US Federal Tax Return Filing Deadlines & Penalties

You’re late! The April 17th deadline has now passed. If you haven’t done so already, you need to start thinking about what your options are for minimising your penalties for filing and paying tax late.

For the avoidance of doubt, this is for Federal taxes only and does not include any State tax return penalties. If you are concerned about your State tax return filing obligations and any associated late filing penalties, please get in touch with us to discuss this further.

Do I qualify for an Automatic Extension?

If you were residing outside the US on April 17th, 2018 and your main place of business was also outside the US then you will qualify for the automatic two-month extension which extends your filing deadline to June 15th, 2018. This also includes individuals on military or naval services outside of the US.

So, in short, if you’re a US expatriate your first filing deadline would be June 15th, 2018.

This is also an automatic extension of time to pay as it delays any late payment penalties to June 15th. However, interest will still run on any tax that you may owe from April 17th.

IMPORTANT: You do not need to apply for this extension however you must file form 4868 (explained below) before June 15th to receive the further four-month extension to October 15th.

Form 4868

By filing Form 4868, you can extend your filing deadline to October 15th, 2018. This extension is available to everyone. If you are an existing client of ours and we file your US tax returns, then we will have prepared this extension and filed it for you.

It is worth noting that Form 4868 is only an extension of time to file and not an extension of time to pay! There is a separate penalty regime for late payments which has been detailed below.

What if I didn’t file an extension?

If you were required to file a tax return by April 17th and you did not file a valid extension, then my advice is to file and pay as soon as possible. You will have started to accrue penalties from April 17th.

All penalties are assessed on the tax due with the return. If you miss the filing deadline, you will be charged 5% of the amount of unpaid taxes for each month (or part of a month) that the return is late, up to a maximum of 25%.

You may be able to avoid the penalty if you have a reasonable explanation for filing late, which you should attach as a statement to your tax return. N.B. PJD Tax Consultants Ltd do not advise as to what constitutes as a reasonable excuse.

Other Penalties

If you were unable to make an advance payment before the deadline, then you will be charged with interest and a late payment penalty. The late payment penalty is charged at 0.5% of the unpaid tax for every month (or part of the month) that the return is late.

This penalty will be charged from April 17th, 2018 (or June 15th if you are residing outside of the US on the deadline)

IMPORTANT: Late payment penalty is in addition to interest which is charged at the Federal Short-Term Rate (currently 1.18%) plus 3%.

October 15th, 2018

So, what happens if you get to October 15th, 2018 and you still haven’t filed or paid? Under special circumstances you may be granted a further two-month extension through to December 17th, 2018. This extension must be applied for by writing a formal letter to the IRS with an adequate and legitimate reason for filing late. We must stress that this extension is not guaranteed.

Timeline
April 17th, 2018First filing date for everybody

Interest runs from this date on anything you owe

Late payment penalty runs from this date for individuals residing in the US

June 15th, 2018Automatic extension for individuals residing outside the US

Late payment penalty runs from this date for those eligible for this extension

October 15th, 2018Everyone can apply for a 6-month extension (or 4 months if eligible for the June extension)

This delays late filing penalties but not the late payment penalty

December 17th, 2018An extension of time to file under special circumstances only

What if I am late filing tax returns for tax years prior to 2017?

There are options available to individuals who haven’t filed tax returns in several years. Subject to a few conditions, an individual can get back into the US tax system without incurring any late filing penalties. Please see our relevant article for more details:

http://pjdtax.co.uk/updates/post/delinquent-us-tax-filers

It is also important to think about your other filing obligations such as state tax returns and your FBAR. More details about your FBAR filing can be found here:

http://www.pjdtax.co.uk/updates/post/what-is-the-fbar-and-do-i-need-to-file-one

Should you have any further questions or would like more information regarding US tax return filing deadlines and penalties please do not hesitate to contact us.

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