Filing your 2018 US tax return from overseas? Understand the hidden costs involved in transfers of US dollars. There are two things that are guaranteed in This American Life: taxes, and the fact that you have to pay them. The consensus seems to be when it comes to tax and your money, people want to keep things fair. When President Donald Trump introduced the 2017 Tax Cuts and Jobs Act, a Reuters poll showed that three-quarters of Americans surveyed favoured wealthier Americans paying more tax. Looking to Europe, a 2018 Eurobarometer survey reported that 74% of Europeans believe the fight against tax evasion and tax fraud should be prioritised by the EU. CurrencyFair want to share a third universal truth – how saving on money transfers of US dollars can make paying your taxes that bit easier to endure.They don’t tell you about this mark-up, which means you can end up paying up to 3%-6% more in extra fees and hidden charges. When exchanging your money, however, they usually only tell you about the transfer fee charged. If using a bank outside the USA to transfer US dollars, you can be making an international wire transfer without realising it and end up paying additional fees, which means an unfair charge for you to just send your money to another bank account. Talk about adding insult to injury.This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from CurrencyFair Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
Filing a tax returnThe process of completing a tax return is generally an unpleasant affair. Filing your tax return is accompanied by a dread-inducing feeling reserved for that long overdue dentist’s appointment. But putting off the inevitable has its consequences. No matter where you are in the world, US nationals face penalties that the Internal Revenue Service (IRS) can levy for failure to file taxes.
Failure to fileIf you are a US expat living overseas, you are obliged to file taxes with the US government, even if you are 100% confident that there is no tax due to be paid by you. Failure to file means you could end up paying more than you expected. You are liable to pay a penalty should you fail to file your tax return or pay any taxes owed by the filing deadline.
- Fail to file by the tax deadline? For each month or part of a month that your tax return is late, the IRS charge a penalty of 5% of the unpaid taxes.
- Fail to pay your taxes owed to the IRS by the tax deadline? There is a penalty of a half of one percent of the unpaid taxes for each month or part of a month after you have missed the tax-filling due date. No penalties will incur until after June 15th, but interest on the taxes due will begin as of April 15th.
Got it, I need to file. How much time is left to file my 2018 tax return?The 2019 deadline for a US national filing their 2018 tax returns from overseas is June 15, 2019. The deadline for all other US nationals is April 15, 2019. That means American expats have an extra two months of tax-induced purgatory to navigate each tax season when you live overseas. But what you decide to do with all this extra time is important. Even if you can’t stand the process of filing, and dread to see the final numbers on the IRS scale, use your extra extension time until June 15, 2019 wisely:
How to avoid extra fees and charges on money transfers of US dollarsBy researching the extra fees and charges you could be paying when sending US dollars to the USA, you can save money on the cost of your wire transfer. Before you complete a wire transfer of US dollars, you’ll want to:
- Research the fees your bank will charge you for the online money transfer
- Compare the exchange rate being offered at the time of the transaction with the currency market rate
- Consider any additional intermediary and recipient charges by your bank to complete the transfer