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The Consequences of Being a US Citizen Living Abroad Not Filing Taxes

If you are a US citizen, the rules for filing and paying taxes are the same whether you are in the United States or living abroad. Even if you are a permanent resident or citizen of a foreign country, you are still required to report your worldwide income.

Just like every US resident, if you’re living abroad and fail to file your US or state taxes, you can receive a penalty for not filing taxes, even if you do not owe taxes. The failure to file penalty could be thousands of dollars, being disqualified from benefits that will reduce your tax obligation, or worse.

Revocation or Denial of Passport

Beginning January 2018, if you have a serious tax debt, the IRS to will be able to notify the State Department who will then have the authority to revoke your US passport or deny your request for a passport.

Many US citizens living aboard assume that they only have tax obligations to their current country of residence and overlook their US tax duty. However, you need to be aware that America has tax treaties with over 40 countries where the IRS and the foreign tax agencies exchange tax data on their residents.

America vigorously pursues taxes worldwide - so don’t expect to avoid US tax debt by moving overseas.

The Australian and US government are actively working to mutually share private citizen data, such as Australian bank accounts. As a consequence of FATCA, banks are now required to divulge the identification and account details of US citizens to the IRS. Opening a new bank account in Australia requires disclosure as to whether or not you are a US citizen.

It’s highly likely that the US government already has your details in a database, particularly if you are eligible for or have a social security number. You still should file a return with the US every year, whether you have income or not.

When to File?

If you are a US citizen living abroad, you are allowed an automatic 2-month extension to file your return without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15th. However, you must pay any tax due by April 15 or interest will be charged from April 15th.

Complexities to Consider

There are some complications around Australian income and superannuation when filing a US tax return, such as you must express the amounts you report on your US tax return in US dollars. So, if you receive your income or pay some or all of your expenses in foreign currency, you must translate the foreign currency into US dollars.

Fortunately, If you have not filed your US tax returns or complied with your reporting requirements, for however many years, we can help you. No matter how complicated your US tax return is, we’re ready to help.

Back9 offers personal, high-quality, hands-on advice that is specifically designed to suit your circumstances, get in touch with us today.


The opinions in this post are intended for general information purposes only and should not be used as a substitute for professional advice. Back9 is not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.


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