US TAX RETURN FILING DEADLINES & PENALTIES

Your US tax return is due on April 15th. If you are unable to meet this deadline, then 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 the Automatic 2-Month Extension?

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

So, if you are a US expatriate, your first filing deadline would be June 15th.

This delays any late filing penalties, but importantly, it is also an automatic extension of time to pay which delays late payment penalties to June 15th. Interest will accrue on anything you owe from April 15th.

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.

More info can be fund here on the IRS website – Automatic 2-Month Extension

Are there any further extensions available?

Yes, but this must be requested on Form 4868. By filing this form, you can extend your filing deadline to October 15th. 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 and filed this extension on your behalf.

Unlike the automatic 2-month extension above, 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 is detailed below.

What if I didn’t file an extension?

If you were required to file a tax return by April 15th and you did not file a valid extension, then our advice is to make a payment to the IRS as soon as possible. You will have started to accrue interest and penalties from April 15th.

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. PJD Tax Consultants Ltd do not advise as to what constitutes as a reasonable excuse.

What are the Late Payment 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 15th (or June 15th if you are residing outside of the US on the deadline)

IMPORTANT: The late payment penalty is in addition to interest which is charged at the Federal Short-Term Rate (3.63% at the time of writing) plus 3%.

What if I am unable to file by October 15th?

For individuals residing outside of the US, it is possible to apply for a further 2-month extension to December 15th. This extension must be applied for in writing with a formal letter posted to the IRS showing an adequate and legitimate reason for filing late. We must stress that this extension is not guaranteed.