The Basics of Streamlined Filing Compliance Procedures and Delinquent FBAR Penalties
4 min read
October 25, 2022
October 25, 2022
At a glance
Behind on your expat taxes? You have options. Learn about Streamlined Filing Compliance Procedures and penalties for late FBARs and tax filings with the tax experts at H&R Block.
For most Americans who pack up and move overseas, selling your belongings and saying goodbye to family and friends means you’ve left behind your American life — which can put you in a sticky situation when it comes to U.S. taxes. You see, just because you relocate to a new country doesn’t mean you get to leave behind your U.S. tax and reporting responsibilities. As long as you’re considered a U.S. citizen, you have a tax obligation to Uncle Sam.
But there’s good news! the IRS Streamlined Filing Compliance Procedures are there to help you get caught up — penalty free (as long as you qualify).
If you’re an American living abroad and haven’t filed your annual U.S. income tax returns for several years — or 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.
What to do if you’re a U.S. citizen abroad and have never filed U.S. taxes while overseas
It’s common for U.S. expats to think they only have to file taxes for the country they live in now, causing them to accidentally overlook their U.S. tax obligations. In the face of honest mistakes, the IRS has historically shown lenience. However, you could face serious penalties for things like failure to file your foreign bank account reports (FBAR).
If you’re a U.S. citizen abroad and have never filed taxes while you’ve lived overseas, don’t panic — we’re here to help you through your options. You’ll have to get caught up on your U.S. expat taxes, and you’ll also have to get caught up on your FBAR.
You can do this with the IRS’ Streamlined Filing Compliance Procedures and Delinquent FBAR and Information Report Procedures. It can be a bit confusing, so if you’re unsure about your responsibilities or how to file, let us do the heavy lifting for you with our Expat Tax Preparation Services.
Catch up on past taxes with Streamlined Foreign Offshore Procedures
Offshore Streamlined Filing Compliance Procedures are an option for U.S. taxpayers abroad who need to get caught up on expat taxes. The program supplemented the now-defunct Offshore Voluntary Disclosure Program and helps U.S. expats who were unaware of their obligations catch up with prior year filings while minimizing penalties.
To qualify for the Offshore Streamlined Filing Compliance Procedures, you must:
- 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.
- 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:
- File income tax returns for the prior three delinquent tax years.
- File an FBAR (FinCEN Form 114) for the prior six tax years.
- Complete a statement of explanation detailing why your tax returns and FBAR weren’t filed.
- Pay the tax and interest due for the last three years.
If you don’t qualify for Streamlined Filing Compliance Procedures:
Don’t qualify for streamlined filing? You still have options to try and get caught up with minimal penalties:
- IRS-Criminal Investigation Voluntary Disclosure Program
- Delinquent international information return submission procedures
If it sounds like a little too much for you, we’re here to take over. Simply create an account and upload your documents to your tax portal. Our seasoned Tax Advisors will look over your documents and help you with next steps.
Avoid FBAR penalties with Delinquent FBAR and Information Report Procedures
Not only do you have to file U.S. taxes each year, but you may also have to report money in foreign banks with a Foreign Bank Account Report (FBAR). The actual form you’d file is FinCEN Form 114, and you’ll have to file it if the combined balance of all your foreign accounts totals more than $10,000 at any point during the calendar year.
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, you might be able to claim amnesty with a different procedure.
Delinquent FBAR or International Information Return Procedures allow you to file and amend your FBAR and return to include omitted information. A detailed explanation is required with each report to make sure your failure to file was an honest mistake.
Need help with Streamlined Filing Procedures or a delinquent FBAR? Start now with H&R Block’s Expat Tax Prep Services
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, we’ll help you tackle them all. Want help? Get started now and we’ll take over from there.
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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