Source
r/USExpatTaxes•
johnmasterof

Never Filed While Abroad - Streamline or Individual year?

Hi all,

I have searched this subreddit and even had a CPA review things with me but they are wanting a lot of money for something I feel I am not understanding fully.

For some background, I live abroad and have for my entire adult life. My last tax filing in the US would have been in 2002 when I was a high school student.

I make well under 100,000USD / year. Have three foreign bank accounts in the same country with barely any savings (and thus no interest received).

I tried to follow the procedure for a Streamlined Filing (that would cover the last three years) but my financial contact told me that if I did not have any financial assets or similar interest to my bank account then I do not qualify for the Streamlined Filing, and would have to file all the way back from 2002 onwards (with each yearly filing costing about 600USD to finish with this particular person).

My understanding was that the Streamlined Filing was for anyone who did not know of their legal requirements to file - which was the case when I found out in 2021 that I should file (and since have been reading this subreddit a lot).

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So my question is, how should I best proceed with this? Do I just file for the last X amount of years (I have the last 4 readily available) or can I actually go through with the Streamlined filing to get set?

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Any help or advice you can provide would be extremely useful.

Thank you all in advance!

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**Editing my latest response based on the discussion:

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OK - so if my understanding is correct then lets say in 2021 I have more than the FBAR threshold of 10,000USD for about a week in my collective accounts. That would make me have an obligation to fill in the FBAR. Having failed to do that I should be eligible for the streamlined filing correct?However, at the same time since I did not file by April 15, I should get an automatic extension until October 15 which means I could just file as-is online.

If my understanding is correct with the above (and this website as well) I should be able to file the last 3 or 4 years back, which I easily have the information for, get the FBAR settled for 2021 and more or less be OK within the eyes of the IRS (unofficially, of course).

Knowing they can still request or audit an additional 3, 6, or indefinite time after my earliest filing however this can at least get me set with starting this whole process and at least filing.

OK - so if my understanding is correct then let's say in 2021 I should be able to file the last 3 or 4 years back, which I easily have the information for, get the FBAR settled for 2021, and more or less be OK within the eyes of the IRS (unofficially, of course).

Posted Jul 4, 2022, 8:03 AM UTC · edited

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loveandpolisci•

I think you should be able to do the streamline and the advice you got was wrong. Check out Revolve Tax who can do this.

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johnmasterofOP•

Thank you for your reply. Do you by chance know how much they would charge for that service? Any ballpark would be helpful as I weigh my options.

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TaxTalkinGuy•

To use the Streamlined procedures, you must have unreported income from a "foreign financial asset" (i.e., a non-US bank or brokerage account).

Also, the entire purpose of the Streamlined procedures is to get you out of the $10,000 per year penalty for not filing the FBAR on time. So, if you have not had an obligation to file an FBAR in the last 6 years (i.e., you haven't had more than $10,000 across all of your non-US bank and brokerage accounts in that time), you don't really need the Streamlined procedures. You could still use the Streamlined procedures though if you have unreported interest on your non-US bank accounts (so that you can get all caught up only by filing the last three years).

If you don't have unreported income from any foreign financial assets, the only fully legit way to get caught up on your returns is to file all the back returns. Various things people do in this situation include (i) file all the back returns, (ii) just start filing now, (iii) file the last 3 years, and (iv) file the last 6 years.

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logit•

Where did you see this? I've never heard of the FBAR requirement to be eligible for streamlining. Please provide a source if possible because this definitely isn't in the IRS guidelines.

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TaxTalkinGuy•

Reading my post again, I see a typo and also that perhaps I wasn't all that clear in some spots (I've edited it now).

If someone has never had an obligation to file an FBAR, then they can still use the Streamlined program as long as they have failed to report interest on a non-US bank account (or, more generally, income on a "foreign financial asset"). However, taxpayers don't really need the Streamlined program in this case (because the whole idea of the program is to get people out of the penalty for not filing FBARs or other international information returns).

Here's the IRS guidance: https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states

In addition to having to meet the general eligibility criteria, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Foreign Offshore Procedures described in this section must: (1) meet the applicable non-residency requirement described below (for joint return filers, both spouses must meet the applicable non-residency requirement described below) and (2) have failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a foreign financial account, and such failures resulted from non-willful conduct.

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johnmasterofOP•

First off, thank you for your replies.

OK - so if my understanding is correct then lets say in 2021 I have more than the FBAR threshold of 10,000USD for about a week in my collective accounts. That would make me have an obligation to fill in the FBAR. Having failed to do that I should be eligible for the streamlined filing correct?However, at the same time since I did not file by April 15, I should get an automatic extension until October 15 which means I could just file as-is online.

If my understanding is correct with the above (and this website as well) I should be able to file the last 3 or 4 years back, which I easily have the information for, get the FBAR settled for 2021 and more or less be OK within the eyes of the IRS (unofficially, of course).

Knowing they can still request or audit an additional 3, 6, or indefinite time after my earliest filing however this can at least get me set with starting this whole process and at least filing.

OK - so if my understanding is correct then let's say in 2021 I should be able to file the last 3 or 4 years back, which I easily have the information for, get the FBAR settled for 2021, and more or less be OK within the eyes of the IRS (unofficially, of course).

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goneinaflash32•

I'm a US citizen in the process of getting a residency in Spain (Barcelona). I'm looking to switch jobs in the next few months and start working via contract which will allow me to work as a freelancer in Barcelona. This means I will be paying Spanish taxes. Is it possible for me to be working remote abroad as a W2 employee for a US based company? The goal is for me to still be working with a US company, just not full-time. I'm a bit confused on the tax implications for the company and myself. Any advice would be great!

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CReWpilot•

I'm a bit confused on the tax implications for the company and myself.

For you, not much. You'll still pay taxes in Spain and use the FEIE or FTC on your US return.

For the employer though, it is quite complicated. They'll likely need to pay social security in Spain. They could be subject to local labor laws. They could also face permanent establishment risk in Spain. For an employer, it a lot of downside (complication and risk) for little to no upside. Which is why most companies won't officially do it. Look in to a GEO / EOR.

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TaxTalkinGuy•

What's incorrect exactly?

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TaxTalkinGuy•

And while I am certainly not a tax attorney

I'm a tax attorney, by the way.

my understanding is that the mere fact that a salary is deposited to a foreign account makes that account an income source.

No, that's not the case. The IRS guidance on the Streamlined program (which I copied elsewhere in this thread) says that the Streamlined program can only be used when the taxpayer has unreported income earned with respect to a foreign financial asset. Just depositing money into a bank account doesn't create income (receiving the salary in the first place is the income).

But even if an income was received in cash form without any financial account (very unlikely but who knows), one can still use the streamline procedure

No, that's not the case. You are simply incorrect. Again, look elsewhere in this thread for an exact quote from the IRS for who can use the Streamlined procedure.

And at least technically, back filing returns is not an IRS program. They only have voluntary disclosure for wilful cases and streamlines for unwillful cases

I never said that back fling was an IRS program.

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