BETTER LATE THAN NEVER!
Fallen behind, have you? Well, just so you know, you’re not alone. Many American expats are in the same boat and are able to file late and accrue no penalties or interest.
First question to ask yourself…do you owe tax? If your income falls below the foreign exclusion amount (for 2012 it was $95,100) or if you pay tax in your residence country, chances are you will owe no tax, no penalties, no interest! IF you have not filed in a good long time, we often suggest that you file under the new “steamlined” catch up program, which requires you to file 2009, 2010 and 2011 and 2012…and voila, you are up-to-date.
If you end up owing tax after the exclusion or if you are self-employed and living in a country that does not have a social security equalization treaty with the USA, the answer to your late filing dilemma is not quite so easy. The IRS has 10 years to collect taxes due, so our suggestion would be to file as far back as you owe tax or 6 years, whichever is greater, considering this 10 year collection rule. Since the late filing penalties and interest are accruing as you are reading this, it is probably a good idea to get the filing process started as soon as possible.
If you have already heard from the IRS…file asap, before they prepare your return(s) for you and you lose the foreign income exclusion for all years prior to 2009.
If you have not heard from the IRS…still file asap, declaring all of your foreign income taking the foreign income exclusion for every outstanding year.
If you owe tax and cannot afford to pay it, the nicer, kinder IRS will assist you in setting up an affordable monthly payment plan.
Need to file late tax returns 1, 2, 3, 5, 7, 10 years, or whatever? Contact www.expatriatetaxreturnbs.com we are here to help!