Fyi For Us Retirees: No Automatic 2 Month Extension To File

[Jingthing]

(US as in United States, not "us")

Just got off the phone to the IRS, and they told me the 2 month automatic extension both to file and pay does not apply to retired people living abroad. Instead, you must either have some foreign place of business abroad or be in the military. They said retirees living abroad must file the normal extension form (if you want an extension) which now gives 6 months to file, and no extension at all to pay owed tax (still due April 15).

BTW, there is always the chance the rep I talked to is totally wrong. Anyone else with a different opinion about this? She was very careful, and put me on hold to talk to consult with someone more expert though, specifically about the having no business or post abroad detail, and after that, she sounded pretty certain that retirees weren't eligible.

http://www.irs.gov/businesses/small/intern...d=96768,00.html

U.S. Citizens and Resident Aliens Abroad - Automatic 2 Month Extension of Time to File

You may be allowed an automatic 2-month extension of time to file your return and pay any federal income tax that is due. You will be allowed the extension if you are a U.S. citizen or resident and on the regular due date of your return:

* You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or

* You are in military or naval service on duty outside the United States and Puerto Rico

If you use a calendar year, the regular due date of your return is April 15.

Edited February 1, 2007 by Jingthing

[backflip]

Interesting. As a US citizen, I have never heard of an "automatic extension" for the rank-and-file. As far as I've known, you always had to file for an extension.

[lanny]

You shouldn't believe everything you hear on a call to IRS. I haven't seen any recent statistics but, in the past, the General Accounting Office has reported that as many as 60% of the answers in their tests were wrong! That's why you can't use anything you've been told as an excuse for something on your return, why IRS requires you to get a written statement (and charges you for giving one.)

In any case, this is wrong. In all my years working with expats, I have never had a problem on the two-month extension for my retired clients. If you are retired, your are in the business of receiving retirement benefits and your home is your regular place of business.

[PeaceBlondie]

Agreeing with lanny.

What I found interesting is that the overseas exemption is so automatic (you don't file a form, you don't beg permission to have it, you just let them know you were abroad on June 15), that if you wish to extend past June 15, you use the same extension form that residents of the USA use for an extension past April 15. At least, that was the case back in 2004.

[Tywais]

Agreeing with lanny.

What I found interesting is that the overseas exemption is so automatic (you don't file a form, you don't beg permission to have it, you just let them know you were abroad on June 15), that if you wish to extend past June 15, you use the same extension form that residents of the USA use for an extension past April 15. At least, that was the case back in 2004.

That has been my experience also. For the last 14 years I've filed in June without requesting an extension and there has been no problems or comments from the IRS.

[DFCarlson]

Just a small detail, but this year I believe that the deadline for filing your federal tax return is April 17. The 15th is on a Sunday and there is some kind of holiday on the 16th. (Check the IRS website.)

Edited February 2, 2007 by DFCarlson

[richard10365]

I think the key would be to plan to file by the deadlines established without considering extensions and you should be ok.

[Jingthing]

You shouldn't believe everything you hear on a call to IRS. I haven't seen any recent statistics but, in the past, the General Accounting Office has reported that as many as 60% of the answers in their tests were wrong! That's why you can't use anything you've been told as an excuse for something on your return, why IRS requires you to get a written statement (and charges you for giving one.)

In any case, this is wrong. In all my years working with expats, I have never had a problem on the two-month extension for my retired clients. If you are retired, your are in the business of receiving retirement benefits and your home is your regular place of business.

Lanny, I agree that much info from IRS reps is wrong. However, the rep I talked to specifically wondered if living in a foreign home would meet the qualification, she specifically sought senior advice about that, and came back with the negative ruling. As far as receiving retirement benefits, you might be right about that, but in my case I live on investments, so wouldn't apply to me. I am still not convinced either way, so I will go ahead and file for the six month extension (no excuse needed but you have to file it).

The beauty of the 2 month automatic extension for Americans abroad is mainly that you don't have to PAY by April 15, and also exempt from penalties and interest.

[lanny]

If you are living off investments, then you could argue that you are in the business of managing those investments. As such, your place of business would be your home.

But, in any event, I'll stand by my experience -- the extension applies to anyone living outside the US. The wording you quoted in your original post is from some IRS publication. The code itself says nothing about business.

You are right that it gives you the time to file and pay without penalties. However, IRS will still charge interest from 4/15 to the date you pay.

