to manage your tax obligations without detracting from your enjoyment of the adventure of living abroad.

If you require assistance with your US expat taxes, get started with Wicklow Expat Tax Services today.

Did you know that US citizens living abroad are still obligated to file a US tax return? If you are single and have an income of more than $13,850 (for single filers in the 2023 tax year, $14,600 for 2024), you are most likely required to file a return. The United States is one of very few countries that tax their citizens and residents on their worldwide income, regardless of where they live. Although in many cases no income tax is ultimately due to the US Treasury as a result of foreign income exclusions and tax credits, expats nevertheless need to be aware of these filing requirements. Failure to do so could result in running afoul of US taxing authorities and facing noncompliance penalties.

In addition to income tax reporting obligations, the US Treasury is becoming stricter in enforcing foreign asset reporting requirements. If US taxpayers have foreign financial accounts aggregating more than $10,000 within any given year, submission of FinCen Form 114 (Foreign Bank Account Report, or FBAR) is required. The penalties for FBAR noncompliance are not inconsequential. A $10,000 penalty applies in cases of non-willful noncompliance, and a willful failure to file could result in a civil penalty of up to $100,000 or 50 percent of the balance of an unreported account. Considering that this penalty is applied per account, per year, it is serious business indeed.

The Foreign Account Tax Compliance Act (FATCA) places an additional obligation on US expats residing outside the US if the expat owns specified foreign assets which exceed the following thresholds:

Single filing:

• Either $200,000 on the last day of the year, or
• $300,000 at any point during the year

Married filing jointly:

• Either $400,000 on the last day of the year, or
• $600,000 at any point during the year

In the event that any of these thresholds are exceeded, the expat must file form 8938, ‘Statement of Specified Foreign Financial Assets’, with the IRS. Expats also need to be aware that if they own foreign mutual funds, such ownership must be indicated on the form 8938, and a separate form 8621 must be filed for each foreign fund. Foreign mutual funds fall into a category known as ‘Passive Foreign Investment Companies’, for which not only is the reporting requirement quite onerous, but for which the US tax treatment is quite harsh.

Many expats have an entrepreneurial spirit, and start up a business in their resident country. These expats, in addition to those who own a 10 percent or greater interest in a foreign corporation, will very likely be required to file IRS form 5471, ‘Information Return of U.S. Persons With Respect to Certain Foreign Corporations.’  It is important to note that the IRS definition of a Foreign Corporation includes foreign limited liability companies, so that encompasses many small businesses which the US taxpayer might not normally consider to be a corporation.

If you find yourself behind on your US income tax reporting obligation, there is an option called the IRS Streamlined Procedure which in many cases will serve to get you back up to speed. Under this procedure, the taxpayer is required to file tax returns for the past three years and FBARs for the past six years, if applicable. This strategy can be employed in cases in which the tax noncompliance was not willful (e.g. the taxpayer was unaware of his or her reporting obligation). Under this procedure, late filing penalties are not applied but late payment penalties may be applied if the previously unfiled back tax returns result in tax due.

Options are also available for the willful non-filer to become compliant in the eyes of the IRS and the US Treasury, such as the Offshore Voluntary Disclosure Program (OVDP). This program is designed for taxpayers facing potential criminal liabilities and substantial civil penalties resulting from willful noncompliance of their reporting obligations.

Although much of this may seem daunting to the typical US expat struggling with US tax compliance issues, he or she can rest easy with the knowledge that they are not alone in their struggles, and that there are methods available for extricating themselves from seemingly sticky tax reporting situations.

If you feel that you may be deficient in any of these areas and would like further details and advice on getting back in the good graces of the IRS and the US Treasury, contact us today. We are dedicated to helping US expats navigate the complexities of the US tax system.

If you require assistance with your US expat taxes, get in touch today.

Purpose of the streamlined procedures

The streamlined filing compliance procedures describe below are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations with

• a streamlined procedure for fling amended or delinquent returns, and
• terms for resolving their tax and penalty procedure for filing amended or delinquent returns, and
• terms for resolving their tax and penalty obligations.

As reflected below, the streamlined filing procedures that were first offered on September 1, 2012 have been expanded and modified to accommodate a broader group of U.S. taxpayers. Major changes to the streamlined procedures include:

• extension of eligibility to U.S. taxpayers residing in the United States
• Elimination of the $1,500 tax threshold, and
• elimination of the risk assessment process associated with the streamlined filing compliance procedure announced in 2012.

Eligibility criteria for the streamlined procedures

The modified streamlined filing compliance procedures are designed only for individual taxpayers, including estates of individual taxpayers. The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States. Descriptions of the specific eligibility requirements for the streamlined procedures for both non-U.S. residents (the “Streamlined Foreign Offshore Procedures”) and U.S. residents (“Streamlined Domestic Offshore Procedures”) are set forth below.

Taxpayers must certify that conduct was not willful. Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct.

IRS has initiated a civil examination of taxpayer’s returns for any taxable year. If the IRS has initiated a civil examination of taxpayer’s returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the streamlined procedures. Taxpayers under examination may consult with their agent. Similarly, a taxpayer under criminal investigation by IRS Criminal Investigation is also ineligible to use the streamlined procedures.

Taxpayers eligible to use streamlined procedures who have previously filed delinquent or amended returns must pay previous penalty assessments. Taxpayers eligible to use the streamlined procedures who have previously filed delinquent or amended returns in a attempt to address U.S. tax and information reporting obligations with respect to foreign financial assets (so-called “quiet disclosures” made outside of the Offshore Voluntary Disclosure Program (OVDP) or its predecessor programs) may still use the streamlined procedures by following the instructions set forth below. However, any penalty assessments previously made with respect to those filing will not be abated.

