Tax Extensions for Americans Living Abroad

It’s important for US expats living abroad to know that many of the tax filing deadlines and available extensions differ considerably compared to filing within the US.  The following is a chronological listing of the filing deadlines and extensions applicable to US expats over the course of the tax year.

April 15th – Federal Income Tax Payment Deadline for Expats

It is critical for US expats to be aware that any federal income tax liability payable with their tax returns is due no later than April 15th, despite the fact that expats living abroad receive an automatic extension to file their returns until June 15th.  Very often however, expats do not end up owing any US federal income tax liability, due to being able to claim the Foreign Earned Income Exclusion (FEIE) to exclude their foreign earned income from US federal taxation, or the Foreign Tax Credit (FTC), to claim a credit for foreign income taxes paid on their earned income, to avoid double taxation.

June 15th – Tax Return Filing Deadline for Expats (Before Extension)

As mentioned above, US expats residing abroad receive an automatic extension until June 15th to file their US federal returns.  If additional time is needed to file their returns beyond June 15th, the IRS will automatically grant an additional two months to file (until October 15th), if an extension is timely filed on or before June 15th on Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

October 15th – Extended Tax Return and FBAR Report Filing Deadline for Expats

An expat’s federal return is automatically extended until October 15th, if Form 4868 has been filed.  If the expat living abroad is required to file a Report of Foreign Bank and Financial Accounts (FBAR) on FINCen Form 114, it is also automatically extended until October 15th by the US Department of the Treasury’s FINCen bureau.

An FBAR report is required to be filed if an expat or other US persons had a combined balance of $10,000 or more in their foreign bank or other financial accounts (including investment, insurance or pension accounts) during the year.

December 15th – Latest Possible Extended Deadline for Most Expats

US expats residing abroad who are unable to file their returns by October 15th have one additional opportunity to extend them for two months, until December 15th – but the extension is not automatic (unlike the first extension filed on Form 4868) – and the expat (or his or her tax preparer) must physically write a letter to the IRS postmarked before October 15th requesting the additional two-month extension, and explaining the reason why the additional extension is needed.  The letter should include the expat’s full name and Social Security number, the tax year and return to be filed.  The explanation should be detailed and explain the reasons why the additional extension is needed – for example, extra time is needed due to waiting on foreign tax statements, or to obtain missing US investment income documents due to being abroad.

The IRS address to send the additional extension request letter is as follows:

Department of the Treasury

Internal Revenue Service Center

Austin TX 73301-0045

Expats requesting the additional extension to December 15th should bear in mind that the extension is granted at IRS discretion – it is not automatic – and that the IRS only notifies taxpayers who have been denied the extension.

I’m a New Expat Who Needs More Time Beyond December 15th in Order to Qualify to Claim the Foreign Earned Income Exclusion (FEIE) – Is There a Special Extension for That?  When Does It Need to be Filed?

There is in fact a different extension form which new expats may use to qualify to claim the FEIE for the first time, beyond the last available extended deadline of December 15th – it’s Form 2350, Application for Extension of Time To File U.S. Income Tax Return For U.S. Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment.

Expats may use Form 2350 to obtain a special extension to obtain more time to meet either the Physical Presence Test or the Bona Fide Residence Test, either of which must be fulfilled to be eligible for the FEIE.  Form 2350 must be filed no later than June 15th, the unextended tax return filing deadline for US expats residing abroad.

It is important to note that the extension of time requested on Form 2350 is discretionary: the IRS may either approve or deny the request.  If granted, the extended filing date is normally up to 30 days following the date on which the expat expects to be able to meet one of the two tests to claim the FEIE.

If for some reason the expat is unable to qualify for the FEIE under either the Physical Presence Test or the Bona Fide Residence Test after the extension is granted for Form 2350, the expat should file the return as soon as possible.