What Happens to Your Tax Debt if You Leave the Country?
If you have tax debt with the IRS and decide to leave the country, you might be wondering: Does my tax debt follow me? Can I escape my obligations by living abroad? Unfortunately, the answer is a resounding no. Here’s what you need to know about tax debt and international travel.
Your Tax Debt Doesn’t Disappear
Regardless of where you live, if you incurred tax debt while residing in the United States, you still owe it—even if you move abroad. U.S. citizens and resident aliens are required to report and pay taxes on their worldwide income, regardless of where they live. While certain tax breaks, like the Foreign Earned Income Exclusion and Foreign Tax Credit, can reduce or eliminate the amount of U.S. taxes owed, these provisions do not erase tax debt that you already owe.
The IRS Can Pause the 10-Year Collection Clock
Some taxpayers believe they can wait out the IRS’s 10-year statute of limitations on tax collections by moving overseas. However, that strategy won’t work. The IRS has mechanisms in place to pause the Collection Statute Expiration Date (CSED) while a taxpayer is abroad. This means that if you leave the country for an extended period, the clock on your tax debt stops running until you return to the U.S., preventing the statute from expiring.
The IRS Can Revoke Your Passport
Another critical consequence of unresolved tax debt is the potential revocation or denial of your U.S. passport. If the IRS certifies your debt as seriously delinquent (over $62,000, adjusted annually for inflation), they can report it to the State Department, which can then deny passport renewal or even revoke an active passport. Many taxpayers only discover this issue when they attempt to travel back to the U.S. and find they cannot renew their passport due to outstanding tax obligations.
What Should You Do If You Owe Back Taxes?
If you owe at least $10,000 in tax debt or have multiple years of unfiled tax returns, it’s crucial to address your situation before it escalates further. At Choice Tax Relief, we specialize in helping individuals resolve their IRS and state tax issues. Whether you’re still in the U.S. or currently living abroad, we can help you explore your options, such as:
- Offer in Compromise (OIC): Settling your tax debt for less than what you owe.
- Installment Agreements: Setting up manageable monthly payments.
- Currently Not Collectible (CNC) Status: Stopping collection efforts if you can’t afford to pay.
- Penalty Abatement: Reducing or eliminating penalties added to your tax debt.
Author:
Rylee Holwager, Social Media Manager
Rylee Holwager graduated from California State University, Northridge in 2022 with a bachelor’s degree in journalism and a minor in communications. She has loved nothing more than telling stories and providing the people with what they need to know. Her career is only in the early stages, but she has already held titles such as marketing administrator, staff writer, social media editor, freelance UGC creator and now social media manager. Here at Choice Tax Relief she is excited to come to work every day to bridge the gap between confused taxpayers and complicated tax concepts.
