Paying Taxes To The Irs From Thailand

[Pib]

... this refund evaporates into Uncle's treasury.

Jim,

I think you just may have provided a clue on how to solve the U.S. debt: just air condition the U.S. Treasury...no more evaporation. I've already shot off a suggestion form to Uncle Sam...if he approves the suggestion I'll give you half the suggestion reward...I'm just that kind of guy.

Pib

Edited March 8, 2012 by Pib

[JimGant]

... this refund evaporates into Uncle's treasury.

Jim,

I think you just may have provided a clue on how to solve the U.S. debt: just air condition the U.S. Treasury...no more evaporation. I've already shot off a suggestion form to Uncle Sam...if he approves the suggestion I'll give you half the suggestion reward...I'm just that kind of guy.

Pib

Ok

[TallGuyJohninBKK]

Jim Gant regarding the two-month expats extension:

There's no free lunch. Uncle understands the time value of money, and he wants it by April 17. Now, you're off the hook for any "late filing" penalty. But, not the "late payment" penalty (however, if you've paid 90% by April 17th of the eventual tax owed, you're off the hook. See http://www.irs.gov/n...=205326,00.html).

Jim, this is not my area of expertise, but I think your comment above may be mixing up the two-month extension for folks who are out of the country vs. the 6 month extension. It's pretty clear to me that the two-month extension is indeed on a person's time to file AND pay... No penalty if paid up before the two months ends... But interest owed from the April date until paymenjt on any unpaid tax balance...

I've done exactly that in past years with the two month expats extension... no penalty...just interest.

Quoting from IRS Pub 54 cited above:

Automatic 2-month extension. You are allowed an automatic 2-month extension to file your return and pay federal income tax if you are a U.S. citizen or resident alien, and on the regular due date of your return:

• 
  You are living outside 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. Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return.

Married taxpayers. If you file a joint return, either you or your spouse can qualify for the automatic extension. If you and your spouse file separate returns, this automatic extension applies only to the spouse who qualifies for it.

How to get the extension. To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

Automatic 6-month extension. If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). To get this automatic extension, you must file a paper Form 4868 or use IRS e-file (electronic filing). For more information about filing electronically, see E-file options , later. The form must show your properly estimated tax liability based on the information available to you.

You may not be eligible. You cannot use the automatic 6-month extension of time to file if:

• 
  You want the IRS to figure your tax, or
  
• 
  You are under a court order to file by the regular due date.
  

E-file options. You can use e-file to get an extension of time to file. You can either file Form 4868 electronically or you can pay part or all of your estimate of tax due using a credit or debit card. First, complete Form 4868 to use as a worksheet. If you think you may owe tax when you file your return, use Part II of the form to estimate your balance due. Then, do one of the following.

1. 
   E-file Form 4868. You can use a tax software package with your personal computer or a tax professional to file Form 4868 electronically. You will need to provide certain information from your tax return for 2010. If you wish to make a payment by electronic funds withdrawal, see the instructions for Form 4868. If you e-file Form 4868, do not also send a paper Form 4868.
   
2. 
   E-file and pay by credit or debit card. You can get an extension by paying part or all of your estimate of tax due by using a credit or debit card. You can do this by phone or over the Internet. If you do this, you do not file Form 4868. For more information, see the instructions for your tax return.
   

<a name="en_US_2011_publink100047332">When to file. Generally, you must request the 6-month extension by the regular due date of your return.

Previous 2-month extension. If you cannot file your return within the automatic 2-month extension period, you generally can get an additional 4 months to file your return, for a total of 6 months. The 2-month period and the 6-month period start at the same time. You have to request the additional 4 months by the new due date allowed by the 2-month extension. The additional 4 months of time to file (unlike the original 2-month extension) is not an extension of time to pay. You must make an accurate estimate of your tax based on the information available to you. If you find you cannot pay the full amount due with Form 4868, you can still get the extension. You will owe interest on the unpaid amount from the original due date of the return. You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Penalties for paying the tax late are assessed from the original due date of your return, unless you qualify for the automatic 2-month extension. In that situation, penalties for paying late are assessed from the extended due date of the payment (June 15 for calendar year taxpayers).

http://www.irs.gov/publications/p54/ch01.html#en_US_2011_publink100047323

[JimGant]

I've done exactly that in past years with the two month expats extension... no penalty...just interest.

