It seems it was only a matter of weeks ago I was writing about the beginning of the tax year, but we’re now already at tax deadline time, 15th April.
But, I’m frequently asked “isn’t there a 15th June deadline for US citizens overseas?”. Here’s an explanation.
Our article today is fairly brief, as we are in the midst of our busiest period of year.
Tax Deadline
The US tax system has a number of deadlines throughout the year, with the main deadline being 15th April each year. This date can vary if the 15th falls on a weekend, or a public holiday.
On 15th April, US taxpayers are expected to have filed their tax return (or filed for an extension), and paid any tax owing to the IRS.
An extension of time for filing can be requested, and is automatically approved, moving the filing deadline up to 15th October. This must be requested using Form 4868, prior to 15th April.
However, even when the tax filing deadline is extended to 15th October, the deadline to pay any tax remains as 15th April.
Taxpayers Overseas
US taxpayers overseas receive an automatic extension of time to 15th June each year. No application or request needs to be submitted to the IRS in order to receive this.
As you may have expected, the deadline to pay any tax still remains at 15th April.
“Estimated Tax Payments”
For those who expect to have a tax liability, but know that their tax return will not be ready by 15th April, we recommend making an estimated payment of taxes to the IRS.
Whilst a payment such as this is commonly referred to as “estimated tax”, it is actually a little different to the estimated tax system, which requires taxpayers to make instalment payments throughout the year.
For taxpayers who expect to owe tax, but don’t yet know the accurate amount by 15th April, we recommend making a 2023 estimated balance due payment on the IRS website (http://irs.gov/payments).
The taxpayer should usually pay at least the same amount they owed on their most recent tax return. In most cases, provided the taxpayer pays at least the same amount they owed last year, as an estimate for this year, then the IRS will not subject the person to an “estimated tax penalty” if indeed the final amount of tax calculated is higher than what was estimated.
For those who didn’t have a tax liability last year, then a best estimate of what their tax liability will be this year, should be prepared.
Commonly, clients will tell us “I think I’ll owe tax this year, but it’ll be less than last year”.
In this case, we recommend still paying at least the same amount as last year, in the knowledge that for any overpayment, we can get this refunded when their tax return is filed.
At The US Tax Team New Zealand, we assist all of our clients with estimated tax payments. For any tax advice or consulting, contact us today at info@usatax.nz.
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