Coronavirus (COVID-19) tax impacts for U.S. expats living abroad
Editor’s Note: This article was originally published on March 19, 2020.
As an American living abroad, you are likely trying to keep up with important updates in the U.S. and at home during the coronavirus pandemic. While taxes may not be your top concern at this time, we understand you may have questions about what’s changed and what it means for your 2019 return.
You might have heard the Treasury Department announced a 90-day tax payment extension. This change gives all taxpayers, including expats, additional time to file and pay their income tax bill—until July 15, 2020.
What about your state tax deadline? Some states are following the federal changes, while others are setting their own deadlines. Review coronavirus state tax information.
Frequently asked questions about the payment extension
Get answers from our Expat Tax Services team.
Q. Who is eligible for the tax filing and payment deferral?
A. The following types of filers are eligible to use the special coronavirus tax extension.
- Individual Form 1040 filers
- Corporations filing Form 1120
- Trusts and states filing Form 1041
- Fiscal year partnerships, associations and companies with due dates on April 15, 2020 (uncommon)
Q. What do I need to do to delay my tax and filing payment?
A. You must file your tax return or extension by July 15, regardless of whether you’re living and working in the U.S. or abroad. The 90-day tax payment deferral itself is automatic when you file, which means interest and penalties are automatically waived for 90 days and won’t accrue for qualifying taxpayers and businesses until after July 15.
Q. What if I need more time to prepare my return?
A. You must file Form 4868 to request an extension by July 15, 2020, depending on where you’re living and working. This extension would give you until October 15 to file your return, but your payment would still be due by the extended payment deadline, July 15, 2020.
Q. What if I’m getting a refund? Does this news affect me at all?
A. It should not affect you if you’re receiving a refund. The Treasury Department says you should still expect to receive your refund within the normal time period (9 out of 10 are received within 21 days of electronic filing).
Q. What types of payments does this deferral cover?
A. It covers income tax payments, as well as any normally associated interest and penalties, such as the failure-to-pay penalty. It also covers estimated tax payments (included payments of tax on self-employment income) due on April 15, 2020, for the 2020 tax year.
Q. How much can I defer?
A. There is no limit on the amount of tax payment you can defer.
Q. Does this deferral apply to 2020 estimated tax payments (including estimated self-employment taxes)?
A. It depends on the payment date.
- First quarter 2020 estimated tax payment – The deferral includes this estimated tax payment otherwise due on April 15, 2020.
- Second quarter 2020 estimated tax payment – The deferral does not apply to this tax payment due on June 15, 2020. In addition, the penalty for failure to make estimated tax payments for 2019 is not waived or deferred.
Q. Does this announcement mean I don’t owe taxes for 2019?
A. No, the deferral only extends the due date of when your tax liability is due. Interest and penalties will again accrue on outstanding tax liabilities starting July 16, 2020. The deferral does not exclude or exempt taxpayers from filing if they are already required to file.
H&R Block Expat Tax Services is here to help
Our expat tax advisors will be standing ready to help you file your U.S. taxes with our virtual services. You can rest assured that we’re able to process your returns without disruption.
At H&R Block, we’re committed to providing information you can trust that you can use to help navigate the changing tax landscape. If you’d like to stay informed about the tax impact of the coronavirus pandemic, visit our Coronavirus Tax Impact page for the latest information.