American citizenss who choose to live abroad expect a certain amount of adjustment when they arrive at their new home, but if you scan online chat rooms, it’s pretty clear that expats have a lot of questions – and some of them didn’t even occur to them until they’d already emigrated.
If you suspected that taxes were the top concern in these chat rooms, then you are correct. The United States is one of a handful of countries that have a citizenship-based tax structure instead of a residency-based system, and this often creates confusion among those new to the process. Adding to the turmoil is the fact that tax dates that people have been accustomed to their entire adult life, such as April 15 (tax filing deadline) can be completely different when you live outside the 50 states.
Plus, depending on the country you moved to, you may have different deadlines for filing your foreign taxes. In Australia and the United Kingdom, for example, the tax year follows a fiscal calendar instead of the annual one.
Last year brought even more bewilderment to the table as tax deadlines were often extended due to the COVID-19 health pandemic.
If you live abroad or are planning a move later this year, here’s a brief rundown of what you need to know when it comes to taxes and deadlines in 2021:
- June 15 is the filing deadline for expats, rather than April 15, although estimated tax still needs paying by April 15 if any’s due
- Oct. 15 is filing deadline for expats who applied for an extension to the Internal Revenue Service (IRS). All expats receive the extension even if they didn’t specifically request it
- Oct. 15 is the Foreign Bank Account Report (FBAR) deadline using the FinCEN Form 114. Note: This form is not to be filed with federal tax returns. Instead, it needs to be separately submitted electronically using the Financial Crimes Enforcement Network’s BSA E-Filing System. It is possible to file using a traditional paperwork system, but an exemption must be obtained.
Remember, the FBAR is required for United States citizens, residents, businesses and estates with financial interest in or authority over a foreign financial account or multiple accounts that total more than $10,000 at any time during the calendar year.
If you are filing taxes abroad as a U.S. citizen and you are having trouble gathering up your tax documents in another country, don’t give up. Resist the urge to ignore the filing deadlines and instead request and extension.
Above all, seek the professional services of a tax preparer who is familiar United States citizens filing taxes from abroad. Filing your taxes while living abroad is overwhelming the first year after you move and in all likelihood, it won’t get any better the following years, either. An expat tax specialist can help you adhere to all tax deadlines and claim credits and exclusions for expats as well.