Many Americans move abroad and they do not realize that they have to file US expat tax returns. Although, most American expats do not owe any taxes after filing taxes late, they still might be subject to substantial penalties for a failure to file just one form. For example, a penalty for a failure to report foreign bank and financial accounts and to file FBAR can be as low as $10,000 in case of a non-willful violation. US citizens and green card holders might be subject even to criminal prosecution if they willfully failed to file the FBAR. There are other IRS forms in place that might trigger substantial penalties. For example, Americans living abroad might own foreign mutual funds, foreign partnership, foreign corporation, foreign LLC or foreign trust.
What options are available for American expats in case of filing taxes late?
Currently there are three ways for American expats living abroad to become compliant.
First, on September 1, 2012 the IRS introduced a new IRS streamlined program for delinquent American expats. Filing taxes late under this program is a good choice for low-risk taxpayers. US taxpayers must file only 3 years of past-due tax returns and 6 years of FBAR to become compliant.
Second, Offshore Voluntary Disclosure Program is another way for American expats get back into the system. Under this program late filers must submit 8 years of past-due returns.
Third, some taxpayers choose to proceed with a “quiet” disclosure. However, each approach has its pluses and minuses.
We provide regular updates and valuable information on our site so American expats stay up to date with the latest IRS developments and other expat tax issues.
We have helped American expats residing in over 135 countries with their expat tax questions. International tax experts at Expattaxcpaservices.com are here to help with various overseas tax issues and filing taxes late.