Understanding your responsibilities during tax time can be daunting. If you are a U.S. citizen or resident alien living abroad, things can get even more complicated. It’s important to realize that many of the same rules apply to those living outside the U.S. and those living in the U.S., with the exception of filing tax extensions. If you are out of the country on the due date of your tax return, you may qualify for an automatic 2-month extension without having to file anything.
Do I Pay the Same Taxes?
The biggest concern for those living abroad is the obligation to pay taxes on all income earned in the U.S. as well as income that’s earned in other countries. The same income tax rules apply to a U.S. citizen or resident alien (Green Card holder), whether you live in the United States or if you live in another country for any portion of the year. You are still required to file a tax return and pay the requisite taxes on that return. This is generally the same for estate and gift tax returns, as well as state income taxes.
The Internal Revenue Service (IRS) allows an automatic 2-month extension for any qualified U.S. citizen or resident alien living abroad during the due date for tax filing (April 15 for most individuals). This automatic extension allows you to file and pay your taxes by June 15 without any added filing or payment penalties, as long as you file your return by the extended deadline. However, interest will still be charged on any tax that is paid after the original due date (April 15).
If you are unable to file your return by the extended due date (June 15), you can apply for an additional 4-month extension by filing Form 4868. This will give you until October 15 to file your U.S. tax return. Make sure to check the box for “out of the country” when you fill out Form 4868.
There are a few ways you can file Form 4868. It can be printed out from the IRS website, filled out by hand, and mailed to the appropriate IRS processing center for “out of country” extensions.
If you are making a payment with your extension request, mail Form 4868 to the following address:
Internal Revenue Service
P.O. Box 1302
Charlotte, NC 28201-1302 USA
If you are not making a payment, mail Form 4868 to this address:
Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215 USA
Your extension application must be postmarked on June 15 (at the latest) in order to be accepted by the IRS.
You can also apply for a tax extension online with a 3rd party software provider. Make sure you use an Authorized IRS e-file Provider so your personal information is kept secure. The tax extension form is easy to fill out and usually takes less than 10 minutes online. If you e-file an extension online, you will have the option to pay all (or part) of your taxes with your extension.
Alternatively, you can ask a tax professional for help to ensure you do not run afoul of the deadlines and get heavily penalized for it.