You're right. I rolled the two extension types together, under the umbrella that neither the out-of-country extension nor the 4868 extension would have "late payment penalties." And that's true, assuming the 90% withholding criteria I mentioned is adhered to:

The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 17, 2012. It is charged for each month or part of a month the tax is unpaid. The maximum penalty

is 25%.

The late payment penalty will not be charged if you can show reasonable cause for not paying on time. Attach a statement to your return fully explaining the reason. Do not attach the statement to Form 4868.

You are considered to have reasonable cause for the period covered by this automatic extension if at least 90% of your actual 2011 tax liability is paid before the regular due date of your return through withholding, estimated tax payments, or payments made with Form 4868.

And that "90% rule" is usually accompanied by "or withholding/paying estimated taxes equal to100% of last years taxes" or "less than $1000 under withheld/paid." I would assume those would also apply in this scenario.

Anyway, presuming one meets the 90%, or equivalent rule to avoid the "underpayment of estimated tax" penalty, either method of extension will work. And the 4868 method, allowing for accompanying payment (to bring you to at least the 90% mark), may just be easier via the TT Easy Extension, or similar.

But yeah, if you're way behind with withholding and estimated tax payments, and thus facing the underpayment of estimated tax penalty, going the out-of-country extension route will at least avoid adding-on the "late payment penalty." At least for two months.

[TallGuyJohninBKK]

Thanks Jim.... though I think the above is making things a bit over-complicated...

As regards the two-month out of country extension:

--you do get two extra months to file your return without late filing penalty.

--you do get an extra two months to pay your full tax bill if owed, without late payment penalty.

---you will pay interest on any unpaid tax balance from the normal April taxes due date until the date you actually pay.

--You could face an underpayment of taxed owed penalty if you haven't covered enough of your actual tax obligation thru withholding, prepayment or regular payments.

Though it's my understanding, a person who has failed to cover enough of their tax obligation could face such an underpayment penalty either a) based on filing by the regular April deadline, or b] based on filing with the two month out of country extension. The rules on that would be the same...only the required filing deadlines would be different.

Edited March 9, 2012 by TallGuyJohninBKK

[TallGuyJohninBKK]

BTW, as for the ways of obtaining the two month out of country extension when using TurboTax, I was clear on the process you explained above for that, both for paper and efiling, using the DESKTOP package..

And Pib above posted on how TurboTax ONLINE will handle that when printing out a paper return.

I was merely pointing out that last year, when I used the TT ONLINE package and e-filed, I never saw any option or query about requesting the two month extension. And as I believe has been pretty well established, the processes in the TT Desktop package aren't necessarily the same as in the online package.

I always wondered whether perhaps I wasn't queried on that by their online system because I was filing using a U.S. mailing address for tax purposes. I kind of thought that if perhaps if I had filed using a foreign address, then TT ONLINE would have put forward that option.

I really don't know... I just know, last year using TT online with a U.S. filing address, I never saw the option to request the two month out of country extension.

[JimGant]

John, just out of curiosity, why do you file late every year? Is the lost interest of whatever you have to cash-in to pay by April 15 considerably more than the interest you have to pay Uncle for paying two-months late?

And, I'm pretty sure we're talking, max, about only 10% of your taxes owed, as I doubt you're under withholding, and thus paying applicable penalties......

I've always thought paying on time, unless physically unavailable to do so, makes the most sense......

Again, just curious -- but always willing to learn by how others do business....

[Pib]

Oh you rich Americans and your need to delay filing of your tax return!!! Just kidding...just kidding.

I finished my return last night by entering the interest earned off a couple of Thai savings accounts...now I will just let my return rest in TaxAct for a while...over the coming days/weeks I'll open it a couple more times to double check some entries...and then hit the eFile button later this month and hopefully in about two weeks after that Uncle Sam will electronically deposit my refund in my U.S. bank...and it's not much of a refund so I got my tax withholding about right. Then I move on to filing my Treasury Dept TDF90.22-1 form by 30 Jun 12 to further satisfy Uncle Sam. Oh, what we go through to keep Uncle Sam happy in using and watching our money.

