Greenback Case Study: Couple Catches Up on US Expatriate Taxes Using the Streamlined Program

Greenback Case Study: Couple Catches Up on US Expatriate Taxes Using the Streamlined Program
July 9, 2018

The Streamlined Filing Procedures program is designed to help Americans who are delinquent on their US expatriate taxes become compliant. Streamlined is the most popular amnesty program offered by the IRS. Greenback has helped hundreds of expats get caught up on their US tax obligations, and many choose the Streamlined Filing Procedures because the filing requirements are manageable, and often, no penalties will be assessed for those living abroad. Below is a case study about two expats who were able to take advantage of this program and get caught up on their US expatriate taxes, penalty-free.

Meet Brian and Sandra

Greenback recently worked with a young couple named Brian and Sandra. They currently reside in the US but spent the previous four years living abroad in the UK. Their experience in the UK was their first real overseas experience, and like many new expats, they were unaware that they must file US tax returns each year they lived abroad.

Brian and Sandra were working for different companies while living in the UK. They made a major decision to invest in a UK business and quit their jobs to focus full-time on their new venture. They have since returned to the US, but they continue to manage their UK-based business.

Brian and Sandra had no idea they were delinquent on their US expatriate taxes until they received a notice from the state of California. The state was requesting tax returns from the years they were abroad, and it occurred to them that if the state wanted tax returns, the federal government likely did, as well!

Options for Getting Caught Up

As you can imagine, the couple was apprehensive about their situation, and not sure where to begin or what the process would involve. While they weren’t aware of the Streamlined Filing Procedures, their accountant discussed all of the options thoroughly and together they decided this was the best program for their tax situation.

The Streamlined program is generally best suited for those individuals who, since they were unaware of the US requirements, did not disclose foreign assets and income or did not file returns in several years. If penalty fees are incurred under this program (they usually are not), they are significantly lower than if you filed under the IRS’ alternative amnesty program, the Offshore Voluntary Disclosure Program. Brian and Sandra didn’t expect to owe any taxes, so they felt the Streamlined Filing Procedures would work best for them.

Normally, if your Greenback accountant determines that you qualify for the Streamlined Filing Procedures, the process is relatively straightforward – depending on your situation, you simply need to file three years of back tax returns, or three years of amended tax returns, and six years of FBAR forms. But because they owned a UK company, things were a bit more complicated. Brian and Sandra needed to file Form 5471, Information Return of US Persons with Respect to Certain Foreign Corporations, for each year they owned their business. This form is quite detailed and often takes a significant amount of time to complete.

In the End

Brian and Sandra chose the right program for getting caught up on their taxes. They didn’t end up paying any penalties or additional taxes to the IRS. This outcome is relatively common for expats, as the IRS has historically shown leniency to expats who were simply unaware they needed to file. The Streamlined Filing Procedures is almost always the best choice for US expats in this situation.

After this experience, the couple vows to remain compliant with their taxes in the future. They are now aware of the importance of filing not only their Federal Tax Return, but also FBAR (Foreign Bank Account Reporting) and FATCA From 8938.

Looking to Get Caught Up on Your US Expatriate Taxes?

Greenback’s expert accountants have helped hundreds of expats get back into compliance on their US expatriate taxes. Contact us today to find out how we can help you!

Originally published in 2014; updated July 9, 2018.

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