The IRS Streamlined Tax Amnesty Program – Complete Guide
IRS Tax Amnesty Explained – What You Need to Know
Did you know all US citizens living abroad must file annual US tax returns? If you’re feeling overwhelmed, you’re not alone. Common questions include:
- Do I have to pay US taxes while living overseas?
- Will I face penalties for missed tax returns?
The IRS has an official program for expats that makes catching up on overdue taxes much easier and protects you from potential penalties.
What is the Streamlined Tax Amnesty program?
The Streamlined Tax Amnesty Program, or IRS Streamlined Offshore Filing Procedure, is designed to help US citizens and Green Card holders abroad who have fallen behind on their US tax obligations. It’s a simple, penalty-free way to catch up and stay compliant.
Whether you’ve never filed a US tax return, which is common for Accidental Americans, or you haven’t filed since you moved overseas or you’ve been filing, but you’ve missed important details, such as non-US income, non-US pensions and retirement accounts, the tax amnesty program has you covered.
The IRS designed the Streamlined Tax Amnesty program specifically for US citizens and Green Card holders that live outside the United States. It is a simple streamlined way to catch up on US taxes and get yourself back on track.
In a nutshell, you only have to file your last three years of tax returns (no matter how many years you’ve missed) and six years of FBARs (Foreign Bank Account Reports).
What exactly do I benefit from by using the Streamlined Procedure?
The IRS promises no late-filing penalties or fines, and you don’t have to file tax returns for any of the other missed years. This can be a real lifesaver!
Visit the IRS Website to learn more…
Do I qualify for the Streamlined Tax Amnesty program?
The program was originally intended for individual taxpayers who were considered to be “low risk” or had minimal returns to be filed. This excluded a lot of expats which, in turn, did not resolve the problem at hand. Fortunately, the IRS expanded its scope in 2014, paving way for more taxpayers to have access to the amnesty program.
Here is the eligibility criteria, you qualify for the Streamlined tax amnesty program if you;
Then, the Streamlined Tax Amnesty Program is for you!
Join the 200,000 Americans abroad who have benefited from this program!
If you don’t qualify for the Streamlined program, you may still be eligible for First Time Penalty Abatement (FTA). This is a separate IRS relief option that can remove certain penalties.
What does non-willful conduct actually mean?
There are many meanings of “Non-willful conduct”. To simplify, it means you didn’t break the rules on purpose. It’s like when you accidentally forget to do something or make a mistake because you didn’t understand how the rules worked. Maybe you were trying your best to follow the rules but got confused, we’ve all done that before. Also, you may have received poor advice from a tax professional and believed you didn’t need to file US tax returns.
What is the Streamlined Certification and is it important?
The Streamlined Certification (Form 14653) requires a statement to describe what you haven’t been filing your tax returns. You’ll need to sign under penalty of perjury that your reasons are non-willful.
It’s incredibly important because making a declaration under penalty of perjury means you promise that what you’re saying is true, and if it turns out you’re lying, you could get in big trouble for breaking that promise.
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Get to know: How the Streamlined Tax Amnesty program works, eligibility criteria, real-life examples, FAQs.
How does the Streamlined Tax Amnesty program work?
Once we’ve checked you’re eligible, we prepare your 3 tax returns, 6 years of FBARs and your Streamlined Certification.
What’s the process and tax amnesty timeline?
✔ Complete our Streamlined Amnesty Tax Questionnaire
✔ You’ll be contacted by our Client Services Team
✔ We’ll assess your information and let you know what documents to provide.
✔ Upload your documents, then sit back and leave the hard work to us.
✔ Your Streamlined tax return package will be ready in approximately 20-35 working days. Complex returns can take longer.
Normally, when preparing your submissions, you would need to prove your eligibility for the Streamlined Program first:
- Check If You Qualify
- If you live outside the US, you must meet certain residency rules (being physically present outside the U.S. for at least 330 full days in a 12-month period).
- If you live in the US, you need to show that your failure to file or pay taxes was unintentional.
- Apply for a Taxpayer Identification Number (if needed)
- If you don’t have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), you’ll need to apply for an ITIN using Form W-7. This application must include supporting documents, such as a certified copy of your passport or another form of valid identification.
- Without an ITIN or SSN, you won’t be able to file the required tax returns.
- File Missing Tax Returns
- Complete and file federal tax returns for the last three years.
- Include all relevant forms, such as FBARs (Foreign Bank Account Reports), if you held foreign accounts exceeding US$10,000 in total during any of the six reporting years.
- Prepare an Original Signed Statement
- To prove your eligibility for the streamlined program, you must submit an original signed certification form or statement (Form 14653 for US persons residing outside of the US or Form 14654 for those living in the US). This statement certifies that your failure to file was not willful.
- Your statement must be truthful and clearly explain the reasons for your previous non-compliance, such as misunderstanding filing rules or unintentional oversight.
