My local tax declaration (i.e. France, Switzerland) won't be ready by the October deadline. What should I do?
We can go ahead and prepare your return for you before the deadline by basing the numbers on:
- The income you earned during the last calendar year.
- The taxes you paid over the course of the last calendar year (regardless whether it was the tax bill for the prior year or automatic withdrawals during the year).
We are able to do this because IRS only cares about the actual income/tax paid during the tax year.
Then once we see what your actual situation is (vis-a-vis you owing tax or getting a refund), we will advise you on how to proceed. If need be, we can wait for your local tax return to be prepared and incorporate it before filing.
The following options are available to you (all dates assume the current year is 2018 and you are filing a 2017 tax return):
1. File a return now reporting tax paid during 2017 on income earned in 2016
- Pro - You can file now.
- Con - If your income has greatly increased from 2016 to 2017, your amount of tax paid on your income in 2016 may not be enough to generate sufficient foreign tax credit to fulfill current year obligations.
2. Request an additional extension of time to file using a free-form letter (TFX can help)
- Pro - Most accurate way to file
- Con - As opposed to the first (automated) extension the second request for an extension requires IRS approval. If approval is not granted, then your tax return will be considered late.
3. File now with using an estimate of the tax due for the year
(You will report it as "tax assessed")
- Pro - You’ll get the return out of the way now.
- Con - You’ll be required to continue filing using the "tax assessed" method in future years and will not be allowed to return to the “tax actually paid” method.
4. Hold off on filing until you receive your refund information
(If you expect to receive a refund for the prior year AND you claimed a foreign tax credit in the prior year)
We will adjust the amount of the foreign tax credit carryover on the current year tax return and you will not have to worry about amending your prior year return.