What Happens If You Don’t File Taxes While Living Abroad?
Filing taxes is one of the most important responsibilities for American citizens, regardless of where they live. When you are living abroad, it is vital that you still file a return to the U.S. government each year.
If you fail to do so, there can be severe consequences. You may get hit with steep fines and interest charges from the IRS, legal proceedings could begin and prevent you from ever returning to the states, and you stand to lose any tax refunds that may be coming your way in addition to having other financial issues. It truly pays off to make sure your taxes are taken care of correctly every year no matter where you call home. In this blog post, we’ll go over the consequences of missing the tax return deadline, so you can avoid any costly mistakes.
Those who are citizens of the United States but live outside the country and fail to file their taxes there could be subject to fines, interest fees, or even criminal prosecution. Both late filings and late payments are subject to penalties by the Internal Revenue Service.
Key Takeaways
- It is important to file taxes while living abroad as a U.S. citizen, and failure to do so could have serious consequences.
- The IRS can impose fines, interest fees, and criminal prosecution for late filing or late payment of taxes.
- Consider seeking professional help if you have any questions or concerns about filing taxes while living abroad. By understanding the consequences of not filing your taxes, you can ensure that no mistakes are made and stay on good terms with the Internal Revenue Service.
Reasons for not filing taxes while living abroad
Lack of knowledge about tax laws and requirements
The main reason is that people are not aware of the importance of filing their taxes. This is because they think it will take too much time and effort to file their taxes.
The second reason why people do not file their taxes while living abroad is that they do not know how to file their returns or they have no idea where to start. They might be used to filing their taxes at home, but there are different rules in foreign countries (like a foreign earned income exclusion) and they need to get used to them.
The lack of knowledge about tax laws and requirements is one of the reasons for not filing taxes while living abroad. That’s why the first thing you need to do when you arrive in a new country is to get a local tax number. This number will allow you to file your taxes in that country. You will also be able to receive all of your social security benefits.
Difficulty in accessing tax forms and resources
For one thing, it’s hard to access the forms and resources you need when you’re in a different country. You might not have a local accountant or tax preparer, and the companies that provide those services may not be available online.
Besides, the most common way to file taxes is to use software that can be downloaded onto a computer. However, this type of software is not always available in other countries or perhaps where you are living, which can make things more difficult for you. Another option is to use paper forms that you can print out at home or download from the internet when you get back home.
However, this can also be an issue for some people who live in remote or rural areas where there may be no computer access at all. That’s why filing taxes can still be a challenge in the present time.
The belief that taxes do not need to be filed because of living abroad
When you live abroad, it can be difficult to get a handle on your taxes. In fact, there are some people who believe that filing tax returns isn’t even necessary while they’re living overseas. However, this is one of the reasons why it’s important to file a federal tax return (or at least most states’) while living abroad.
If you choose not to file your taxes while living overseas, you’ll have to pay penalties and interest on any unpaid taxes. This could add up quickly, especially if you have numerous deductions that could be applied to your tax bill.
In addition, if you don’t file your taxes and then decide later that you want to file them after all, it’s going to be difficult for you to get them done by the deadline—and this could cause problems down the road with things like loan approvals or credit card applications.
If you want to work for a US company, but are living abroad check this article out where I discuss how to go about it. With the right guidance, you can find the job of your dreams and make a successful transition from living abroad to pursuing your career in the US.
Consequences of not filing taxes while living abroad
Penalties and fines
A tax debt is a fine or penalty assessed against an individual or business for failing to file a tax return, pay a deficiency or pay the correct amount of tax. If you are living in another country, it is critical that you file your taxes as soon as possible so that you can avoid penalties and fines.
Penalties and fines can be assessed by any government agency. They range from small amounts to very large amounts depending on the severity of your failure to file your taxes.
Penalties can also be temporary or permanent in nature depending on how long it has been since you filed your taxes, how many returns have been filed since then, what type of income is involved, and whether you actually paid all or part of your tax liability at some point in time (read more about late payments). Nevertheless, to avoid all of these, you just have to pay the corresponding amount of taxes every month.
Difficulty in obtaining a passport or renewing a visa
In today’s world, you can be anywhere in the world and still work for a company. While this may seem like a great thing, it also means that you have to be able to travel wherever your job takes you. If you live abroad, however, then getting your passport or visa may become more difficult than ever.
If you are living in another country and don’t pay taxes while living there, then it is extremely likely that your government will not recognize your income while abroad. This could mean that they won’t grant you a passport or visa, even if all other requirements are met. This is because they do not want people who are not paying taxes to be able to leave their country without paying their fair share first!
Difficulty in re-entering the country
If you’ve been living abroad for a long time, it may be difficult to get back into the country without filing taxes. This is because your return will be delayed by the processing of your paperwork and the need to ask for special permission from the IRS. That’s why it’s definitely worth filing your taxes once you live abroad so that you will not face any legal consequences in the future.