- Gather Required Documents
- Collect necessary documents like W-2s, 1099s, proof of foreign income, and residency records.
- If you’re filing an ITIN application, include certified copies of identification documents with your Form W-7.
- Submit Your Paperwork
- Send your completed tax returns, certification form, ITIN application (if applicable), and other supporting documents to the specific IRS processing address for streamlined submissions.
What is the required documentation for the Streamlined Amnesty Program?
The Streamlined Filing Compliance Procedures require specific documents to ensure the IRS processes your submission without delays. Here’s what you will generally need to prepare:
- List of Required Forms
- Form 1040: Your regular US individual income tax return.
- Form 1040X: Used to amend prior-year returns if corrections are needed.
- Form 8938: Reports foreign financial assets, if applicable.
FBARs (FinCEN Form 114): Discloses foreign bank accounts exceeding US$10,000 in total. - Form 3520/3520-A: Required for reporting foreign trusts or gifts.
- Form 5471: For US taxpayers with ownership in foreign corporations.
- Form 14653
- This form is essential for certifying that your failure to comply with tax obligations was non-willful. A clear and truthful explanation of why you didn’t file on time is critical to avoid penalties.
- Additional Documents
- A signed statement explaining your non-willful conduct.
- Taxpayer Identification Number (TIN) or ITIN application, if you don’t already have one.
- Proof of any foreign taxes paid, if claiming Foreign Tax Credits.
How much does the Streamlined Amnesty program cost and what’s included as standard?
The basis of the IRS Streamlined Amnesty program is that we prepare and file your last 3 overdue tax returns.
We need to prepare FBARs for the last six years. The FBAR provides information about your non-US bank accounts. We report the account number, we say if it’s a joint account, and the highest balance during the year. Remember, you don’t have to worry about FBAR failure-to-file penalties when you’re filing via the Streamlined Foreign Offshore Procedures.
This is the legal bit and we’ll take care of it. We simply ask you why you haven’t been filing US tax returns. Your answer can be as simple as “I didn’t know I had to”.
Each client will be looked after by their dedicated Client Coordinator. Your Coordinator can help you with information we need, answer any questions you have and provide updates on our progress. They’ll also be there at the end of the process to help you file your tax returns.
In the unlikely event of an audit by the IRS, we’ll be on hand to support you through the process. If you receive a notice from the IRS, we’ll help with that also.
Your tax returns will be checked by at least three US tax professionals before being delivered to you, so you have peace of mind that it’s accurate and thoroughly reviewed.
Every tax return prepared by Expat Tax Online is signed by an IRS licensed tax professional (EA or CPA). You’ll see their name and IRS license number on your tax return and so will the IRS.
You’ll be fully IRS tax compliant at the end of the process and your foreign financial assets will be disclosed to the IRS with accuracy and protection from penalties.
The majority of clients pay our base rate. There are certain types of investments that require additional paperwork. The most common examples are shareholdings, investing in stocks and shares and making contributions to certain types of non-US retirement accounts. Minor additional fees can be added for those with high income, self-employment income and rental property ownership.
The IRS will not ask you to file older tax returns except for your latest three overdue tax returns. Other tax returns that have not been filed will never need to be filed. The exception to that is if the IRS has already contacted you about a prior tax year or they receive an income statement, such as a W-2 from one of the prior years.
Best price for the IRS Streamlined Tax Amnesty program
Usually US$1,195
It’s more than just a special offer (PLEASE READ);
When you file via the Streamlined Tax Amnesty program the IRS is letting you off the hook with possible tax due, late filing penalties and more (at least from their perspective). Your end of the bargain is to keep filing tax returns on time each year going forward.
Considering the Amnesty program is filing your last three overdue tax returns, your current tax return could be due in a matter of weeks or months and it needs to be filed on time.
When comparing quotes, always compare apples with apples. Make sure to check how much you’ll be charged to file your next due tax return.
Some firms discount their Streamlined Amnesty package fee and then charge higher fees for your next tax return.
We’re currently including a standard tax return FREE OF CHARGE with our Streamlined Tax packages so you’re completely covered. Get a quote from us today, you’ll be pleasantly surprised.
Why can’t I just simply file my overdue tax returns?
Filing your US taxes late or failing to report FBARs can subject you to a lot of failure-to-file penalties. The main reason why the Streamlined Tax Amnesty Program is so popular is that it absolves you from any fees and penalties related to late filings and payments. Also, you only have to file the last 3 years of tax returns, even if you haven’t filed for 20 years! Once you’ve completed the program, you’ll be completely tax compliant with the IRS.
What about Stimulus payments, can I claim them?
No. Unfortunately, the window to claim any of the Stimulus payments has officially closed. These credits were tied to the 2020 and 2021 tax years, and the IRS gave a limited period for late filers to claim them through the Recovery Rebate Credit.
The third Stimulus payment (worth up to US$1,400) could only be claimed on