I forgot to file my expat U.S. tax returns. What can I do about it?
You are having the time of your life living overseas and have forgotten to file your U.S. Expat Tax returns. Oh no, will I be fined a huge amount for having fun instead? Don’t worry; the IRS acknowledge how easy it is to forget and has created a series of streamlined procedures that make it easier to beg for forgiveness and file what you need without penalty. They have even drawn up a threshold for reporting, so you might not even have to file.
At Mir Taxes, we understand the American Tax System inside and out and are here to help. Our founder, Carl Mir, has lived abroad and has seen from numerous client’s experiences how easy it is to forget. This is why we have created the following guide to the IRS’s foreign offshore procedures for late filing.
Will the IRS forgive you for forgetting to file your tax return?
- A step-by-step method to putting your affairs in order and filing past or amended tax returns.
- Allowing you to file delinquent or amended tax returns to resolve outstanding tax issues i.e. errors in income, number of dependents etc. that have a flow on effect.
- Provision of reasonable terms and timeframes to resolve tax issues and pay any penalties applied to your case.
Can anyone apply for clemency?
The Streamlined Foreign Offshore Procedures (SFOP) are available to individual taxpayers, the estates of individual taxpayers who meet the filing threshold requirements, and the non-willful criteria.
To meet the non-willful criteria, you must certify that the non-filing and non-payment of tax liabilities were not willful. In the words of the IRS:
non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
In our words, as long as you did not intentionally fail to or ignored fulfilling your tax obligations, you may be forgiven. Just don’t do it again!
Unfortunately, if you are already under a civil examination by the IRS or have used the streamlined procedures before, you cannot use the SFOP to apply for clemency.
What do I need to file using the SFOP?
To use the SFOP, the first thing you require is a valid Taxpayer Identification Number (TIN or ITIN). According to the IRS, “U.S. citizens, resident aliens, and certain others can use a valid Social Security number” (SSN). However, if you are a taxpayer who is ineligible for an SSN but is eligible for an ITIN and doesn’t have one, you can still go through the SFOP if you also submit an ITIN application at the same time. The bad news is that if you are ineligible for an SSN or a TIN, you cannot have your forgetfulness processed this way.
To be considered compliant under the SFOP, you must report the following:
- Filing of the last three years of tax returns, including all corresponding forms and the reporting of all worldwide income, received.
- Filing the current year’s tax return, including all corresponding forms.
- Filing of the current and past six years of Foreign Bank Account Reporting (FBAR)
- Completing and filing Form 14653: Certification by a U.S. Person residing outside of the U.S. Included with this form is a certification of reasoning for non-filing to determine non-willfulness.
Some of the financial documents you also need to provide include:
- End of year salary reporting from your employer/s. If self-employed, an income statement of revenue and expenses.
- Bank statements and statements of income from investments.
- A summary of any rental income and expenses.
- Tax returns filed from within your country of residence.
Gathering all the information you require and applying for SFOP can take time and be a demanding task. So let us take some of the weight off your shoulders by filing for an SFOP on your behalf. We can also make sure that your non-willful failure to file does not happen again.
Please note that if the IRS has any questions, they will need to communicate with you directly, but we keep all of your corresponding documents safe and secure in case they do. At Mir Taxes, we take the hassle out of completing your Expat American Tax reporting.
Streamlined Filing Compliance Procedures
U.S. Taxpayers Residing Outside the United States
FBAR FinCEN Form 114
Form 8938, Statement of Specified Foreign Financial Assets
Certification by U.S. Person Residing Outside of the U.S. (Form 14653) (PDF)
Streamlined Filing Compliance Procedures for U.S. Taxpayers Residing Outside the United
States Frequently Asked Questions and Answers
The U.S. tax filing threshold requirements