I filed before June 15. Why do I owe interest?

Even though the deadline to file is automatically extended to June 15 for expats, any tax owed must still be paid by April 15.

If you owe tax to the IRS and haven’t paid by April 15, you’ll have to pay accrued interest on the tax due.

This rule often proves problematic for expats. The only solution is to prepare your taxes (or at least estimate) before April 15 so that you’ll know for sure if (and how much) you’ll need to pay.

I owe an estimated tax. What should I do?

If you did not owe any tax last year, you do not need to make estimated tax payments before April 15.

If you think you may owe tax this year, please submit your documents as early as possible so we can prepare your return well before April 15 (your tax due will begin accruing interest).

If you owed U.S. federal tax last year and did not anticipate tax withholding through an employer:

You should make quarterly payments on your estimated taxes for the coming year. These quarterly payments assume a 10% increase in income.

If you failed to make estimated payments or if you paid too little:

You can eliminate the most significant part of the estimated payment penalties by filing your tax return early (filing a preliminary draft, based on the highest amount of tax you may owe) and paying the total amount no later than January 31. You can later file an amended return with the exact numbers and receive a refund if you’ve overpaid.

If you file by Jan 31:

You will still owe a penalty for failure to pay your estimated tax payments on time, but it will be relatively small (approximately $20 for every $1,000 which was not paid on time).

I am unable to pay the total amount of tax I owe. What are my options?

If you find yourself unable to pay the full amount of tax that you owe, you have two options:

Option 1

You can request a payment agreement online through the IRS website.

You will qualify if you owe $50,000 or less in tax, penalties, and interest combined and have filed all the returns required.

Option 2

If you are unable to request an agreement online or do not qualify, we can file an installment agreement request for you.

Regardless of which option you choose, you should pay as much as you can when you submit your tax return and then wait for the IRS to send you a bill for the unpaid balance plus penalties and interest. The installment agreement must be prepared for the full amount owed to the IRS including penalties and interest.

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