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Instructions for Paying Your US Tax Liability While Living Overseas

Instructions for Paying Your US Tax Liability While Living Overseas
Ines Zemelman, EA
26 January 2022

The majority of US Expats are able to completely eliminate US tax liability after taking advantage of all the exclusions and deductions available to those living and working overseas.  There are times, though, when there is still some tax liability.  If you are a US Expat who owes taxes to the IRS, here are the steps to take to make the proper payment(s).

Paying with bank account

If you have a US bank account, you are able to transfer funds from your bank account to the IRS.  To pay using your bank account, go to: http://www.irs.gov/Payments/Direct-Pay.

Then take the following steps:

  1. Click the option ‘Make Payment’
  2. Choose ‘Balance Due’ under Reason for payment.
  3. Apply payment to 'Income Tax - Form 1040'
  4. Choose your tax year for payment - this is the tax year you are making a payment towards. Remember that you are filing for the previous year, so your tax liability in 2015 will be for tax year 2014.
  5. Verify your identity. Be sure to enter your information exactly as you have entered it on your US expat tax return. Information entered should be for the primary taxpayer. If the information on the site doesn't match the information on your return, your payment will be rejected or mislabeled.
  6. Enter the payment amount you wish to send to the IRS. Enter the personal information of the primary taxpayer.

Credit Card Payment

If you don’t have a US bank account, you will be able to make a payment using your credit card.  Keep in mind that this is a ‘convenience’ offered by the IRS, so there are additional charges in processing your credit card payment. 

To take advantage of this option, visit http://www.irs.gov/uac/Pay-Taxes-by-Credit-or-Debit-Card and take the following steps:

  1. Click the option ‘Make Payment’
  2. Choose ‘Reason for payment’ from the dropdown list
  3. Choose the tax year - this is the tax year you are making a payment towards. Payments for multiple years are processed in separate transactions.  
  4. Verify your identity. Be sure to enter your information exactly as you have entered it on your US expat tax return. Information entered should be for the primary taxpayer. If the information on the site doesn't match the information on your return, your payment will be rejected or mislabeled.
  5. Enter the payment amount you wish to send to the IRS. Enter the personal information of the primary taxpayer.
  6. Repeat the process if you need to pay for multiple years or for different reasons.

Estimated Tax Payment

If you are making a payment towards estimated taxes, select 'Estimated Tax' as your reason for payment and the tax year you will be paying towards. Unlike payment towards a prior tax year, estimated payments are for the future, so you are likely paying towards the current year.

As a rule of thumb, if you owed tax last year, you should make estimated payments of 110% of your prior year tax due to avoid underpayment penalties.

Wire transaction from foreign bank

If you don't have U.S. bank account and you don't have a credit card then the last option is wire transaction from the foreign bank to the IRS: https://www.irs.gov/individuals/international-taxpayers/foreign-electronic-payments

You are going to want to pay special attention to the address you listed on your US expat tax return.  If you made any abbreviations on your return to make it fit in the lines, be sure to use the same abbreviations on your electronic payment.

Ines Zemelman, EA
Founder of TFX