Americans wondering What Happens If You Don’t File Taxes While Living Abroad. You may find it surprising that the IRS would consider them delinquent!. You should know that US citizenship comes with a lifelong requirement for filing taxes. The money is for the US government, regardless of where the American citizen in question is located.
Moreover, should your debt to the IRS reach a certain limit, they might revoke your passport!. How does the IRS find expats who have been delaying their taxes? We’ll explain that below.
The Way IRS Discovers Delinquent Tax Returns
One way of doing that is through the collection of information the IRS already has, such as with the W-2s or 1099s. Since they don’t know anything about the deductions, exclusions, or credits, the expat gets the estimated amount they owe. Thus, the limit of tax liability is missing, and you may end up paying much more than you would have originally.
Expats with late taxes do get noticed by the collective IRS. Then, they’re bound to check your tax standing. The actions that prompt such measures can include:
- Receiving the application for pension or social security benefits
- Finding out about your inheritance
- Discovering that you are renewing your passport
- Applying for an account overseas since the financial institution in question will report your finances to the US in compliance with the FATCA regulations
- Finding registration at the US embassy of a child you may have had abroad
- Catching your financial records being submitted to a US university
- Receiving your information from someone in an amnesty program
- Determining that you’ve entered the US with your foreign passport while being born in the US
- Going through your financial documents that show US citizen, which you submit to form an overseas corporation
However, there are other situations that could result in you getting flagged. Then the IRS must bring you into compliance. In short, any paper trails that you leave for the IRS can clue them in to your noncompliant tax status.
The IRS Crack Down
This summer, the IRS enforced some new compliance programs. Many of the latter seek expats with pending tax-filing requirements for IRS Payment. The organization is also allocating other resources in these areas:
- Expatriation
- S Corporations Built In Gains Tax
- High Income Non-Filer
- Post-OVDP Compliance
- US Territories – Erroneous Refundable Credits
- Section 457A Deferred Compensation for services before January 1, 2009
Actions Expats with Delinquent Taxes Should Take
Indeed, there are amnesty programs that are still available. Some of them even offer penalty-free advantages. However, they aren’t permanent and will only excuse you if you applied for them before the IRS catches on to your taxation status. The IRS incentivizes voluntary action, so more people will come forward. Therefore, this is a smarter course of action as opposed to waiting for the IRS to find you.
Have questions about What Does It Mean To Be Delinquent On Your Taxes? Then contact us before the IRS contacts you!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Akif CPA will not be held liable for any problems that arise from the usage of the information provided on this page.
