Catching Up: What You Need to Know About Streamlined Filing Compliance Procedures and FBAR Penalties

If you’re an American living abroad and haven’t filed annual U.S. income tax returns, maybe ever since moving abroad, H&R Block Expat Tax Services can help. Understanding filing requirements in the U.S. and your host country can be overwhelming, but we’ll get you back on track.

It’s common for U.S. expats to overlook or misunderstand their tax duty, thinking they only have filing obligations in their foreign tax jurisdiction. In the face of honest mistakes, the IRS has historically shown lenience, however you could face serious penalties for things like failure to file foreign bank account reports (FBARs).

H&R Block U.S. Expat Tax Services helps expats decipher their options. The IRS has extensive choices, like Streamlined Filing Compliance Procedures, for Americans who need to catch up with-filing prior year tax returns and foreign account reports.

Offshore Streamlined Filing Compliance Procedures

Offshore Streamlined Filing Compliance Procedures are an option for U.S. taxpayers abroad. The program accommodates expats who were unaware of their obligations, and helps them become compliant with prior year filings while minimizing penalties. To qualify for the Offshore Streamlined Filing Compliance Procedures, you must:

  1. Have lived in a foreign country for at least 330 days during one of the last three years and not maintained a U.S. abode.
  2. Confirm that your failure to file U.S. tax returns and FBAR was due to an honest misunderstanding of your responsibilities.

If you do qualify for Streamlined Filing Compliance Procedures, you will need to:

  1. File income tax returns for the prior three tax years.
  2. File an FBAR for the prior six tax years.
  3. Complete a statement of explanation detailing why your tax returns and FBAR weren’t filed.
  4. Pay the tax and interest due for the last three years.

Delinquent FBAR and Information Report Procedures

If you’ve been filing your tax returns annually and reporting your income, but were unaware of your foreign bank account reporting requirements and the associated FBAR penalties, or other informational reports, a different procedure may secure your amnesty.

Delinquent FBAR and Information Report Procedures allow you to file and amend tax returns to include omitted information reports. A detailed explanation is required with each report to make sure your failure to file was an honest mistake.

Get Started with Virtual Tax Prep

If you’re a U.S. taxpayer, and you honestly made the mistake of not fulfilling your U.S. tax and FBAR duties, H&R Block U.S. Expat Tax Services can help. While your process does require a few more steps, it’s nothing we haven’t seen. Want help? Visit our Virtual Expat Tax Preparation page to learn more about our virtual tax preparation service and to get started with your return.

Warning! The programs listed above are for U.S. taxpayers who have honestly overlooked their past U.S. tax responsibilities. Severe civil and criminal disciplinary action and penalties, such as FBAR penalties, can be assessed against taxpayers who have willfully avoided U.S. tax. H&R Block does not provide legal services. If you are concerned that your failure to file was willful, consult an attorney.

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