The U.S. tax system can be confusing for Americans abroad, with rules that are easy to miss. While filing requirements are clear, the nuances can be hard to navigate. In today’s digital age, it’s harder to say you didn’t know. Bad advice happens, but the responsibility still lies with you.  With the deadline approaching, now’s the time to act—ignoring it could be costly.

Written for Expat Network by RoseMarie Guaglieri, H&R Block Expat Tax

If you’re an American living abroad, June 15 is a key date on your tax calendar—it marks the end of the IRS’s automatic two-month extension to file your 2024 U.S. tax return. Since June 15 falls on a Sunday this year, the deadline shifts to Monday, June 16.

If you’re still waiting on documents or your local tax return follows a different schedule, you’re not alone. We understand how complex cross-border filing can be—especially with conflicting timelines, foreign tax rules, and packed schedules.

But with just under two weeks left, now is the time to act.

Even if you’re not ready to file by June 16, the most important step you can take right now is to request an extension. Ignoring the deadline is not your best choice. It’s important to start the process now.

What happens if I miss the deadline?

If you’re reading this after the deadline, don’t panic—but don’t ignore it either. Missed deadlines happen. What matters most now is taking the next step.

Here’s what you need to know:

If you owe U.S. taxes, interest has been accruing since April 15, even if you had the automatic extension. The current rate is 7% per year, so the longer you wait, the more it adds up.

If you did not file an extension by June 16, you will face penalties, some of which compound the longer you wait:

• The Failure-to-Pay Penalty is 0.5% of the unpaid tax for each month (or part of a month) your payment is overdue, up to a maximum of 25%.
• The Failure-to-File Penalty is 5% of the unpaid tax for each month (or part of a month) your return is late, up to a maximumof 25%. This penalty is in addition to any late payment penalties and will be adjusted to 4.5% per month when both penalties are applied together.
• International informational return penalties —These are penalties for forms that report information relating to certain international-based issues, such as businesses, trusts, and foreign account reporting. These penalties can be very steep and often start at $10,000, but they are only assessed if the form is filed late or incomplete.  Even if you don’t expect to owe anything, it’s still a good idea to file as soon as you can. Life gets busy, and before you know it, a late return turns into multiple years behind, and the IRS is not generally understanding with someone who knows they need to file and doesn’t.

Never Filed U.S. Taxes? You’re Not Out of Options

If you are an American who hasn’t filed in years, it might come as a surprise to learn that most Americans do have a filing requirement.  Many people find out through a friend, their bank, when their spouse applies for a green card, or even during college applications.

Our team has helped thousands of Americans in the same situation, and many of our long-time clients started as first-time filers.  If your failure to file was unintentional, the IRS offers a way to catch up and be forgiven for penalties through the  Streamlined Filing Offshore Procedures. 

Even if you don’t qualify for that program, other options might be available. But timing is key — this is a tax amnesty program, so if the IRS reaches out before you enter the program, you may lose eligibility. This process can be complicated and isn’t something you want to navigate alone. We can guide you through every step, including preparing the required disclosure statements to support your case.

Catching up could also unlock valuable tax benefits if you have dependent American children with valid U.S. tax IDs. You may be eligible for up to three years’ worth of Child Tax Credits (CTC)—potentially reducing your tax bill or even resulting in a refund. Filing is the key to accessing those benefits.

You’ve got options — we can help you find the right one.

Beyond the Filing Deadline: What Expats Often Miss

Living abroad comes with all kinds of added tax layers that aren’t always obvious and misunderstood – not because people are careless, but because the rules are complicated and not always clear. Here are some of the most common — and costly — mistakes we see.

“I Don’t Earn Enough to File” — Why That Might Not Be True

Many expats think their income is too low to require filing a U.S. tax return. They often mix up the statutory U.S. tax filing thresholds—which are quite nuanced—with the Foreign Earned Income Exclusion (FEIE). Filing rules depend on your filing status, and as a U.S. citizen, you need to report all worldwide income, no matter where you live. While the FEIE lets you exclude up to $126,500 of foreign earned income from U.S. taxes, you still must qualify and file a tax return to claim it. Just because your income might fall below the filing threshold doesn’t automatically exempt you from the filing requirement.

