Over nine million Americans live overseas, and those whose global income exceeds IRS minimum thresholds have to file a US tax return. This filing requirement applied even if they also have to file foreign taxes or if the US has signed a tax treaty with their country of residence.
This is because the US taxes all US citizens, not just US residents.
What are IRS minimum income thresholds for US tax filing for expats? For 2020 tax year (so for tax filing in 2021), they are $12,400 for individuals, $24,800 for married couples, or just $400 of self-employment income for anyone, or just $5 of any income for Americans married filing separately with someone who isn’t a US citizen or green card holder.
To avoid double taxation, when expats file from abroad, they can claim either the Foreign Earned Income Exclusion or the Foreign Tax Credit by filing the relevant additional forms. Expats also often have to file other forms, such as a Foreign Bank Account Report to report their foreign bank and other financial accounts
Filing deadlines and extensions for expats differ compared to filing in the US, however.
Expat Tax Paying Deadline – April 15th 2021
April 15th is the day by which expats who owe US tax must pay it by.
However, most expats who claim the Foreign Earned Income Exclusion or the Foreign Tax Credit when they file won’t owe any US tax.
Expats that do end up owing US tax include higher earners, self-employed expats, and expats considered to be consultants.
For Americans living abroad, April 15th is just the deadline for paying US tax, but not for filing.
Expat Tax Filing Deadline – June 15th 2021
Americans living abroad receive an automatic two-month tax filing extension until June 15th. The reason for this is to allow them enough time to file their foreign tax return first.
“If you are a U.S. citizen or resident alien, your worldwide income is subject to U.S. income tax, regardless of where you reside.” – the IRS
In 2020, due to the Coronavirus pandemic, all Americans, including those living abroad, received a further extension until July 15th to both file and pay. However, the filing deadline for expats is expected to revert to June 15th in 2021 (and the expats tax payment deadline to April 15th).
Extended Expat Tax Filing Deadline – October 15th 2021
Expats who aren’t ready to file by June 15th 2021 can request more time by filing Form 4868.
Form 4868 is filed online and gives expats an additional four months to file, making the final filing deadline October 15th 2021.
Expats who still aren’t able to file by October 15th can request two more months until December 15th by writing to the IRS, although this is granted on a discretionary basis rather than automatically.
FBAR Filing Deadline in 2021
All Americans who have a total of over $10,000 in foreign financial accounts, including all of their foreign registered bank and investment (including pension) accounts, have an additional US annual filing requirement called a Foreign Bank Account Report (FBAR).
FBARs are filed online to FinCEN, the financial crimes authority, and while the FBAR form (FinCEN Form 114) isn’t the most complex form to file, penalties for not filing it are stringent. Foreign financial firms provide the same information to the US Treasury directly, so it’s an important requirement.
The FBAR filing deadline for US expats is April 15th, however there’s an automatically applied filing extension until October 15th.
Some expats need to be aware of a couple of other IRS filing deadlines in 2021.
For example, some forms must be filed by March 15th, such as those required by expats owners of foreign trusts and US-based S-corps and partnerships.
Furthermore, expats who have to pay estimated quarterly tax should note that these payments are due on April 15th, June 15th, September 15th, and January 15th.
Filing US taxes from abroad is different and more complex, with additional forms to file and multiple possible ways of approaching it. For this reason, expats most often benefit from seeking assistance from a US expat tax specialist.
Expats who haven’t been filing from abroad because they weren’t aware of the requirement can catch up without facing penalties using an IRS amnesty program called the Streamlined Procedure.