Missed tax extension deadline - what penalty applies if I don't owe or expect a refund?

I've been living and working in South Korea for the past two years and just moved back to the US in late November (currently job hunting). For some reason, my tax extension for the 2024 filing didn't go through this time, which has never happened before. I called the IRS and they mentioned I'd likely face a penalty. When I looked online, it seems the penalty is calculated as a percentage of what you owe, plus interest for each month it's late. But here's my situation - I don't actually owe anything to the IRS. Because of my time working abroad, I just need to file as a formality. I didn't pay any federal or state taxes during my time overseas, and I'm not expecting a refund either. So I'm confused about what penalty I'd face when everything is essentially $0. Would the penalty also end up being $0 since it's calculated as a percentage of what I owe? Or is there some minimum penalty regardless of owing nothing? Really appreciate any insight on this!

0 coins

18 comments

Tami Morgan

•8M

The good news is that if you don't owe any tax, there's typically no failure-to-file penalty. The penalty is indeed calculated as a percentage (usually 5% per month) of the unpaid tax, so if your tax due is $0, then 5% of $0 is still $0. However, you should still file your return as soon as possible. Even though you worked abroad, you're still required to file if you're a US citizen or resident alien, regardless of where you live. Make sure you properly report your foreign earned income and look into claiming the Foreign Earned Income Exclusion (Form 2555) or Foreign Tax Credit (Form 1116) if you paid taxes to South Korea. Also, don't forget that some states have their own filing requirements that might differ from federal ones, so check if you still have state tax obligations.

0 coins

Tami Morgan

•8M

State tax penalties vary by state, and California in particular can be quite strict. If you were a California resident before leaving and didn't formally change your residency, California might still consider you a resident and expect you to file. Unlike the federal system, some states do impose minimum penalties even if you don't owe tax. The IRS typically doesn't charge a flat fee for late filing when no tax is due. The percentage calculation is standard practice. However, if you have an obligation to file certain information returns related to foreign accounts (like FBAR or Form 8938), those can have separate penalties regardless of tax owed.

0 coins

Haley Bennett

•8M

I went through something similar after working in Germany for a few years. I used taxr.ai (https://taxr.ai) to analyze my situation and it saved me so much headache. They specifically helped me understand how my foreign income affected my US filing requirements and confirmed I wouldn't face penalties since I didn't owe anything. Their system scanned my foreign tax documents and explained exactly how the Foreign Earned Income Exclusion applied in my case. It took like 10 minutes to get clear answers instead of hours of research or expensive accountant fees.

0 coins

Haley Bennett

•8M

They don't file the taxes for you - it's more like having a tax expert analyze your situation and documents. You upload your documents, and they use AI to review everything and provide personalized guidance on what forms you need and how to handle your specific situation. For my German income, they highlighted exactly which parts of Form 2555 were relevant. Yes, they absolutely handle state tax issues too. They specifically helped me understand my obligations to my home state while living abroad. They explained California's residency rules and what steps I needed to take to establish non-residency for tax purposes, which saved me from making costly mistakes on my return.

0 coins

Nina Chan

•8M

Just wanted to follow up - I tried taxr.ai after seeing this recommendation and it was exactly what I needed. The system confirmed that I didn't need to worry about federal penalties since I didn't owe anything, but it caught that I still had California tax obligations I wasn't aware of! They explained exactly how to handle the state residency issue and what documentation I needed to prove my time abroad. Would have been hit with CA penalties without realizing it. Definitely worth checking out if you're dealing with international tax situations.

0 coins

Ruby Knight

•8M

If you need to resolve this quickly, I'd recommend Claimyr (https://claimyr.com). I was in a similar situation with a missed extension after working in the UK, and I needed to talk to someone at the IRS directly. After trying for days to get through on my own, I used Claimyr and had a callback from the IRS within 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed I wouldn't face penalties with zero tax due and helped me understand what forms I needed to file to properly document my situation. Saved me days of frustration and uncertainty.

0 coins

Ruby Knight

•8M

The service just helps you skip the hold times - they use a system that waits on hold for you and calls you back when an agent is available. Think of it like having someone else wait in line for you. It's especially useful now during tax season when hold times can be 2-3 hours. No, it's definitely not a scam. They don't claim to have special access or to move you ahead in line. What they do is navigate the complex IRS phone system and stay on hold so you don't have to. The IRS doesn't know or care that you're using a service - they just see a caller waiting on hold who happens to connect you when an agent picks up. I was skeptical too until I tried it and got through when I had been unsuccessful for days.

0 coins

Logan Stewart

•8M

I owe everyone here an apology - especially to profile 12. I was totally wrong about Claimyr being a scam. After posting that skeptical comment, I decided to try it myself just to prove it wouldn't work. I was absolutely shocked when I got a call back from an actual IRS agent in about 35 minutes. The agent confirmed exactly what others here have said - no penalty when you don't owe taxes. She also walked me through some foreign bank account reporting requirements I had no idea about. Would have been in hot water if I hadn't filed those forms. Really glad I tried this instead of continuing to struggle with the IRS phone system.

0 coins

Mikayla Brown

•8M

The FBAR deadline is technically April 15th (same as tax day), but there's an automatic extension to October 15th - you don't need to request it. File it as soon as you can though! It's filed electronically through the FinCEN BSA e-filing system, not with your tax return to the IRS. I'd also check if you need to file Form 8938 (Statement of Foreign Financial Assets) with your tax return if your foreign accounts exceeded certain thresholds. The requirements are different than FBAR and it goes with your tax return, not separately.

0 coins