Consequences of Not Filing US Taxes While Living Abroad

Accurate taxes are important for more reasons than getting the right tax return. Don’t assume you’re automatically exempt from filing US taxes when you move abroad. Likewise, you shouldn’t assume you won’t feel the consequences of not filing when you’re in another country. Expats can still encounter consequences when they avoid filing accurately or at all. Read the walkthrough below to get a better look at the consequences of not filing US taxes while living abroad.

Consequences of Not Filing Taxes

One of the biggest consequences of failing to file your taxes is the financial penalty. Refusing to file will lead to fines that will grow over time. Details such as how long you fail to file US taxes and how much those taxes are will alter the penalties. Generally, penalties range from five to 25 percent of your unpaid taxes, plus interest. Avoiding your US taxes will also lead to consequences such as losing your passport, so it doesn’t stop at the fines. These penalties are stressful on their own, but as you’ll learn below, there are even more penalties you may encounter when refusing to file.

Consequences of Failing To File FBAR & Form 8938

US citizens with bank accounts outside of the US must report their accounts annually to the IRS via the Foreign Bank Account Report (FBAR). Willfully neglecting to file the FBAR can result in fines as high as $100,000. In some cases, the penalty may be 50 percent of the foreign account at that time.

Expats must also file in accordance with the Foreign Account Tax Compliance Act (FATCA). This requires expats to report their foreign assets when the assets surpass certain thresholds. Expats can abide by FATCA using Form 8938. The IRS may impose a penalty of $10,000 upon expats who don’t report Form 8938. Eventually, further neglect to accurately report assets in accordance with FATCA can result in penalties up to $50,000 and criminal penalties.

Consulting an Expat Specialist

The consequences of not filing US taxes while living abroad can be quite substantial. However, this shouldn’t scare you from moving abroad. Talking with an expat tax specialist can help you smooth the transition so you can keep taxes accurate and penalty-free.

Because of the specific forms you will encounter for expat taxes, make sure you talk to a professional who focuses on that area specifically. For example, at Accutax Business Center, the services we offer include US expat tax services. Instead of guessing your way through Form 8938 and more, talk with someone who can assess your specific needs before filing.