Everything you need to know about Streamlined Filing

Many US citizens hold dual citizenship and have never lived in the US, or left as children.

Many of the estimated 9 million US citizens living around the world would be shocked to learn that they still have to file a tax return with the IRS every year.

The US is one of only two countries that tax their citizens on worldwide income wherever they live (the other is Eritrea, for the curious among you). It's not unusual to meet expats who haven't filed in years simply because they didn't know they had to.

So what can expats in this tricky spot do? If you haven't filed for ten years, will the IRS want all ten returns? Can you catch up without facing harsh penalties?

If you're asking yourself these questions, the IRS streamlined filing procedure may be the answer you're looking for.

1What are the Streamlined Filing Compliance Procedures?

The Streamlined Filing Procedures were launched in 2012 to encourage US expats to catch up on their overdue taxes. The program was originally meant as an alternative to the IRS's other disclosure programs (such as the now-closed Offshore Voluntary Disclosure Program). Whether and how the procedure still applies today is covered in our article on the Streamlined Foreign Offshore Procedure under Trump.

The Streamlined Filing Compliance Procedures were created to help people considered low-risk meet their tax obligations. The procedure was designed as a less burdensome way to get caught up. The Streamlined Filing procedure only requires a set number of returns, which can cut the time and effort involved in catching up.

In its original form the program was stricter, and many expats fell outside the low-risk category. Fortunately, the IRS lifted these restrictions in 2014 and opened the program to a wider audience to help more taxpayers catch up.

2Can expats use the streamlined procedure?

Expats can use the Streamlined Foreign Offshore Procedure to become tax compliant from abroad. It's the program designed specifically for Americans living outside the US to catch up on missed taxes.

It differs from the Streamlined Domestic Offshore Procedure, the version of the program available to people currently living in the US.

3Who qualifies for the Streamlined Filing Procedures?

To qualify for the streamlined procedure, you must:

• show that you failed to file in the past simply because you didn't know you were required to
• not have had a US residence in one or more of the last three tax years
• have spent at least 330 full days outside the United States in one or more of the last three tax years.

To prove you're eligible for the Streamlined program, you include a signed certification (Form 14653) confirming this as part of the package you send to the IRS.

4What do I need to do to catch up on my taxes?

Unlike its older cousin, the OVDP, which required eight years of returns plus a stack of extra forms, the Streamlined Filing Procedures are, well, streamlined.

To complete your Streamlined Filing, you need to submit:

• Your last three (3) years of federal tax returns. This may include amended returns if incorrect returns were filed before.
• Your last six (6) years of FBAR forms (foreign bank account reports). Generally, you must file FBARs if the combined balances of all your non-US accounts exceeded $10,000 at any point in the year. Under the program, you file every FBAR you should have filed for the last six years; no FBAR is due for years below the threshold. These are filed online (as required for all FBAR forms); and
• Your signed "Certification by U.S. Person Residing Outside of the U.S." (Form 14653). This certifies that (1) you're eligible for the program, (2) all FBAR forms have been filed and (3) your failure to file was due to non-willful conduct.

5Which forms do you need for streamlined filing?

To use the streamlined procedure, expats must complete all the tax forms required for each federal and FBAR filing, plus a special form certifying their eligibility for the program.

These are the tax forms required for streamlined filing:

• Form 1040: US individual income tax return for your three years of federal returns
• FinCEN Form 114 for your FBARs for the last six years
• Form 14653 certifying that your failure to file was non-willful
• Other common expat tax forms your federal returns may require:
• Form 2555: Foreign Earned Income Exclusion (FEIE)
• Form 1116: Foreign Tax Credit (FTC)
• Form 8938: Statement of Specified Foreign Financial Assets (required under FATCA)
• Form 8833: Treaty-Based Return Position Disclosure
• Form 5471: Information Return of U.S. Persons With Respect to Certain Foreign Corporations
• Form 8865: Return of U.S. Persons With Respect to Certain Foreign Partnerships
• Form 8621: Information Return by a Shareholder of a Passive Foreign Investment Company (PFIC)
• Form 3520/3520-A: Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts / Annual Information Return of Foreign Trust With a U.S. Owner

6How can I prepare for streamlined filing?

Because you have to file tax returns for several years, preparing for the streamlined procedure can feel daunting. But if you're well prepared, the process will be as painless as possible.

To prepare, we recommend:

1. Choosing an experienced expat tax advisor to save time, ensure accuracy and avoid the risk of an audit
2. Organizing your tax records (for the last three years)
3. Gathering statements from your foreign financial accounts (for the last six years)

You'll find every step to prepare for streamlined filing on our Streamlined Filing page.

7What if I need to amend a streamlined return?

If you need to amend a streamlined return, act fast. Once the IRS has started reviewing your return, you can no longer change it.

To amend a streamlined return, you need to:

1. Prepare corrected returns for every year included in the original submission.
2. File an amended Form 14653 explaining the errors in the original submission.
3. Write "Amended Streamlined Foreign Offshore" in red ink at the top of the first page.
4. Send the amended return and any additional tax due to the IRS.

8Do I have to pay penalties?

No, penalties are waived for streamlined filers.

The good news about the streamlined procedure: if you qualify and submit the completed streamlined return, the IRS waives all penalties for late filing and late payment.

If you qualify for the program and follow all the filing instructions, you pay no penalties for failure to file, failure to pay or FBAR.

9What if I don't qualify for the streamlined procedure?

If you willfully failed to file, meaning you knew you should have filed a return but chose not to, your next best option used to be the OVDP. Unfortunately, that program was closed in September 2018.

Because taxpayers with foreign financial assets are in very different situations, the IRS continues to offer the following options for fixing past failures to meet US filing obligations:

• IRS Criminal Investigation Voluntary Disclosure Practice
• Delinquent International Information Return Submission Procedures

If you don't think you qualify for the Streamlined Filing Compliance Procedures, book a consultation with an experienced expat tax advisor who can recommend the best way forward.

10Ready to get caught up on your taxes as a US expat?

Our experienced CPAs and IRS Enrolled Agents are ready to help you at every step, so you can catch up on your returns as stress-free as possible with our Streamlined Filing Package.

Get started today and put your taxes back on track for the peace of mind you deserve. For an overview of all our US tax return services, see the US Tax Return page and our Taxes hub.

In short

• The Streamlined Filing Compliance Procedures have existed since 2012. They help US citizens abroad catch up on missed tax returns.
• You can take part if your conduct was non-willful and, in at least one of the last three tax years, you had no US residence and spent at least 330 full days outside the US.
• You file the tax returns for the last three years, the FBARs for the last six years and Form 14653.
• If you qualify and follow all the instructions, you pay no penalties for failure to file, failure to pay or FBAR.
• If your conduct was willful, you need a different route. The OVDP was closed in September 2018.

How we help you

• Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
• Your US Tax ReturnForm 1040 or 1040-NR, handled in English.
• IRS letters and penaltiesMail from the IRS? We reply, request penalty relief and put things right.
• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
• US Tax ConsultationYour US tax question, answered by people who know both sides.