Getting Help with Unfiled Tax Returns as US Expat

Have you missed more than a few tax returns since moving abroad? If so, you’ll have a stack of unfiled returns that require your attention. Let’s say you forgot or didn’t know you had to file US taxes while living abroad. In that case, you have a high probability of qualifying for a tax amnesty program called the Streamlined Procedure.

Understand the Streamlined Procedure

The Streamlined Procedure is a filing process that helps US expats catch up on unfiled tax returns and Foreign Bank Account Reports (FBARs) without fearing penalties. This procedure is open to any US citizen or Green Card holder in various tax situations. Overall, the Streamlined Procedure is designed to help US expats regain their good standing with the IRS.

Qualifying for the Streamlined Procedure

1) The IRS Hasn’t Contacted You

For the Streamlined Procedure, the IRS must not have contacted you directly. If the IRS contacts you requesting your unfiled tax returns and FBARs, you will not qualify for this amnesty tax program.

2) Your Reason for Not Filing was Non-Willful Conduct

To qualify for the tax amnesty program, your reason for not filing must be non-willful, meaning you were completely unaware of your filing duties and requirements. Submitting Form 14653, the Certification by US Person Residing Outside of the US, confirms your innocence, allowing you to meet one of the Streamlined Procedure requirements.

Luckily, Form 14653 is easy to file when you use MyExpatTaxes. Check out our special offer for the Streamlined Procedure.

3) Meet the Residency Criteria

If you have unfiled tax returns but live in the US, the Streamlined Procedure will not help. For this amnesty program, US citizens and Green Card holders must pass one of two tests: the Physical Presence Test or the Bona Fide Residency Test.

Physical Presence Test: You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during any period of 12 consecutive months, including some part of the year at issue.

Bona Fide Residency Test: You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. If you are a calendar year taxpayer, an entire tax year is from January 1st through December 31st.

4) Catch Up on Unfiled Tax Returns and FBARs

Firstly, you are only required to file the current year plus three years of past tax returns. With these four returns, all the same rules apply, meaning you can still claim deductions like the Foreign Earned Income Exclusion or Foreign Tax Credit to limit double taxation.

Secondly, only the last six years of FBARs must be submitted. If any foreign financial account has collectively exceeded $10,000 in the past six years, it must be reported on an FBAR. These foreign financial accounts include anything from a standard bank account to a foreign investment account.

Lastly, if you have filed US taxes since moving abroad, then you were aware of your tax obligations, which makes you ineligible for the Streamlined Procedure. This is when it’s important to work with an expat-focused Tax Professional to ensure you have an airtight reason for not filing.

Didn’t Qualify for the Streamlined Procedure?

Unfortunately, if you have been contacted by the IRS regarding your unfiled tax returns, there will be tax penalties, and you will still be required to file your prior tax returns. Penalties can become quite serious for a US expat, making the process more stressful. Here is an overview of what could happen:

• A fine of $10,000 or 5% interest is added monthly to unpaid taxes, compounding until it reaches 25%.
• Being denied your US passport renewal due to a large unpaid tax debt.

Learn more about how the IRS calculates penalties.

Start Streamlining with MyExpatTaxes Today!

At first glance, the Streamlined Procedure seems rather complex, but with MyExpatTaxes, it is a straightforward process. With our dedicated Streamlining package, you can become tax-compliant once again!

Our software helps US expats by allowing them to e-file all unfiled tax returns and FBARs. Even the essential Form 14653 is handled using the MyExpatTaxes tax software. It’s time to start your tax filing journey as a US expat.

Get started for free, pick a plan when you’re ready. Or see the Pricing Page for all the details.