U.S. EXPAT TAX GUIDE – INDIA

What to do if you forgot to file US taxes for five years while living in India.

The IRS Streamlined Filing Compliance Procedures can help US citizens and Green Card holders in India catch up on unfiled tax returns without facing penalties.

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If you’ve been living in India for years without filing US taxes, this program provides an easy way to become compliant without the fear of severe consequences. This process is designed for people whose failure to file was non-willful—meaning it was due to misunderstanding or lack of knowledge, rather than a deliberate attempt to evade taxes.

How many years of tax returns are required under the Streamlined Program?

With the streamlined program, you are required to file only the most recent three years of US tax returns and six years of FBARs (Foreign Bank Account Reports).

If you owe any taxes, you will need to pay those back along with accrued interest. However, the streamlined program waives all penalties that are usually applied to late tax filings and missed FBARs.

What happens to tax returns from earlier unfiled years?

One of the biggest benefits of the Streamlined Filing Program is that it allows you to achieve compliance without having to file tax returns for every single year you missed.

Once your submission is accepted by the IRS, tax returns from years prior to the three that you filed are no longer required.

Will you face penalties for late filing under the Streamlined Program?

No, there are no penalties for late filing if you qualify for the streamlined program.

You won’t face fines for missing past tax returns or FBARs, although you will still need to pay any taxes owed along with interest on those overdue taxes.

Who is eligible for the IRS Streamlined Program?

To qualify for the streamlined filing procedures, you need to meet specific criteria:

Non-Willful Conduct: You must certify that your failure to file was not willful. In other words, it should be due to a lack of awareness rather than an intentional attempt to avoid paying taxes.
Residency Requirement: You must have been outside the United States for at least 330 full days during one of the last three years you are filing.
No IRS Contact: You must not have already been contacted by the IRS regarding your unfiled tax returns.

How can you start with the Streamlined Filing Program?

To start the streamlined filing process, you need to collect your financial records for the past three years and also gather information required to file FBARs for the last six years.

You will need to fill out Form 14653, where you certify that your failure to file was not intentional.

It is strongly recommended to work with a tax professional who understands both US and Indian tax systems. Since filing through the Streamlined Program can be complicated, a tax professional can help you smoothen the process.

What are the benefits of using the Streamlined Filing Program?

No Penalties: You will not face penalties for missed tax returns or FBARs.
Limited Filing: Only the three most recent years of tax returns and six years of FBARs are required, rather than filing for every year you’ve missed.
Fresh Start: Acceptance into the program gives you a clean slate without having to worry about earlier unfiled years.

What do US expats need to know about FBAR requirements under the Streamlined Program?

FBARs (Foreign Bank Account Reports) are required if you have foreign financial accounts with a combined value exceeding US$10,000 at any point during the calendar year.

Under the Streamlined Filing Program, you must submit FBARs for the past six years. These reports include all foreign accounts—whether savings accounts, investment accounts, or retirement accounts in India.

Failing to file FBARs can lead to significant penalties, but under the streamlined program, these penalties are waived. However, you will still be responsible for paying taxes on any income generated from these accounts.

Are there alternatives if you don’t qualify for the Streamlined Program?

If you do not qualify for the Streamlined Filing procedures, there are other options to help you get back on track with your taxes. Programs like the Delinquent FBAR Submission Procedures or the Offshore Voluntary Disclosure Program (OVDP) may be available.

While these options may involve penalties, they still provide a path to resolve outstanding tax issues with the IRS.

If you are unsure about which program is suitable for you, it’s a good idea to consult with a tax expert who can guide you through the options and help you make an informed choice.

What if the IRS has already contacted you about unfiled returns?

If the IRS has already contacted you regarding unfiled returns, you may no longer qualify for the Streamlined Program.

In such cases, you will need to work directly with the IRS, which could involve negotiating a payment plan or settling penalties.

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in Germany. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.

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