Never filed a US tax return? Check Streamlined first

You have never lived in the USA, but you hold US citizenship by birth or descent?

Then you are what's known as an "Accidental American". And if you have only just found out that this also makes you subject to US taxes, this article is for you.

Here's why: if you simply file your first tax return now without using the Streamlined Procedure, you risk severe penalties, and completely unnecessarily.

1What is an "Accidental American"?

The term describes people who:

• Were born in the USA but moved away as children

• Or have a parent with US citizenship and became US citizens that way

• Have never lived or worked in the USA

• Were never aware of their tax obligations

Sounds harmless? Unfortunately, it isn't.

2US tax obligations even without living in the USA

The USA taxes the worldwide income of all its citizens, no matter where they live.
That means even if you have never set foot in the USA, the IRS expects from you:

• An annual income tax return (Form 1040)

• Reports on foreign accounts (FBAR, from $10,000)

• Where applicable, FATCA forms (Form 8938)

• And all of this going back many years

3The fatal trap for first-time filers

Many people think:
"Fine, I'll just dutifully file my first tax return now and that'll be that."

But that is a serious mistake.

If you "just" file your first 1040 with the IRS, you give up the protection of the official amnesty for those years: penalties the IRS assesses on those returns are not waived, even if you switch to the Streamlined Procedure later, and that can cost you tens of thousands of dollars.

4What is the Streamlined Foreign Offshore Procedure?

The Streamlined Procedure is an official IRS amnesty program. Introduced in 2012 and expanded in 2014, it is aimed at people exactly like you:

Americans abroad who didn't file tax returns because they didn't know they had to.

Benefits:

• No penalties, neither for late tax returns nor for FBAR violations

• Only 3 years of tax returns and 6 years of FBARs required

• After that, you are considered fully tax compliant

• You simply sign a short statement that you did not act willfully

5File the normal way and you give up your shield

As soon as you "just" file a tax return, the IRS assumes you know your obligations.
That means:

• You are no longer considered unaware

• Penalties the IRS assesses on those returns can no longer be waived, not even through the Streamlined Procedure

• In a later audit, you can face draconian penalties, for example:

  ● FBAR penalties of up to $16,536 per unfiled FBAR per year
  ● Interest and late-payment penalties
  ● In extreme cases, even criminal prosecution

6Common misconceptions

🟥 "But I don't owe any tax anyway."
→ Maybe not, but penalties apply not only to unpaid tax, but also to missed filings (such as FBARs).

🟥 "I can fill in the forms myself."
→ With the Streamlined Procedure in particular, professional support matters: even small mistakes in the reasoning ("non-willfulness") can lead the IRS to reject it.

🟥 "I'd rather wait until someone writes to me."
→ If you only come forward after the IRS has taken action, you lose every safeguard. At that point, even the Streamlined Procedure can't help.

6.1What should I do if this applies to me?

If you are a US citizen and have never filed a tax return:

1. Under no circumstances just file Form 1040

2. Instead: have a professional check whether the Streamlined Procedure is available to you

3. Then: complete the program with guidance, safely, fully and penalty-free

7What does it cost?

At Mount Bonnell Advisors we offer a complete Streamlined service, including analysis, preparation and filing.
The price of the full package depends on the scope (number of accounts, countries, income, etc.); you'll find it on our Streamlined Filing page.

It's worth it:

It still costs less than a single FBAR penalty.
And above all, it protects you going forward.

8Why "just getting started" can cost you everything

You get only one chance to sort everything out cleanly and without risk.
The Streamlined Procedure is a gift. Use it before it's too late.

If this applies to you, get in touch with us for an initial consultation.

We'll guide you safely through the jungle of American tax obligations. For the details of the procedure, read everything you need to know about Streamlined Filing and our overview of the US tax return; you'll find more articles in our News section.

Mount Bonnell Advisors: your US tax experts, in English

In short

• If you were born in the US or are a US citizen through a US parent, you are subject to US tax, even if you have never lived there.
• That means an annual Form 1040, FBAR reports as soon as your foreign accounts together exceed $10,000, and Form 8938 where it applies.
• The Streamlined Foreign Offshore Procedure requires three years of tax returns and six years of FBARs, and charges no penalties.
• Before you file for the first time, check whether the procedure is open to you. If you only come forward once the IRS has acted, you lose this route.

How we help you

• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
• Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
• US Tax ConsultationYour US tax question, answered by people who know both sides.