Many U.S. expats do not know that they have to file their tax returns while living abroad. The IRS introduced few amnesty programs and one of them is called “Streamlined Procedures”. In today’s infographics we cover all necessary facts that you need to know about becoming tax compliant using the Streamlined Procedures program. Educated yourself in an easy and fun way by following our weekly infographics!
Are you ready to become tax compliant using the Streamlined Procedures program? As you can see, it’s easy and there is nothing to worry about. We can help you to live your expat life freely and without the hassle of dealing with late tax returns.
There are also some circumstances in which you don’t need to file.
1. When You Don’t Need to File
First, the income was less than $10,350 (that is the 2018 amount – it is indexed for inflation). U.S. citizen abroad did not own a foreign corporation or trust.
In this case, American living abroad don’t have to file a tax return and use the Streamlined Procedures program. The fact that they are non-compliant probably won’t incur any penalties.
In regards to Foreign Bank and Financial Accounts (FBAR), the aggregate balance of all non-US bank accounts must be more than $10,000 to require filing and using the Streamlined Procedures program would be a good option.
2. When There is No Tax Due
If you own a foreign corporation, foreign trust, or hold more than $200,000 in foreign bank accounts, you need to file several forms. Each of these forms come with a potential penalty. If there is no tax owing, they might still have this $10,000 penalty (although unlikely).
The two main ways for US citizens living outside the US to reduce the tax they owe are:
2) The Foreign Earned Income Exclusion (FEIE)
3. When the IRS Has Not Contacted You About FBAR (yet!)
If you have past due FBAR reports, your smartest course of action would be to file right away and you should consider using the Streamlined Procedures program. The IRS/FinCEN won’t request penalties, so long as you have not previously been contacted by the IRS regarding your failure to file (or are under a civil audit or criminal investigation by the IRS). In any other situation though, it is highly likely you will be assessed a fine of $10,000 or more for failing to file.
We will give you an honest assessment of your situation and let you know if you need to use the Streamlined Procedures program. Being tax compliant can bring peace of mind, knowing the potential penalty and ways to get straightened out can also bring peace of mind. There are ways to minimize any money owed, and you might find the process is much simpler and cheaper than you imagine. Moving forward, you will feel safer knowing that your life and business are completely above the board in regard to taxes. If you or someone you know are non-compliant, we’d love to talk to them about their options for changing that.