The IRS Shutdown: Why US Expats Can’t E-File All Year Round?

Every online system available requires a period of time to update its platform, and this is no different for the IRS. The IRS undergoes a period of maintenance known as the E-Filing Shutdown. During this shutdown, taxpayers cannot submit their US taxes electronically for nearly two months. Therefore, it is recommended that you file before mid-November. With that, this article will explore why the shutdown happens, how it affects taxpayers and expats, and how you can prepare for it.

Why Does the IRS Shut Down E-Filing?

The IRS e-filing shutdown occurs for a few different reasons:

• System Maintenance and Updates: This is important when new tax legislation is added for the next year. With yearly maintenance, the IRS ensures the system can adequately handle the tax returns for the new year.
• Security Enhancements: With cyberattacks becoming increasingly common, especially during tax season, the IRS must continuously strengthen security measures to protect personal financial data.
• System Capacity Testing: As e-filing is the most common way to file, the IRS uses this period to ensure the system can handle a high volume of tax returns during peak tax season.

Without the yearly maintenance, people could experience slower returns, data breaches, and errors within the systems.

When Does the IRS E-Filing Shutdown Happen?

Unlike the standard filing deadlines, the IRS e-filing shutdown has no specific date set in advance. Often, you will only hear the official date of the shutdown approximately three weeks before. In 2024, the IRS e-filing shutdown has already been announced for November 30th, 2024, at 11:59 pm EST.

Anyone looking to e-file beyond November 30th, 2024, must submit their US tax return on paper.

How the Shutdown Affects Taxpayers and Expats

The IRS e-filing shutdown can substantially impact how taxpayers file their taxes. When the shutdown occurs, taxpayers are required to file their tax returns on paper. Paper filing takes longer and has the added risk of errors. It can be even more frustrating for those relying on refunds for financial planning. For US expats, this means dealing with international mailing times, furthering delays.

For businesses, the IRS shutdown plays a significant role in quarterly filing. Three out of four times per year, businesses can e-file payroll tax returns such as Form 941. In the fourth quarter, paper filing can cause the same delays with important forms, which may also result in penalties for businesses.

The December 15th Extension for Expats

If you think you will miss the October 15th deadline, you can still apply for the December 15th extension, but it will have a few challenges. First, you must mail a formal paper letter to the IRS before October 15th. Second, the IRS does not confirm if the December 15th extension was granted.

The only confirmation you will receive is through a tracking service, stating it has arrived on time. This can be especially stressful as international postal delays are still common.

With the December 15th extension being so unpredictable, it is best to file before the October 15th deadline, but this is not always possible. If you must file after October 15th, try to file before the IRS e-filing shutdown if no taxes are owed, or you will likely face processing delays with paper filing. If taxes are owed, paper mailing with a copy of your December 15th extension letter is recommended to ensure no late filing fees are imposed.

Penalties for Missing Deadlines

If you were not granted the December 15th extension, you will be subject to penalties as your US tax return will be considered late, also known as failing to file. Every month you haven’t filled, there will be a 5% penalty on any unpaid taxes – a maximum of 25%. On top of your failure to file, there will be accrued interest on unpaid taxes.

Note that paper filing does not remove any penalties for late tax returns. Therefore, planning ahead is essential for avoiding penalties and delays.

Preparing for the IRS E-Filing Shutdown

The best way to avoid complications is by filing your tax return as soon as possible before the IRS e-filing shutdown. Avoid the delays and inconvenience of paper filing by filing before mid-November. If you can file by October 15th, you can avoid delays and penalties.

If you must file your tax return by paper, it is recommended that you pay for mail tracking with a certified postal company. International postal services can cause delays, so it is advised for US expats to use a reliable, trackable courier service to ensure timely delivery and maintain proof of mailing.

Another good way to prepare for the IRS e-filing shutdown is to stay informed by signup for the MyExpatTaxes email list. Knowing dates or changes in the filing process can only benefit you as the taxpayer. Keeping an eye on these updates will help you make more informed decisions regarding filing times and procedures.

If you want to prepare for 2025 (filing your 2024 taxes) ahead of time, check out MyExpatPlanning. This service helps you start planning your filing year!

E-File by November 30th!

Although the IRS benefits from the shutdown, most taxpayers do not. E-file your tax return by November 30th to avoid more unnecessary tasks. Don’t miss the cut-off date; file today with MyExpatTaxes!

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