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OCTOBER 15 – THE EXTENDED DEADLINE OF THE US TAX YEAR

October 02, 2019

By Joshua Ashman, CPA & Nathan Mintz, Esq.

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If you’re an American living abroad, you may have taken advantage of the automatic 6-month tax filing extension by filing Form 4868 by the original due date of your return. June 17, 2019 was the original due date for the 2018 US tax year filing.

If you’ve filed the extension, now is the time to get moving on finishing your US tax year return filing. The October 15, 2019 extended deadline is fast approaching!

Additionally, the FBAR form for the 2018 US tax year is due October 15, so it essential to ensure that both your tax return and your FBAR are filed by the shared extended deadline.

FILING AFTER THE DEADLINE

Filing after this year’s extended deadline can have a number of adverse and irreversible effects, including:

  • Trigger of failure-to-file penalty – calculated as 5% of the taxes owed for each month outstanding (capped at 25% of the total tax liability). If tax is owed, then the previously triggered late-payment penalty and interest also continue to accrue.
  • Forfeiture of tax elections – A number of important elections must be made by the due date of the tax return (including extensions) or they may be lost. Examples include the Section 911 foreign earned income inclusion and the Section 1296 election to mark-to-market PFIC Stock.

STAYING ON TOP OF THE US TAX YEAR

For those of you who have successfully completed an IRS delinquency amnesty program (e.g., the Streamlined Procedures), filing by the extension deadline is particularly important, because the IRS is most likely going to pay special attention to your subsequent US tax year filing to ensure you stay on track from now on. The IRS will be looking to see that you have filed your tax return and all information returns (e.g., Form 5471, 3520) on time.

October 15 is also the final deadline to fund a qualified retirement account, such as an IRA. In this regard, your tax return must be completed in order to finalize certain tax information that is necessary for determining your contribution limitation.

HOW WE CAN HELP

Expat Tax Professionals has decades of combined experience in preparing U.S. tax returns for Americans living abroad. Our dedicated team can assist with preparing your US tax year return and other required filings so that you can meet this year’s October 15 deadline.

If it turns out that October 15 does not provide sufficient time to prepare your tax return this year, all is not lost. Under the right circumstances, we can help you secure a further extension to December 15. While a further extension will not automatically be granted, our experience has been that the IRS will provide the extra time if a reasonable explanation for the delay is provided.

It is best, of course, to try to avoid this type of situation and instead prepare your tax return in good time.

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