Receiving an IRS Notice While Living Abroad

Receiving an IRS notice while living abroad can be overwhelming, but taking quick action is essential to stay on top of your US tax responsibilities. Here’s a step-by-step guide to help you navigate an IRS notice as a US expat.

Understanding IRS Notices

An IRS notice received via paper mail is the only official communication sent by the Internal Revenue Service to inform you, a US taxpayer, of an issue regarding your tax return. The notice could range anywhere from an issue with your tax filing, payment, or unpaid taxes to a simple request for more information.

It is essential to address an IRS notice quickly, especially while abroad. It can take weeks for a letter from the IRS to reach a foreign address, adding to the time pressure. Failure to react promptly could lead to further penalties, interest charges, or an audit. Ignoring the notice could escalate the situation, leading to more serious consequences like an IRS levy.

Taking quick action ensures you can resolve the issue before it gets out of hand.

Common Types of IRS Notices Expats Receive

• Notice of Tax Due (CP14 ): A warning about unpaid taxes or penalties. This could be due to an error on your return, missing payments, or under-reported income. The notice will outline the amount you owe, including any penalties or interest accumulated due to non-payment. US Expats are susceptible to this type of notice if they fail to file their tax return correctly or on time or do not file a Foreign Bank Account Report (FBAR).
• Notice of Deficiency (Notice 3219): An audit notice outlining potential tax owed. This notice typically gives you a 90-day window to pay the amount owed, file an appeal, or request a hearing with the IRS Office of Appeals. Expats may receive this notice if their filings don’t meet IRS standards or fail to report foreign income or assets correctly. If you receive this notice, we recommend consulting with a Tax Professional at MyExpatTaxes!
• Request for Additional Information (Notice 6091): Information needed to complete tax filings. This notice is sent when the IRS requires further documentation or clarification to process your tax return. This could include missing forms such as foreign income reports or additional proof of deductions and credits you’ve claimed. As an expat, you may be asked to provide evidence of your foreign earned income or foreign tax payments.
• Form 1099 Issues: Mismatched information or failure to file required forms. Form 1099 is used to report various types of income, such as freelance work, rental income, or income and dividends. This type of notice will require you to clarify your income further for the IRS.
• Penalties for Late Filing or Payment: When filing or payment deadlines are missed.

Don’t Panic – Assess the Notice Carefully

Receiving an IRS notice can feel overwhelming, particularly when living abroad. That’s where MyExpatTaxes comes in! Our team of experienced Tax Professionals understands the unique tax issues faced by US expats, and we are here to guide you every step of the way.

When you file with MyExpatTaxes, we will help you interpret the details of the notice and break down what it means for your specific situation. We can assist in clarifying the following:

• What the IRS is asking for
• Why you received the notice
• What your next steps should be

Dealing with an IRS notice is not a one-time task. Once the notice is addressed, there may be ongoing steps to take or follow-up communication with the IRS. MyExpatTaxes will help monitor your case, future tax planning, and strategy optimization for the following tax year.

Verify the Legitimacy of the IRS Notice

Remember, the IRS will only ever contact you via paper mail! If you receive an email or SMS claiming to be the IRS, back away! Always verify the notice by contacting MyExpatTaxes or the IRS through their official channels.

Tips for Preventing IRS Notices in the Future

There are proactive steps that US expats may take to avoid receiving a notice from the IRS. Here are MyExpatTaxes top tips to keep you on track:

• File Your Taxes Accurately and On Time: Ensure all your income, deductions, and credits are correctly reported. Unsure how to get started? MyExpatTaxes software guarantees you use the correct tax benefits for your unique situation and will pick up any discrepancies before you e-file.
• Keep Copies of Your Tax Returns and Records
• Double-Check Your Forms and Documents: If you are filing independently, carefully review your forms and supporting documents, including foreign bank statements and other income records. Small mistakes or missing documentation can trigger notices from the IRS.
• Consider Working with a Professional: Here at MyExpatTaxes, we offer three filing plans for those ready to file independently; there is the Base plan. For those looking for a little more peace of mind with our Reviewed plan, or Premium for those who want to work alongside a Tax Professional.

Conclusion

Ignoring an IRS notice can lead to serious consequences, including penalties and additional interest owed. Remember to act quickly if you receive a notice!

If you’ve received an IRS notice or need help with expat tax filing, MyExpatTaxes is here to help. We’ll guide you through the process and help you stay compliant with your US expat taxes.