Catching Up With US Tax Returns — Top Tips
US citizens (and resident aliens) are still required to file US tax returns each year — their worldwide income is still subject to US tax.
If you haven’t been filing your US tax returns while you have been overseas, the IRS currently has an amnesty where you can catch up on your US tax returns.
The Streamlined Filing Process is only aimed at individual US taxpayers.
If the IRS has already initiated an examination into your tax affairs, you will not be eligible to use the Streamlined Filing Process.
You will need to know your social security number. If you are not eligible for a social security number, you can apply for a individual tax identification number (ITIN). You can send in the application for the ITIN with the Streamlined Filing Process documents.
For at least one of the last 3 years, you are required to be outside of the US for at least 330 days.
Under the Streamlined Filing Process, you are required to file the last 3 returns that are overdue. The normal due date for the US return is April 15 following the end of the tax year. If you are living overseas on the due date, you are granted a 2 month extension to file your US tax return — June 15.
By using the Streamlined Filing Process, the IRS waives the late filing penalties that would otherwise have been payable.
In addition, you may also need to declare your foreign bank accounts on the Foreign Bank Account Reporting (FBAR) forms.
You will need to look back 6 years for the FBAR forms. If the total value of all your foreign bank accounts exceeds $10,000 for a year then you will need to file the FBAR forms.
The FBAR forms are not filed with the US tax returns; instead they are filed online with the US Treasury. When the FBAR forms are submitted, you should make a note that you are using the Streamlined Filing Process in the notes section. There is a cover page for the FBAR forms and when asked why you are filing the forms late, you should choose “other” as the reason. In the box that then pops up, you can elaborate and explain about your situation and the Streamlined Filing Process.
If you have any queries on the FBAR forms, there is a helpline where you can discuss your queries — 1–703–905–3975 (if calling from overseas).
You may see the FBAR forms described under their technical name — FinCEN 114).
When the tax returns are submitted to the IRS, you will need to include, in red, on the top of the return that the returns are being filed under the Streamlined Filing Procedure, by writing “Streamlined Foreign Offshore”.
You will also need to sign a statement to certify that there was no non-wilful conduct — normally this would be that you were not aware that you still needed to file US tax returns now that you are living abroad.
The disclosure, form 14653, is sent in with the tax returns. The IRS provides detailed examples of what it deems to be non-wilful conduct and in the vast majority of cases there should be a scenario that covers your situation.
If there is any tax to pay, you will need to send payment in with the tax returns. The payment should be in US dollars and not foreign currency.
Once all the tax returns and disclosure have been completed, you will need to send all the documents in the post to:
Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741
Once the returns have been submitted, the IRS normally takes 3 to 4 weeks to process all the tax returns. If there is no tax due for the returns, the IRS will not normally send out any confirmation of the returns or that the Streamlined Filing Process has been completed. For peace of mind you can call the IRS and they will confirm over the phone that the tax returns have been processed and you are all upto date.
About Bambridge Accountants (www.bambridgeaccountants.co.uk)
Bambridge Accountants specialise in providing accountancy and tax advice to American expats and helping US citizens catch up with their tax returns.
If you have any questions about the Streamlined Filing Process, or you would like to arrange a free initial meeting please call us on 020 3829 3492 or email email@example.com