What Happens if a U.S. Expat Files Their Taxes Late?

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What Happens if a U.S. Expat Files Their Taxes
Late?
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What Happens if a U.S. Expat Files Their Taxes
Late?

• You are a US citizen living abroad (abroad in
  this case is anywhere outside of the united
  states) - A scenario commonly seen today. Are you
  aware that you are still liable to file tax
  returns the US regardless of which country you
  live in? If this scenario applies to you, and, if
  you have missed tax return filings up until now,
  there are steps you can take still to mitigate
  penalties and get up to date with your tax
  filings. The important aspect that needs to be
  pointed out here, is that one needs to file the
  tax return before the IRS (Internal Revenue
  Service) notifies you. If the IRS contacts you
  before you disclose you are in default, then the
  fines and penalties alternatives are very
  limited. Below you will be provided with all
  necessary information concerning the late filing
  of taxes.
•  

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Consequences of not filing a tax return

• Penalties- A penalty called failure to file
  will be charged by the IRS if you fail to file or
  delay your tax return. The longer the delay, the
  higher the rate of interest will be charged. The
  rate of interest can go up to as high as 25
• Statutes of Limitations- The IRS is no longer
  supposed to send you a cheque after the
  expiration of the refund statute. Another
  essential factor to be pointed out is that the
  statute of limitation to collect taxes by the IRS
  does not commence until the return is filed.
• Loss of Refund- If you fail to file the tax
  return you are most likely to lose on a refund
  from the IRS. If your refund is outstanding, then
  you will not be fined or penalized for the
  failure in tax return filing. The statute of
  limitation provides three years for tax filing
  and refund, after which the IRS is not obligated
  to pay the refund.
• Earned Income Tax Credit (EITC)- If you want to
  claim EITC you need to file tax returns within
  three years from the end of tax year.

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Potential Fines and Penalties

• There are two types of penalties that can be
  levied, if you fail to file US Expat taxes
• Failure to file- this penalty will be applied if
  you miss the deadline for filing taxes. If you
  are filing late taxes as a US expat but within
  sixty days of the due date, then the penalty will
  amount to 5 of the unpaid tax. The same
  percentage will be applied on top additionally,
  for every month the fine remains unpaid, although
  the interest will not exceed more than 25 of the
  total amount of unpaid tax. Furthermore, the
  lowest penalty for filing more than 60 days past
  the filing or extension date is 100 of the
  unpaid amount or 135 (whichever is smaller).
• Failure to pay- This penalty is applied if you do
  not pay all of the tax amounts within the filing
  deadline. If you do not pay your ex-pat tax
  liability you will be charged a monthly rate of
  0.5 of your actual or anticipated tax amount.
  This cannot exceed more than 25 percent. However,
  there is a way to avoid this penalty by applying
  for an extension and paying 90 percent of the tax
  amount which is due.

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Expat Tax Services

• Laws, rules, regulations concerning tax filing
  and tax returns are complicated. Many people in
  the US do not have the correct idea of the
  governance and compliance concerning taxes. We
  strongly encourage you to opt for consultation
  with the tax firm to better equip yourself with
  the rules and regulations around tax filings.
  This will mitigate the risk of any potential
  penalties and fines.

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