[flying]

Oh, what we go through to keep Uncle Sam happy in using and watching our money.

SRV........

Let me tell you how it will be

There's one for you, nineteen for me

'cause i'm the taxman

Yeah, i'm the taxman

Should five percent appear too small

Be thankful i don't take it all

'cause i'm the taxman

Yeah, i'm the taxman

If you drive a car, i'll tax the street

If you try to sit, i'll tax your seat

If you get too cold, i'll tax the heat

If you try to walk, i'll tax your feet

Don't ask me what i want it for

If you don't want to pay some more

'cause i'm the taxman

Yeah, i'm the taxman

Now my advice for those who die

Declare the pennies on your eyes

'cause i'm the taxman

Yeah, i'm the taxman

[TallGuyJohninBKK]

John, just out of curiosity, why do you file late every year? Is the lost interest of whatever you have to cash-in to pay by April 15 considerably more than the interest you have to pay Uncle for paying two-months late?

And, I'm pretty sure we're talking, max, about only 10% of your taxes owed, as I doubt you're under withholding, and thus paying applicable penalties......

I've always thought paying on time, unless physically unavailable to do so, makes the most sense......

Again, just curious -- but always willing to learn by how others do business....

Jim, it's not that I'm setting out to file/pay past the April regular deadline. BTW, I'm not filing "late" to use your term. I'm filing on time within the granted extension.

Rather, it's a combination of a) the mail forwarding time that it takes for 1099 and such documents to be received at my U.S. address and then sent along here once a month, and b] some of the investment holdings I have are ones that tend to be a bit late in getting their reporting documents mailed out

When I was living in the U.S., for close to 30 years of filing and paying taxes, I don't think I ever filed for an extension. But living here, it's kind of the norm because of the logistics.

[TallGuyJohninBKK]

BTW, this discussion reminds me of a surprising episode I had with the IRS two years ago that bears on those folks who paper mail in their tax filings from here in LOS.

Two years ago, the last time I had my returns prepared by a CPA, and after paying a large chunk of change in preparation fees, I decided to mail in my return PRIOR to the 2 month extension deadline... but to send by regular less expensive registered, return receipt requested mail and not by the more expensive EMS...

I thought everything was fine. But a month or two later, I got a mailed response from the IRS hitting me with a late filing fee because my return had ARRIVED in Houston (or wherever the expat location was that year) after my extension filing deadline, even though they were POSTMARKED here well before the filing deadline I had under the two-month extension.

What ensued was a couple months long debate with various IRS reps over the phone and by mail in an effort to get them to rescind the late filing penalty which they had assessed. And that's what they finally did in the end... But not without a lot of grief on my part, some hours of testy phone conversation with them, and their seeming inability to comprehend Thai postal receipt dating.

But what came as the biggest surprise to me was to hear the reason they assessed the late filing penalty in the first place. And the reason they gave was that my return arrived in their office AFTER my filing deadline. And I countered yes, but it was postmarked BEFORE my filing deadline. And they countered, but we don't look at the postmark when the return is logged in... We just note the date it's arrived in our offices. Unfortunately though, in what seems a total non-sequitor to me, the law/regs on what's timely filing or not is in fact the postmark date...regardless of when the postal service gets around to delivering your return.

The IRS guys I was dealing with, who were in their section that deals with international filings, seemed to be particularly confused with the Thai (and I guess other places too) practice of placing the day date first, followed by month and then year, as in June 1, 2012, becoming 1/6/2012. Where in U.S. style June 1 would be written 6/1/2012. I remember that too contributed to overall confusion.

So I remember swearing to myself that year, if I'm ever going to do paper mail filing again, I'm going to be sure it ARRIVES to the IRS before the deadline, even if it is the postmark that really matters under the rules.

Of course last year, I chucked the tax filing fee and paper return mailing altogether, and did the whole thing myself for the first time with TurboTax Online and e-filing through that method. And didn't have even the slightest hitch...

[JimGant]

But living here, it's kind of the norm because of the logistics.

Understood. This was the first year I was finally able to get all my 1099's available on-line.

BTW, I'm not filing "late" to use your term. I'm filing on time within the granted extension.

"Retreat, hell, we're just attacking in another direction."

MGen O.P Smith, USMC

Chosin Reservoir