[Jingthing]

Well, I wouldn't want to argue with the IRS if I don't have to and I think I need more than a 2 month extension anyway, but Lanny, I will concede you are most likely correct. Thanks for clearing up my error about no interest due. Cheers and happy tax season!

Edited February 2, 2007 by Jingthing

[taxout]

No, there's no verbatim statutory requirement of a "tax home" to qualify for an extension. That's because the detailed rules are set out not in the Code but the Regulations. Section 6081 of the Code gives the Secretary of the Treasury broad authority to establish, by Regulation, the requirements for a filing extension. For all practical purposes, Treasury Regulations prescribed under statutory authority are the law.

And the Regulations themselves provide that the automatic two-month extension is available only to Americans "whose tax homes and abodes, in a real and substantial sense" are outside the U.S. §1.6081-5(a)(6). (The IRS closed the old loophole, under which mere physical presence outside the U.S. on April 15 was sufficient, about 20 years ago.)

"Tax home" here has the meaning used in another section of the Code regarding allowance of business travel expenses and the like; if you're not working, it is hard to fit yourself clearly within that meaning of "tax home."

However, the Regulations regarding filing extensions foresee this problem and provide that "If a person does not have a regular or principal place of business, that person's tax home will be considered to be his regular place of abode in a real and substantial sense." §1-6081-5( c ).

I suspect the folks at the IRS looked only at the definition of "tax home" under the business expense provisions and did not notice the special carve-out in the extension Regulations.

Notwithstanding all this, I'd tend to file on time or file for an extension; no reason to get into an argument with the IRS -- even if you'll win -- when avoidance is so simple.

Edited February 2, 2007 by taxout

[ProThaiExpat]

The importance of using correct terminology when discussing IRS matter is even more important than using correct language when discussing visa matters and we all know how goofy some threads get when the terms are used loosely.

I could easily see a caller to the IRS talking in a mind set of when his return is due and using the classic April 15 due date as his benchmark. Using incorrect terminology, June 15 due date for overseas returns could morph into an automatic extention of two months.

Likewise, technically, and "extention" applies to the postponement of a "due date", thus for overseas taxpayers, moving the June 15 due date would be an extention, "haveing enjoyed already the automatic extention given to overseas taxpayers from April 15 to June 15"

My CPA as a matter of practice, always requested an extention to file on my returns with the same lingo "oftaining information from third parties" or some other such nonsense. I am not quite sure, but my guess is that an extention for the overseas return may end up the same date as the extention of the U.S. resident extention, some know if the standard extention is the same or do the overseas files get only four months, thus making their extended date the same as resident filers?

[Jingthing]

The person I talked to definitely knew I was asking about the AUTOMATIC EXTENSION for overseas taxpayers FROM April 15. I have no doubt about that.

To get the current SIX MONTH extension (again from April 15) this is for all taxpayers, expat or not, and there is no excuse needed whatsoever. All you have to do is file it. It used to be you had to file two extensions to get that much time, but no more.

[Paul MBMG]

No, there's no verbatim statutory requirement of a "tax home" to qualify for an extension. That's because the detailed rules are set out not in the Code but the Regulations. Section 6081 of the Code gives the Secretary of the Treasury broad authority to establish, by Regulation, the requirements for a filing extension. For all practical purposes, Treasury Regulations prescribed under statutory authority are the law.

And the Regulations themselves provide that the automatic two-month extension is available only to Americans "whose tax homes and abodes, in a real and substantial sense" are outside the U.S. §1.6081-5(a)(6). (The IRS closed the old loophole, under which mere physical presence outside the U.S. on April 15 was sufficient, about 20 years ago.)

"Tax home" here has the meaning used in another section of the Code regarding allowance of business travel expenses and the like; if you're not working, it is hard to fit yourself clearly within that meaning of "tax home."

However, the Regulations regarding filing extensions foresee this problem and provide that "If a person does not have a regular or principal place of business, that person's tax home will be considered to be his regular place of abode in a real and substantial sense." §1-6081-5( c ).

I suspect the folks at the IRS looked only at the definition of "tax home" under the business expense provisions and did not notice the special carve-out in the extension Regulations.

Notwithstanding all this, I'd tend to file on time or file for an extension; no reason to get into an argument with the IRS -- even if you'll win -- when avoidance is so simple.

agreed - it's so easy to do that you should just file the extension request

in the past though we have't seen too many problems when US expats didn't file in advance but why run the risk of antagonising?