Taxpayers who want to participate in the streamlined procedures need a valid Taxpayer Identification Number. All returns submitted under the streamlined procedures must have a valid Taxpayer Identification Number. For U.S. citizens, resident aliens, and certain other individuals, the proper TIN is a valid Social Security Number (SSN). For individuals who are not eligible for an SSN or ITIN will not be processed under the streamlined procedures. However, for taxpayers who are ineligible for an SSN but do not have an ITIN, a submission may be made under the streamlined procedures if accompanied by a complete ITIN application. Additional information on getting an ITIN is available.

General treatment under the streamlined procedures

Tax returns submitted under either the Streamlined Foreign Offshore Procedures will be processed like any other return submitted to the IRS. Consequently, receipt of the returns will not be acknowledged by the IRS and the streamlined filing process will not culminate in the signing of a closing agreement with the IRS.

Returns submitted under either the Streamlined Foreign Offshore Procedures will not be subject to IRS audit automatically, but they may be selected for audit under the existing audit selection processes applicable to any U. S. tax return and may also be subject to verification procedures in that the accuracy and completeness of submissions may be checked against information received from banks, financial advisors, and other sources. Thus, returns submitted under the streamlined procedures may be subject to IRS examination, additional civil penalties, and even criminal liability, if appropriate. Taxpayers who are concerned that their failure to report income, pay tax, and submit required information returns was due to willful conduct and who therefore seek assurances that they will not be subject to criminal liability and/or substantial monetary penalties should consider participating in the Offshore Voluntary Disclosure Program and should consult with their tax professional or legal advisers.

After a taxpayer has completed the streamlined filing compliance procedures, he or she will be expected to comply with U.S. law for all future years and file returns according to regular filing procedures.

If you require assistance with your US expat taxes, get in touch today.

Filing IRS Form 5471 for owners of Controlled Foreign Corporations can be a very complicated process. And costly as the IRS penalty can run to 10k per form per year. Here is a brief description from the IRS on who needs to file.

Purpose of Form

Form 5471 is used by certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations. The form and schedules are used to satisfy the reporting requirements of sections 6038 and 6046, and the related regulations.

Who Must File

Generally, all U.S. persons described in Categories of Filers below must complete the schedules, statements, and/or other information requested in the chart, Filing Requirements for Categories of Filers, on page 2. Read the information for each category carefully to determine which schedules, statements, and/or information apply.

Categories of Filers

Category 1 Filer

This filing requirement has been repealed by section 413(c)(26) of the American Jobs Creation Act of 2004, which repealed section 6035.

Category 2 Filer

This includes a U.S. citizen or resident who is an officer or director of a foreign corporation in which a U.S. person (defined below) has acquired (in one or more transactions):

1. Stock which meets the 10% stock ownership requirement (described below) with respect to the foreign corporation or
2. An additional 10% or more (in value or voting power) of the outstanding stock of the foreign corporation.

A U.S. person has acquired stock in a foreign corporation when that person has an unqualified right to receive the stock, even though the stock is not actually issued. See Regulations section 1.6046-1(f)(1) for more details.

Stock ownership requirement.   For purposes of Category 2 and Category 3, the stock ownership threshold is met if a U.S. person owns:

1. 10% or more of the total value of the foreign corporation’s stock or
2. 10% or more of the total combined voting power of all classes of stock with voting rights.

U.S. person.   For purposes of Category 2 and Category 3, a U.S. person is:

1. A citizen or resident of the United States,
2. A domestic partnership,
3. A domestic corporation, and
4. An estate or trust that is not a foreign estate or trust defined in section 7701(a)(31).

See Regulations section 1.6046-1(f)(3) for exceptions.

Category 3 Filer

This category includes:

• A U.S. person (defined above) who acquires stock in a foreign corporation which, when added to any stock owned on the date of acquisition, meets the 10% stock ownership requirement (described above) with respect to the foreign corporation;
• A U.S. person who acquires stock which, without regard to stock already owned on the date of acquisition, meets the 10% stock ownership requirement with respect to the foreign corporation;
• A person who is treated as a U.S. shareholder under section 953(c) with respect to the foreign corporation;
• A person who becomes a U.S. person while meeting the 10% stock ownership requirement with respect to the foreign corporation; or
• A U.S. person who disposes of sufficient stock in the foreign corporation to reduce his or her interest to less than the stock ownership requirement.

For more information, see section 6046 and Regulations section 1.6046-1.

Category 4 Filer

This includes a U.S. person who had control (defined below) of a foreign corporation for an uninterrupted period of at least 30 days during the annual accounting period of the foreign corporation.

U.S. person.   For purposes of
Category 4, a U.S. person is:

1. A citizen or resident of the United States;
2. A nonresident alien for whom an election is in effect under section 6013(g) to be treated as a resident of the United States;
3. An individual for whom an election is in effect under section 6013(h), relating to nonresident aliens who become residents of the United States during the tax year and are married at the close of the tax year to a citizen or resident of the United States;
4. A domestic partnership;
5. A domestic corporation; and
6. An estate or trust that is not a foreign estate or trust defined in section 7701(a)(31).

See Regulations section 1.6038-2(d) for exceptions.

Control.   A U.S. person has control of a foreign corporation if, at any time during that person’s tax year, it owns stock possessing:

1. More than 50% of the total combined voting power of all classes of stock of the foreign corporation entitled to vote or
2. More than 50% of the total value of shares of all classes of stock of the foreign corporation.

A person in control of a corporation that, in turn, owns more than 50% of the combined voting power, or the value, of all classes of stock of another corporation is also treated as being in control of such other corporation.

If you require assistance with your US expat taxes, get in touch today.