DESKTOP VIEW

US expat taxpayers: How to pay off IRS tax debts

Written by Phil  Bradford

Are you an American expat who owe money to the IRS? Or, are you thinking of escaping your US tax debt by moving abroad? If so, then beware! The IRS won’t leave you without grabbing its money. It’s because, the US has tax treaties with more than 42 countries, where the foreign tax agencies and the IRS interchange tax data on their residents.

If you stay outside America, you’re still liable to pay expat tax of your home country. Whether or not you have an income, you should file a tax return with the US each year.

Streamlined Filing Procedures: A rescuer to US expat taxpayers

Are you behind your US expatriate taxes? Yes? Then, don’t worry. The IRS has created a program named the Streamlined Filing Procedures by which you can pay off your US expat taxes. This program was created in the year 2012 to help US taxpayers living abroad to pay off their delinquent US expatriate taxes.

There is  good news for all the US expats. After the renewal of this program, the IRS waives of all late filing and FBAR penalties for US taxpayers living outside the country.

Now, let’s see…

How to file taxes through the Streamlined Filing Procedures

After you’ve qualified for Streamlined Filing Procedures you must check out the steps you need to take under this program:

  • You should file the last 3 years of US tax returns even if you’ve failed or submitted an incorrect tax return.
  • You must right in red ink at the top of each page the words “Streamlined Foreign Offshore” to indicate that you’re filing under this program.
  • To prove that your failure to file taxes was non-willful and to certify your eligibility for the program, you must “complete and sign a statement on the Certification by U.S. Person Residing Outside of the U.S.” If you fail to do so, you won’t receive the benefits of the program.
  • Include your tax ID number on your check while submitting payments for taxes or interest dues.
  • Submit an application to get an ITIN along with your return if you don’t have a Social Security number.
  • Last but not the least, you should gather all the necessary financial documents along with your payments and send it to the IRS in a paper form, not electronically.

Quick tip: You can take help from an expert tax consultant. He/she will make the procedure more easy for you.

Now that you know how to file your taxes while living abroad, let’s check out some tips by which you can settle your IRS tax debt.

Straight from the IRS: Tips to get out of tax debts

Want to become debt free soon? Don’t worry! The IRS proposes the following tips to pay off your tax debts:

1. Pay your tax bill

Pay your taxes as soon as possible once you receive a bill from the IRS. If you can’t pay the amount all at once, take out a loan and pay the bill in full. In doing so, you’ll save money on penalties and interest for late payments. Remember, the IRS charges a late penalty of 0.5% every month a tax bill goes unpaid (each month it increases until it reaches 25% of the total tax debt) and 3% per year on back taxes, penalties and interests.

2. Use the IRS direct pay tool

According to the IRS, the IRS Direct Pay tool is the best way to pay your taxes. You can pay your taxes freely and safely from your savings or checking accounts. You’ll get instant confirmation for your payment. With this tool, you can pay your taxes online. You can easily find this tool on the IRS website.

3. Pick up the short-term extension to pay

Can you pay all your taxes within 120 days? If so, then you may qualify to get the short-term extension to pay the IRS. For this, you can call the IRS at 1-800-829-1040 or request a short-term extension online using the Online Payment Agreement (OPA). Also, you don’t have to pay an extra fee for a short-term extension.

4. Opt for a monthly payment

If you can’t pay your dues in full to the IRS, you can apply for an installment payment. If you owe $50,000 or less, you may qualify for an online installment payment agreement with the IRS. According to the IRS, the direct debit payment plan is a low-cost and hassle-free way to pay your taxes. Plus, the set-up fee is also less than other payment plans.

5. Choose the Offer in Compromise (OIC)

If you want to settle your tax debt for less than the full amount and become debt free soon, consider applying for an Offer in Compromise (OIC) with the IRS. This option is best if you owe a huge amount of tax debt. You can use the IRS Pre-Qualifier tool to check whether or not you qualify for an OIC.

So, here’s what you need to know about paying off your tax debts even if you stay outside the country.

Protax Consulting Services Seven Penn Plaza, Suite 416
New York, NY 10001
Tel 212.714.9070
Fax 212.714.6654
protax@protaxconsulting.com

Member and Featured Faculty of:

American Institute of Certified Public Accountants

New York State Society of Certified Public Accountants

NYSSCPA’s 100%
Membership Program

Association of International Tax Consultants, U.S. Member

CCH Wolters Kluwer Faculty

Lawline Faculty

Furthered Faculty

Strafford Faculty

Clear Law Institute Faculty

Clear Law Institute Faculty

Contact Us for U.S.
International Individual Tax

wherever you are, .
wherever you go
- Download our FREE apps -


Download the Protax App on the App Store

Download the Protax App on Google Play

Member and Featured Faculty of:

  • American Institute of Certified Public Accountants
  • NYSSCPA’s 100% Membership Program
  • Association of International Tax Consultants, U.S. Member
  • Faculty
  • Faculty