Other Risks
In the worst-case scenario, you could face legal repercussions. A criminal charge is a formal accusation of a crime against the law. If you are facing these charges, you need an experienced tax attorney to represent your interests and ensure that your rights as an American citizen are protected.
Solutions for avoiding the consequences of not filing taxes while living abroad
Seeking professional help from a tax advisor
With the advent of tax-exile and offshore tax planning, there are many people who choose to live outside their country for a period of time. They can do this for work purposes or for personal reasons. If you are one of these people, then it is important that you file your taxes as soon as possible so that you can avoid penalties and interest charges.
Here are some reasons why you should seek professional help from a tax advisor:
You need guidance on how to file correctly: If you are filing your taxes abroad, then there are certain things that you need to know in order to comply with all laws and regulations. In addition, it is important for you to seek out advice from experts who know how to work around all problems on the ground.
It will help keep your records safe: If you have filed all necessary documents in foreign countries, then they will be safe from the prying eyes of government agencies or other organizations which could access them without your consent. This can result in higher penalties and fines if they determine that something has not been done correctly or legally at all times during your stay outside the country.
It will save time and money: Tax advisors have many years of experience helping people avoid penalties and fines for not filing their taxes correctly. They’ll be able to advise you on what steps you need to take so that you don’t end up paying any additional money because of this mistake.
Utilizing resources provided by the government and embassies
The United States is a country that has many resources and benefits for its citizens. The government of the United States has provided American citizens with various facilities and services to live in peace and happiness. However, one of these facilities is the embassy or consular services.
The embassy or consular services are provided by the government of the United States to its citizens who have gone overseas but still want to stay in touch with their friends, relatives, and family members back home.
The US Embassy in your home country can provide you with lots of information regarding your tax issues, which will help you avoid any penalties or fines imposed by the IRS on your account while staying abroad. It is advisable to use this facility since it will help you get rid of any problems related to taxes while living abroad.
Staying informed about tax laws and requirements
When you live abroad, it is important to stay informed about tax laws and requirements. If you are not filing taxes in your home country, you can face serious consequences if you return to your home country and find out that you owe money for taxes.
Even if your employer has filed your taxes for you, you must still file your own taxes. You do not want to find out later that your employer did not file them correctly or did not include all of the income that you earned while living abroad.
The IRS has several resources available on its website that can help with this process. Including where and when to file taxes and extensions of payment for resident aliens living abroad.
What Happens If You Don’t File Taxes While Living Abroad FAQs
What happens if you don’t pay taxes as an ex-pat?
If you are a non-resident alien and have not paid income tax in the United States, you may be subject to penalties and interest. The IRS can impose penalties on you for failing to file tax returns, failing to pay taxes, failing to pay estimated taxes, and failing to file an extension of time to file.
Additionally, the IRS can assess interest on any unpaid tax liabilities. This includes penalties and interest assessed under your original return as well as interest on any subsequent collection activity against you or your assets.
Can the IRS go after you in another country?
Yes, they can. In general, the IRS can go after you in any country if you owe them money or have other tax obligations to them. However, they cannot do so if the property you own is foreign property.
Which countries do not report to the IRS?
There are a number of countries that do not report to the IRS. This is commonly due to the fact that they have no tax treaties with the United States, or they do not have a corporation in the U.S.
Some examples of countries that do not report include:
- Bermuda
- The United Arab Emirates
- Monaco
- The Bahamas
How to Avoid Double Taxation on Foreign Income?
You may not be aware of the fact that you could be subject to double taxation on your foreign income. Double taxation is when a country taxes you twice on the same income, which would be legal under US law.
One way to avoid double taxation is by using a tax treaty between the US and your home country. These treaties can help you avoid double taxation, but they only apply if your home country has signed one too.
Does the IRS forgive tax debt after 10 years?
The IRS can only forgive or suspend interest and penalties if you have reached the statute of limitations on your tax liability. In this case, the maximum year is 10 years and beyond that, you have to pay the amount of tax you did not pay from the time you filed taxes.
Conclusion
Taxes are a necessary part of living abroad, no matter your location or cultural background. It can be difficult to wrap your head around the new laws and regulations when you move to a new country, but staying up-to-date with the current tax requirements will put you in good standing with local governments.
Taking the necessary steps to remain compliant will save you from potential consequences down the road. Not filing your taxes correctly could mean extra fees, delays, and even legal issues that could keep you from continuing on with daily life as easily planned. Staying organized and prepared for filing season each year is always a smart decision for any ex-pat.
Doing so can be complicated, so it’s very important to stay informed and compliant with the relevant tax laws to avoid potentially costly penalties. We are here to help: subscribe to our newsletter for the best information about living in Thailand or reach out to us directly with any questions you have regarding filing your taxes while abroad.
