With the June 15 tax deadline approaching, you need to distinguish between paying your taxes and filing your tax returns. Let’s get started.
If you live in the U.S., by April 17, you had to:
- Pay your taxes
- File your tax return or file for an extension
If you live abroad, you have an automatic extension to file until June 15. Note, however, that you still needed to pay your taxes by April 17 to avoid interest.
| Deadline | Deadline Date |
| Pay tax due without interest | April 17 |
| File tax return (with automatic extension); Pay tax without penalties (but with interest) | June 15 |
| File tax returns if applied for extension | October 15 |
File Returns
Those living abroad have an automatic extension to file your tax return until June 15. This extension is different than the “applied for” extension through October 15.
If you applied for an “applied for” extension, you must file your tax returns by October 15.
Penalties for failure to timely file (including extensions), generally are 5.0% of net tax amount due per month, subject to a cap.
Pay Taxes
You must pay your Federal and State taxes by April 17 to avoid interest. If you do not pay your taxes by that date, you will likely owe interest.
You must pay your Federal and State taxes by June 15 to avoid penalties. These penalties can be substantial (for instance, penalties for failure to timely pay, generally are 0.5% of net tax amount due per month, subject to a cap). It can also affect the amount that your employer will withhold from your wages in future years.
But wait, how do I know how much tax I owe if I haven’t done my return yet?
It does sound odd that you must pay your taxes before you’ve done the final tax calculation. Nonetheless, it is true. The IRS expects you to either (1) have your return done by the date your taxes are due or (2) estimate your taxes due and pay your taxes based on your estimate.
If you estimate, you should estimate conservatively (when in doubt, estimate you owe the higher amount of tax). Otherwise, if it ends up that you underpaid your taxes, you will likely incur interest and penalties. In our opinion, you are always better off overpaying your taxes (thus avoiding interest and penalties) and filing for a refund than underpaying and owing interest and penalties.
I hope you found this helpful. For more information on this and other topics:
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