As April tax filing due date looms, many US persons abroad are finishing up their US tax returns and getting ready to pay the taxman. Payment of US taxes must be made in US dollars. Making actual tax payments when you are an American abroad can be a bit cumbersome if you do not maintain a checking or other account in the United States. My recent blog post detailed a brand new option for Americans abroad to open up an account in the USA even if they cannot provide a US residence address. This new and convenient option involves a partnership of sorts between the American Citizens Abroad Inc., (ACA) a non-profit organization, and the State Department Federal Credit Union (SDFCU). It makes US accounts available to all ACA members no matter where they live. Read more about it here.
Many clients use this method to make payment of their taxes. If the tax return is being e-filed, the check is mailed separately to the IRS along with the 1040-V voucher that ensures proper crediting of the payment.
A certified check (banker's draft or banker's check) is usually considered a relatively safe and reliable method of payment. These types of checks carry a guarantee from the payer's bank that the funds will be available when the check is cashed by the payee. Essentially, a certified check is guaranteed with funds from the bank and is a check that is signed by the bank. Since it is not from the individual's personal account and a "stop-payment" order cannot be put on a certified check, this type of check is viewed as good as cash.
Most non-US banks will allow you to get a cashier's check in United States dollars in exchange for the cash amount requested, plus the bank's processing fee. The check should be made payable to the "United States Treasury". You may need to leave yourself some time to obtain a certified check as some banks may require time to process them. In addition, you should discuss with the bank how you can add your identifying information on the check (e.g., your name, taxpayer identification number, tax year and so on) so that you can be given proper credit by the Internal Revenue Service (IRS) for having paid your taxes. Some banks are very particular about what you can write on the face of the check and you may have to put this information on the back of the check.
There are various other options for paying your U.S. taxes.
This option is useful if you do not have a US bank account, but the processing and fees can be very costly. Your payment will be processed by a so-called "payment processor" who will charge a processing fee. The fees vary by service provider and may be tax deductible. Refer to the Pay Your Taxes by Debit or Credit Card website with details regarding this process and associated fees.
The Electronic Federal Tax Payment System, or EFTPS, is a system provided by the US Treasury but it is only available if you have a US bank account. With EFTPS you can conveniently pay your taxes either online or by phone from anywhere, 24/7, 365 days a year. It's fast and easy, with step- by- step directions that help you make payments in minutes. It also helps ensure accuracy and reduce penalties by allowing you to schedule payments in advance and review your information throughout the process. Read more about EFPTS here.
If you do not have a US bank account, it may still be possible to make same-day wire transfers directly to the IRS. Your foreign bank must have a banking relationship with a US bank, although the US bank does not have to be an affiliate or otherwise related to the foreign bank. Small local banks may not be able to affect an international wire transfer but most large banks can. If your bank is able to transfer money to the US, it will ask you to complete an application for international wiring. You will need the Routing Transit Number (RTN), also known as the American Banking Association (ABA), number for the "Destination Bank", sometimes referred to by banks as "Beneficiary's Bank".
To complete a wire transfer you will need the following information:
More information can be found here.
In order to complete an international wire transfer through your foreign bank, you will need to complete the Same-Day Taxpayer Payment Worksheet (PDF) with the proper Tax Type Code and tax period (year and/or quarter) so that the funds will be properly applied to your IRS tax liability. After you have completed the worksheet, take it to your bank to request international wiring.
You should complete the Same Day Taxpayer Worksheet PRIOR to going to your bank. The information from the worksheet will be needed to complete the wiring application required by the bank.
If your foreign bank needs assistance, they may contact the Federal Tax Payment Service Customer Service at 314-425-1810 (Not toll free). If you have questions regarding international wiring, please contact your local office internationally for assistance.
For more information on these payment methods, visit the Electronic Payment Options Home Page.
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
Virginia La Torre Jeker J.D.
Virginia La Torre Jeker J.D., is based in Dubai. Virginia has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has over 30 years of experience specializing in the international aspects of US tax, including FATCA. She has been quoted in the New York Times and Newsweek, and is regularly quoted in many local news articles and publications."
Maastricht University - 5th Global Tax Policy Conference: Tax Policy after BEPS, what can be expected? On 6 September 2019 at the Royal Museums of Arts and History in Brussels, Prof. Dr Hans van den Hurk, chairman of the Annual Global Tax Policy Conference of the Maastricht Centre for Taxation (Maastricht University) with his esteem speakers are addressing the above question.Read more