And you may have “just a gig,” but even just $400 of self-employment income—from consulting, blogging, freelancing, tutoring —triggers a filing requirement and may mean you owe self-employment tax for US Social Security and Medicare. This often catches digital nomads and part-time freelancers off guard. The good news: the US has entered into International Social Security Agreements with many countries, so proper planning can mitigate some of these additional tax liabilities.

I Pay Foreign Taxes—Do I Really Need to File with the IRS?

Some people think that because they’re already paying taxes in another country, they don’t have to file a U.S. tax return. It’s an easy assumption to make! But as you probably now realize, the U.S. requires you to report all your income from anywhere in the world.

The good news? That doesn’t mean you’ll get taxed twice.  The IRS offers ways to help avoid double taxation, like the Foreign Earned Income Exclusion we talked about earlier, and the Foreign Tax Credit. The important point to remember is that you do still need to file your U.S. return to claim those benefits.  

FBAR Reporting: It’s More Than Just Bank Accounts!

The Report of Foreign Bank and Financial Accounts (FBAR) is a key compliance requirement separate from your tax return. You need to file it if the combined value of all your foreign financial accounts exceeds $10,000 at any time during the year.

Common FBAR Mistakes:

1. Thinking that accounts with less than $10,000 are exempt: Many people mistakenly believe that if each individual account is under $10,000, there’s no need to report. This is a typical area of confusion. It’s not about individual accounts – it’s about the total combined value of all your foreign accounts that counts toward the $10,000 threshold—even if each account is under that amount.
2. Assuming it’s only for bank accounts: FBAR covers more than just foreign bank accounts. It also includes:
   • Foreign brokerage accounts
   • Foreign insurance or annuity plans with cash value
   • Foreign retirement accounts (with some exceptions)

Penalties for Not Filing:

Missing the FBAR filing can lead to hefty penalties starting at $10,000 per violation. These can add up fast if multiple years are involved.

Married to a non-U.S. Citizen? (or Planning to Be!)?

When your spouse isn’t a U.S. citizen, filing your taxes can get tricky.  For starters, when your spouse is not a U.S. citizen, you can’t file as “single” and you can’t file a joint U.S. return, which generally has preferential tax deductions and tax rates. If you want to file jointly, you’ll need to make an election to treat your spouse as a U.S. tax resident for tax purposes.

Filing separately might seem simpler, but it could end up costing you more.  Your filing status can be a strategy to lowering your tax bill, but it should be discussed with a tax expert, as it can affect your finances now and down the road – and unexpected U.S. tax consequences.

Foreign Inheritances and Gifts Can Come with Strings Attached

If you or your spouse receives a large gift or inheritance from a non-U.S. person—say, a non U.S. parent or relative—you might assume it’s just a personal matter. But if the total value is over $100,000, the IRS wants to know about it. These types of gifts and inheritances may need to be reported on Form 3520, and missing the filing can come with steep penalties.

One area that often gets overlooked is gifting between spouses—especially when one isn’t a U.S. citizen. The U.S. tax code imposes annual limits on gifts to a non-U.S. spouse, a stark contrast to the unlimited gifting allowed between U.S. citizen spouses. Large transfers—like real estate, joint accounts, or even routine financial support—can unexpectedly trigger reporting requirements or tax implications.

These are complex rules and easy to miss, but with proper guidance, they’re manageable.

State Taxes Matter—Even When You’re Abroad

Moving abroad doesn’t automatically free you from state income tax obligations. Some states have strict residency rules and may continue taxing you if you haven’t fully cut ties. For example, if you still have a driver’s license, vote in state elections, or keep financial accounts linked to your U.S. address, you might still be considered a resident and need to file state tax returns.

Need Help Figuring It All Out?

Living abroad comes with a lot of moving parts—and U.S. tax obligations can be surprisingly tricky. Whether you’re behind, unsure about your filing status, or just want to make sure you’re not missing anything, it helps to have someone walk you through it.

The team at H&R Block – Expat Tax is a good place to start; we can help—wherever you are in the process.