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Can I extend filing of my US 1040 return beyond October 15? And how about form 3520?

Weekly Q&A

US citizens living outside the US (i.e. abroad) have an automatic 2-month extension of time to file the individual income tax return from April 15th to June 15th.   If a further extension is needed, Form 4868 must be filed on or before June 15th, to receive an automatic extension of time to file their US individual income tax return to October 15th.

Still not enough time to properly file your US individual tax return and related schedules? Treasury Regulation 1.6081-1(a) authorizes the Commissioner to grant an extension to US citizens abroad to December 15th.  A letter explaining why an additional 2-month extension is required must be sent to the Internal Revenue Service (“IRS”) on or before October 15th.

The authorization to grant an addition 2-month extension of time to file to December 15th applies to any return, declaration, statement or other document which relates to any tax imposed by subtitle A or F of the Internal Revenue Code (“IRC”).  For example, Form 3520 “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts” may also be extended to December 15th as the return filing obligation is imposed by subtitle A, subchapter J of the IRC.  When writing the letter be sure to include the tax return, information return, statement or other document, including the tax year for which the extension is requested.  You must also include a reason for needing additional time to file the required tax and information returns.

The above refers to the extension of time to file a return, and not the extension of time to pay.  All tax payments must be made by April 15th to avoid interest and late payment penalty charges.

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New IRS Compliance Deadlines May Impact Your Filings

IRS Compliance Deadlines

On 31 July 2015 President Obama signed the bill into law (The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, H.R. 3236, also known as Highway or Stop-gap Bill) which amongst other measures sets new due dates for commonly filed US income tax returns and other disclosures. These changes to the filing deadlines are applicable to returns for tax years beginning after 31 December 2015 which means for calendar-year filers the new deadlines will first appear in 2017.

FinCen Form 114

The standalone June 30th due date for electronically filed form FinCen 114, Report of Foreign Bank and Financial Accounts, (also known as FBAR) is now almost history. Starting in 2017, FBARs will have to be submitted at the same time as income tax returns, whether on APRIL 15 or with a six-month extension. A provision for an automatic 2-months extension to June 15 similar to Treasury Regulations Section 1.6081-5 for Americans abroad shall also apply. This is a very welcome change which makes a lot of sense for taxpayers and tax practitioners.

FBAR is required if a taxpayer, whether an individual or an entity, has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds. For additional criteria on filing FBAR please see the following IRS link: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR

Form 1065

U.S. Return of Partnership Income reported on Form 1065 and partner’s Schedule K-1, Partner’s Share of Income, will soon change its current deadline of APRIL 15 or on the 15th DAY of the FOURTH MONTH following the taxable year. Starting with 2017, the filing deadline will be MARCH 15 or on the 15th DAY of the THIRD MONTH following the taxable year. This change effectively aligns the due date of the partnership return with the deadline of another flow-through entity’s tax reporting – S corporation (Form 1120-S). The likely hope behind this switch is that Schedule K-1 reporting each partner’s share of the partnership tax items will be available in time for their inclusion into the partner’s individual or corporation tax return.

We are not so optimistic and think that the change will likely lead to a greater number of extensions of partnership returns in addition to the returns of their partners.

For instructions of filing Form 1065 see the following IRS link: https://www.irs.gov/uac/Form-1065,-U.S.-Return-of-Partnership-Income

Form 1120

The deadline for a U.S. Corporation Income Tax Return has been flipped to what used to be the partnership return’s deadline, or APRIL 15 for a calendar year taxpayers or on the 15th DAY of the FOURTH MONTH for fiscal year-end filers. This means that we now will be clogged even more with the matching personal and corporate deadlines! If it is not confusing enough, here is another twist. C corporations with tax year-ends of June 30 will continue filing their returns on September 15 until 2025 and on October 15 thereafter. https://www.irs.gov/uac/Form-1120,-U.S.-Corporation-Income-Tax-Return

It is yet known whether the filing deadline will change for treaty-protective Form 1120-F, U.S. Income Tax Return of a Foreign Corporation.

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