Paying Your Debt To IRS From Abroad
The US is known for pursuing taxes and debt worldwide. Thus, American Expats can’t avoid paying debt to IRS at any cost even if they shift abroad. US citizens living abroad are subject to the same responsibilities and duties they would have been subjected to had they been in the US. It can’t be forgotten that the IRS is immensely powerful and has all the means to make sure you collect your expat debt, which is why it is in the best interests of US expats to duly pay off their debt to the IRS.
There are various ways through which US resident aliens can pay their US taxes in a foreign country. If you face problems in paying your debt altogether, you can request the IRS for an installment agreement.
A US bank account is a prerequisite for any installment agreement that expats tend to work out with the IRS. Hence, if you don’t have one, you should get one before requesting the IRS for an installment agreement.
Moreover, there is another requirement stating that in order to request an installment plan, you must have duly filed all your tax returns required by the IRS.
US expats owing an amount equal to or less than $50,000 in interest, penalties, or income tax, can apply for an installment agreement online. They can also consult a professional to help them in this case. Those who have a debt greater than $50,000 and do not feel comfortable with online debt payment systems have to fill the Form 9465. This form deals with Installment Agreement Request, and it can be sent to the IRS in mail, along with the Form 433-F regarding Collection Information Statement.
However, you mustn’t forget that there are further fees associated with debt installment agreements. An agreement for direct debit costs $52, whereas a standard agreement costs $105, and in case your income falls below a defined threshold, you might be charged $43.
Expats with US Bank Accounts
If you don’t need an installment agreement, and just need to pay your debt to the IRS, then there are various means by which you can do so:
- Credit or debit card: Card payment solutions offer convenience but at a price specified by service providers of card payment that depends on the amount of your debt.
- Electronic Funds Withdrawal: At the time of filing your return, you can sanction for a withdrawal from one of your savings or checking accounts.
- Money order/Check: In order to pay by this method, you need to make a check for the total amount you owe in debt and make it in the name of ‘United States Treasury’. It is recommended not to send direct cash at all.
Expats without US Bank accounts
In case you don’t have a US Bank account, you can use the following options:
- Credit or debit card: These are provided by service providers and come with a cost.
- Same Day Wire Transfer: If the foreign institution in which you have a bank account has an American affiliate, then you can request your affiliate to arrange a wire transfer at the same date. There will be a fee involved, however.
- Trusted third parties: You can also arrange for a third party that you trust, or a tax professional, to make a deposit to the Treasury on your behalf via a master account.
Online Payment Agreement
These agreements require a US bank account a prerequisite. There are four payment plans that can be utilized by US expats:
- Pay now: Under this, the payment has to be made within 10 days.
- Short-term payment extension: Under this option, you can choose to pay the full balance in 30, 60, 90, or 120 days. However, you need to make sure you pay by the due date, i.e. April 15. Otherwise, penalties will apply.
- Monthly Agreements: These last for more than 120 days in total. Payments can be made directly through credit, debit, or other viable proposed methods, but at a onetime cost of $52.
- Direct Debit: IF your debt is of an amount between $25000 and $50000, you can authorize the monthly payments to be automatically withdrawn from your account.
You can share your experiences regarding paying US debt from overseas. If you have any queries, feel free to contact us.