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Tax Extension for U.S. Expats & Overseas Contractors

posted Apr 15, 2013, 11:34 AM by Krozel Capital

If you are a U.S. citizen or green card holder living abroad, you have no reason to go crazy today and try to file your U.S. federal taxes or an extension. Why, you ask? The IRS gives you an automatic two month extension to file your federal tax return until June 15th. You don’t have to file an extension, call the IRS, or do anything but be overseas to qualify. Note that this is only an extension to file and NOT an extension to pay (of course the IRS still wants their money by April 15th!). But if you do think you owe money to the IRS this year but have not made a payment yet, the IRS won’t hit you too hard. As long as you make a payment by June 15th, 2013 the IRS will only charge you interest (currently at 3%) and no penalty. For example, if your total 2012 tax ends up being $10,000 and you file/make your payment June 15th, 2013 the total interest would only be $50 (61 days of interest at 3%).

If you are a civilian contractor working in a combat zone or contingency operation to support the armed forces, you qualify for the special extension available to military personnel (Per IRC Section 7508). The extension related to military service is 180 days from the last day of qualifying service or hospitalization, plus the number of days you had left to file when you began qualifying service.

For example, if you began serving in a combat zone on April 1, 2013 you had 15 days until your 2012 filing deadline. You will then have 195 days from your last day of service to file the 2012 return and pay any taxes due, or 180 days plus the 15 remaining from April 2013.  Although contractors do get this automatic extension, you may want to go ahead and take care of your filings now, as it is one less thing to worry about when you get home. If so, do not hesitate to contact me.

Another deadline you don’t want to forget though is the deadline to file your FBAR (Form TD F 90-22.1). This form might be required if you have foreign financial accounts. The deadline for this form is June 30th and there is no extension available. For more information on the FBAR see my last post.

If you need help filing your taxes or if you moved overseas in 2012 and are unsure of how to file, please feel free to contact me.