Did you miss my last blog? Check it out here, Preparing for FBAR and Form 8938? Download Your Financial Statements Now. Today I am back with another timely tax tip!

February is an ideal time to begin your resident-country tax return and obtain a preliminary tax calculation. That early number is often exactly what we need to estimate your U.S. Foreign Tax Credit (FTC) and decide whether making a U.S. tax payment by April 15 is a smart move or an unnecessary one.

Why this matters, even if you live outside the U.S.

If you are a U.S. citizen or resident alien living abroad on the regular due date, you generally receive an automatic two-month filing extension, to June 15 for calendar-year filers. This is often misunderstood as “April 15 no longer matters.”

Sadly, this is not the case.

Interest generally starts accruing on unpaid U.S. tax from April 15, even if you qualify for the June 15 filing extension. In other words, the filing deadline moves, but the interest clock does not.

As a result, April 15 remains the key payment decision date for many international clients.

How a preliminary resident-country tax result helps your U.S. return

Many expatriates rely on the Foreign Tax Credit, claimed on Form 1116, to reduce or eliminate double taxation. The problem is timing. Resident-country tax returns are often not finalized by early April, and foreign tax authorities are not known for rushing to accommodate U.S. deadlines.

The good news is that we do not need perfection. A draft return, preliminary computation, or provisional assessment can be extremely useful for U.S. planning purposes.

Switzerland example

In Switzerland, tax returns are commonly due in March, depending on the canton, and extensions are widely available. After filing, the tax authorities issue a final assessment, sometimes well after U.S. filing season has ended.

A preliminary Swiss tax result in March or early April gives us a much stronger basis to:

• estimate available foreign tax credits, and
• determine whether making a U.S. payment by April 15 is prudent to limit interest exposure.

February action plan: quick, practical, and high impact

For your Swiss return: Whether you self-file or work with a Swiss tax accountant, submit your preliminary tax declaration by your canton’s first deadline. Think of it as doing your future April self a favor.

For your U.S. return (that’s us): Send us everything you have so we can prepare a draft U.S. return. This includes wages, self-employment income, and bank and investment income. Any preliminary foreign tax estimate is welcome, even if it comes with multiple disclaimers and the word “draft” in bold.

What this allows us to do before April 15

With both your U.S. income picture and a reasonable foreign tax estimate, we can usually answer the question everyone really wants answered:

Do I need to pay the IRS by April 15, and if so, how much?

Getting this right can materially reduce interest exposure while still letting you take advantage of the June 15 filing extension.

Bottom line

February is the ideal time to start your resident-country tax return and get an early tax estimate. Even a preliminary Swiss computation can significantly improve Foreign Tax Credit planning on Form 1116 and support a smarter, calmer, and less expensive April 15 decision.