Streamlined Procedure FAQs for US Expats
Many American expats assume that living abroad, or perhaps a tax treaty, exempts them from filing US taxes from overseas, so they are surprised to discover that the US requires all American citizens and Green Card Holders to report their worldwide income and that they still have to file.
Many expats realize this after already having been living abroad for some time, along with the realization that they may face IRS penalties.
What is the Streamlined Procedure?
Thankfully, there’s an IRS amnesty program called the Streamline Procedure that allows Americans living abroad who have missed multiple years’ US tax filing to catch up without facing penalties and neither, in most cases, owing back taxes.
To qualify, it’s important that expats take steps to catch up as soon as they realize that they should have been filing, as the program is only available for those who have missed previous filings unintentionally and non-willfully, through prior ignorance of the rules.
Furthermore, the Streamlined Procedure program is voluntary, meaning it can’t be used if the IRS contacts you about your missed filings first.
What does non-willful mean?
Non-willful means that you haven’t been filing from abroad because you weren’t aware, or didn’t understand , that you had to.
The IRS can access expats’ foreign banking, investment, and tax data, and suspicious movements of money between foreign accounts or an online correspondence trail may indicate to the IRS willful avoidance of filing rather than non-willfulness.
How does the Streamlined Procedure work?
To catch up using the Streamlined Procedure, expats have to file their last three missed federal filings, and, if applicable, FBARS for the last six years.
“The streamlined procedures are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct.” – the IRS
They must also file Form 14653, which contains the non-willfulness statement.
An FBAR is a Foreign Bank Account Report, required for any year in which an American has over $10,000 in total in the foreign bank, pension, and investment accounts that they have signatory authority over. If you’re not sure whether you should be filing an FBAR, always seek advice, as the IRS can access foreign bank data and non-filing penalties are steep.
Will I have the opportunity to discuss my circumstances and the filing process with an accountant?
When you choose to work with Bright!Tax to catch up with your US tax filing with the Streamlined Procedure program, you have the opportunity to fully discuss your circumstances and the process in depth with your Bright!Tax, expat-expert, American CPA at the outset.
Will a single accountant be working on my filings?
Your Bright!Tax CPA will always be your single point of contact, and you can communicate with him or her at any time. They are supported by a wider admin team, who will also be available and enthusiastic to assist you throughout the process.
Will you provide guidance on writing my non-willfulness statement?
While everyone’s situation is unique, we will be happy to advise and assist you when you write your non-willfulness statement on Form 14653.
How will I upload my documents to you?
Our secure online client organizer identifies which files you need to upload, and includes a secure document upload (and download) function.
Will I owe back taxes or penalties?
Expats who file under the Streamlined Procedure won’t face any IRS penalties. Most expats don’t end up owing any back taxes either, as they can claim one or more exemptions or credits available for Americans abroad when they file.
How will I know that my filings have been received and accepted by the IRS?
One of the downsides of the Streamlined Procedure is that you have to mail the Streamlined tax forms to the IRS (although the FBARs can be e-filed). After we prepare your US tax returns and, you approve them, you can sign a Power of Attorney form that will allow us to contact the IRS on your behalf to confirm that they have been processed.
If you have any further questions about the Streamlined Procedure, don’t hesitate to get in touch, or, if you’re ready, simply register here.