Filing Taxes Late as a U.S. Expat

What Happens If You’re Filing Taxes Late?

If you file your federal income tax return late and owe taxes, the IRS imposes a failure-to-file penalty, which is typically 5% of the unpaid taxes for each partial month the return is late, up to a maximum of 25%. Additionally, you’ll owe interest on the tax owed, which compounds daily. If you fail to file for more than 60 days after the tax filing deadline, the minimum penalty is either $485 or 100% of your total tax owed, whichever is less.

However, many US expats do not have any tax owing due to exclusions and credits such as the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC). If your tax liability is zero, you won’t be subject to these failure-to-file penalties.

That said, there are other penalties the IRS assesses for failing to file certain forms, such as:

• Form 8938 (Statement of Specified Foreign Financial Assets)
• Form 5471 (Information Return of US Persons with Respect to Certain Foreign Corporations)
• Form 3520-A (Annual Information Return of Foreign Trusts with a US Owner)

Each of these forms carries an automatic $10,000 penalty for non-filing.

Additionally, repeatedly filing late or failing to file can lead to IRS collection notices, liens, or even passport revocation under the Fixing America’s Surface Transportation (FAST) Act. To avoid these consequences, it’s crucial to file your taxes as soon as possible, even if you can’t pay the entire amount owed.

For more details on tax penalties and fines for US expats, visit our Penalties FAQ section.

To avoid penalties and interest, taxpayers should file their tax returns on time, pay their tax bills in full by the deadline, make estimated tax payments if required, and keep accurate records.

Can the IRS Seize Foreign Assets?

Yes, the IRS can seize foreign assets, but enforcing collection outside the U.S. is more complex. While the IRS does not have direct authority over foreign banks or governments, it can work with tax treaties, foreign financial institutions, and international agreements to collect unpaid taxes. Additionally, the IRS can freeze U.S.-based assets, revoke passports under the FAST Act, and levy penalties to pressure compliance. If you have unpaid tax debts, it’s important to understand your risks and options.

For a detailed explanation, check out our full article: Can the IRS Seize Foreign Assets?

How Do I Request a Tax Filing Extension?

To request a tax extension, submit Form 4868 by the tax filing deadline (usually June 15 for US expats). This gives you until October 15 to file your taxes. Note that an extension only applies to filing, not paying. If you owe money, you must still pay by April 15 to avoid penalties and interest.

Can You Get a Tax Extension Beyond October 15?

Yes! While the standard tax extension moves the filing deadline to October 15, U.S. expats can request an additional extension until December 15. This extension is not automatic—you must submit a written request to the IRS explaining why you need more time.

At 1040 Abroad, we can prepare this extension for you free of charge to ensure you stay compliant without stress.

For more details on how to extend your deadline to December, check out our article: Filing an Extension to December 15.

How Do I Catch Up on Back Taxes?

If you’re a U.S. expat who hasn’t filed taxes in years, you’re not alone, and the IRS understands that many expats are unaware of their filing obligations. To help expats become compliant without penalties, the IRS offers amnesty programs such as:

• Streamlined Compliance Procedures – A great option for expats who didn’t know they had to file. It allows you to catch up on three years of tax returns and six years of FBARs without penalties.
• Delinquent FBAR Submission Procedures – If you only need to catch up on foreign bank account reports (FBARs) and have no unpaid taxes, this program allows you to file without penalties.

How to Get Started

STEP 1: Determine Your Filing Obligation – Not every expat needs to file, so first check if you meet the income thresholds and reporting requirements. If unsure, our Enrolled Agents at 1040 Abroad offer free tax advice to help you understand your situation.

STEP 2: See if You Qualify for Amnesty – If you’re eligible for a penalty-free program, you can catch up without IRS consequences.

STEP 3: Gather Income Information – Collect your income statements, foreign tax records, and any financial details for the required years.

STEP 4: File the Required Forms – Submit the necessary tax returns, FBARs, and other compliance forms based on your situation.

If you’re behind on taxes, don’t panic! There are safe ways to become compliant. Contact us at 1040 Abroad for free tax advice, and we’ll guide you through the process step by step.

How Many Years Should I File Back Taxes?

The statute of limitations for IRS audits is typically 3 years—but only if you’ve filed your tax returns. If you never filed, the IRS has the right to audit you indefinitely.

However, if you’re a U.S. expat who hasn’t filed in years and want to become compliant, you don’t have to file every missed return. In most cases, the IRS only requires:

• 3 years of delinquent tax returns
• 6 years of Foreign Bank Account Reports (FBARs) (since the statute of limitations for FBARs is 6 years)

For expats who failed to file because they didn’t know about their obligation, the Streamlined Compliance Procedures provide a penalty-free way to catch up. This amnesty program allows expats to file the required three years of tax returns and six years of FBARs without facing penalties for past non-compliance.

How Does the IRS Calculate Late Filing Penalties?

The IRS calculates late filing penalties as 5% of your unpaid tax for each part of a month your tax return is late, up to 25%. If you also owe taxes, a failure to pay penalty of 0.5% per month applies, also capped at 25%. These penalties accrue until the entire amount is paid or the maximum is reached.

Additionally, the IRS charges interest on the tax owed, which compounds daily and is adjusted quarterly. For late filers who miss the tax deadline by more than 60 days, the minimum penalty is $485 or 100% of the tax owed, whichever is less. If you believe the penalties are unjust, you can request penalty abatement by demonstrating a reasonable cause for filing late.

Can I Still Get a Refund If I File My Taxes Late?

Yes, you can still receive a tax refund if you file taxes late, but you must submit your tax return within three years of the original filing deadline. After this period, any refundable credits or overpayments are forfeited. If you’re due a refund, the IRS will not impose late filing penalties or interest. Always ensure you file your return as soon as possible to avoid losing your refund.

What is the Difference Between Late Filing and Late Payment Penalties?

The late filing penalty applies if you fail to file your tax return by the due date, while the late payment penalty applies if you owe taxes and don’t pay by the tax deadline. The failure to file penalty is 5% per month, up to 25% of your unpaid tax, while the failure to pay penalty is 0.5% per month, also capped at 25%. If both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty. Additionally, the IRS charges interest on the tax owed, which compounds daily. To avoid these penalties, ensure you file your taxes and pay any tax owed by the due date.

What Should I do if I Can’t Afford to Pay the Taxes I Owe After Filing Late?

If you can’t afford to pay your taxes, the IRS offers several options to help you manage your tax liability. You can set up a payment plan, which allows you to pay your tax bill in monthly installments. Alternatively, you may qualify for an Offer in Compromise, which lets you settle your tax debt for less than the entire amount. If you have a reasonable cause for filing late, such as a serious illness or natural disaster, you can request penalty abatement to reduce or eliminate late filing penalties. For taxpayers with foreign assets, the Streamlined Filing Compliance Procedures or Delinquent FBAR Submission Procedures can help you catch up without excessive penalties. Always communicate with the IRS to explore your options and avoid additional penalties and interest.