Ingleton Partners on the US tax deadline changes announced by the IRS due to Covid-19 | Ingleton Partners
Tom LR Griffiths is a tax advisor and consultant, specialising in US expatriate tax matters
Tom LR Griffiths
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US government announces changes to US tax deadline due to coronavirus

Ingleton Partners on changes to US tax payment deadlines due to Covid-19.

Due to the unprecedented impact of the global pandemic caused by Covid-19, the US federal government has changed the deadline for filing and paying taxes. The IRS deadline for US citizens to file tax returns is now 15 July 2020. This was announced in a tweet by US Treasury Secretary Steve Mnuchin on 20 March 2020.

Under normal circumstances, US expats have an automatic extension until 17 June every year but have the same payment date as all other American citizens. At the time of writing, there are no further details available for US expats on whether their date has changed, but we can assume it probably will.

US tax deadline has changed for payments and filing

The US tax system is one of the most complex in the world, and one of just two that continue to tax its citizens regardless of where they live and work. And due to the coronavirus sweeping the world, the tax system is set to be even more complex.

This means there is now four months before filing day for US citizens, and this is also the payment deadline. The payment deadline had already been extended on 17 March 2020, leaving the filing date the same as normal. However, in an escalation of US federal government steps to fight the economic challenges due to the global pandemic, this has now changed.

On 17 March 2020, US Treasury Secretary Steve Mnuchin also announced that individuals will be able to defer up to $1 million in tax liability. Businesses will get an extension on up to $10 million. At the press conference announcing these tax changes, Mnuchin said to US citizens: “All you have to do is file your taxes. You’ll automatically not get charged penalties and interest.”

File as soon as possible to get your return

Despite these changes, the IRS is keen to warn individuals that they should make every effort to file their taxes as soon as possible. In a follow up tweet, Secretary Mnuchin said: “I encourage all taxpayers who may have tax refunds to file now to get your money.”

These extensions are part of the US federal government’s package of economic measures that they hope will stem the destructive economic effects of Covid-19.

Any payments deferred on income taxes for up to 90 days after the filing deadline will not be penalised or incur interest. In 2019, from the tax returns processed, almost three-quarters of American citizens received refunds. The average tax refund was $2,725.

Further measures may be announced

There are no more details about US expat taxes at this time, and at Ingleton Partners, our advice is to file as soon as possible. Filing taxes still remains a priority for US expats living in the UK and in other countries. Details are likely to alter in the coming weeks, as governments take necessary measures to try and mitigate the fallout from this pandemic.

The 90-day tax waiver announced by Mnuchin does apply to US expats and greencard holders as well as to citizens living in America. But US expats have other obligations, including reporting foreign bank accounts and financial arrangements using the FBAR form. This includes all business, joint and personal accounts held by the US expat, or that they are signatories for. The balance of all accounts must add up to $10,000 or more. Form 8938 for the Foreign Account Tax Compliance Act must also be filed. This discloses all overseas and foreign assets.

For advice, US expat tax assistance and to ensure you are fully compliant, talk to Ingleton Partners. We have decades of combined expertise in filing US and UK taxes, and can ensure that your finances are fully up to date.