Never Filed Taxes as an American Expat: Your Complete Guide to Getting Back on Track 

You can catch up penalty-free through the IRS Streamlined Filing Compliance Procedures, and you’ll likely owe little to no US taxes after applying expat protections. According to IRS data from 2016-2021, nearly two out of three expats who file owe $0 in US taxes—here’s precisely why and how it works for you. 

The reality: Most Americans abroad discover their filing obligation years after moving overseas, creating unnecessary anxiety about consequences. The IRS designed the Streamlined Filing Procedures specifically for expats who didn’t know they needed to file. With the Foreign Earned Income Exclusion of $130,000 for 2025 (filed in 2026), plus the Foreign Tax Credit for taxes paid to your host country, most expats end up owing nothing to the US government. 

Bottom line: Whether you’ve never filed or missed several years, you can get compliant without penalties and probably won’t owe any US taxes. Here’s your complete roadmap to catching up safely and moving forward with confidence. 

Do You Need to File? Understanding Your Filing Requirements 

The first step is determining whether you’re legally required to file US tax returns. As an American citizen or green card holder, you must file if your worldwide income meets specific thresholds based on your filing status: 

2025 Tax Year Filing Thresholds (Due April 15, 2026): 

• Single: $15,000 
• Married Filing Jointly: $30,000 
• Married Filing Separately: $5 
• Head of Household: $22,500 
• Self-employment income: $400 or more 

You can verify the current filing thresholds on the IRS website. 

Special Expat Considerations: Even if your income falls below these thresholds, you may still benefit from filing to claim refundable tax credits or establish a filing history for future years. 

What Counts as Income 

Your worldwide income includes all sources, regardless of where earned: 

• Employment, wages, and salaries 
• Self-employment and business income 
• Investment income and capital gains 
• Rental property income 
• Pension and retirement distributions 
• Foreign government benefits (may be taxable) 

The Automatic Two-Month Extension for Expats 

Americans living abroad automatically receive a two-month extension to June 15 for filing their tax return, though any taxes owed are still due by April 15. This extension applies if your principal place of business or post of duty is outside the US on the regular due date. Learn more about expat filing deadlines and extensions. 

What Happens If You’ve Never Filed 

The consequences depend entirely on whether you owe taxes after applying available expat protections. Here’s the reality: 

If You Don’t Owe Taxes (Most Expats) 

Good news: If you don’t owe any US taxes after applying the Foreign Earned Income Exclusion and Foreign Tax Credit, the IRS typically doesn’t impose failure-to-file penalties. However, you should still file to: 

• Establish a compliance record 
• Claim any refunds you’re owed (available for up to three years) 
• Start the statute of limitations clock 
• Qualify for certain tax benefits 

If You Do Owe Taxes 

• Failure-to-File Penalty: 5% of unpaid taxes per month, up to 25% maximum
• Failure-to-Pay Penalty: 0.5% of unpaid taxes per month, up to 25% maximum
• Interest: Accrues on unpaid taxes from the original due date 

Important Note: Both apply simultaneously; the combined penalty is capped at 5% per month. 

FBAR Penalties (Separate from Tax Returns) 

If you had foreign bank accounts totaling over $10,000 at any point during the year and failed to file Foreign Bank Account Reports (FBARs), penalties can be severe: 

• Non-willful violations: Up to $12,921 per account 
• Willful violations: Greater of $129,210 or 50% of account balance 

The good news is that the IRS Streamlined Filing Compliance Procedures can help you avoid these penalties if your failure to file was non-willful. 

The Two Main Protections That Eliminate Most Expat Tax Bills 

Most Americans abroad owe little to no US taxes thanks to these robust protections: 

Foreign Earned Income Exclusion (FEIE) 

• 2025 Exclusion Amount: $130,000 per person (confirmed by the IRS inflation adjustments)  
• Best for: Expats in low-tax countries or those with no foreign taxes paid 
• Example: Sarah lives in Dubai (no income tax) and earns $95,000. Using the FEIE, she excludes her entire salary and owes $0 in US taxes. 

Qualification Requirements: 

• Pass either the Physical Presence Test (330 days outside the US in any 365-day period) 
• OR establish Bona Fide Residence in a foreign country 

Learn more about the Foreign Earned Income Exclusion in our comprehensive guide. 

Foreign Tax Credit (FTC) 

• How it works: Dollar-for-dollar credit for foreign taxes paid
• Best for: Expats in high-tax countries 
• Example: John lives in Germany, earns $80,000, and pays $25,000 in German taxes. His US tax liability would be $12,000, but the Foreign Tax Credit completely eliminates it, leaving him with $13,000 unused credits for future years. 

Learn more about optimizing the Foreign Tax Credit for expats. 

Strategic Application 

Many expats benefit from combining both protections: 

• Use FEIE to exclude earned income up to $130,000 (2025 tax year) 
• Apply Foreign Tax Credit to investment income and amounts over the exclusion 
• Carry forward unused credits for up to 10 years 

How to Catch Up: The IRS Streamlined Filing Compliance Procedures 

Perfect for: Americans abroad who are behind on filing, but whose failure was non-willful 

The IRS Streamlined Filing Compliance Procedures provide a penalty-free path to get current on your tax obligations. This program was specifically designed for expats who didn’t know about their filing requirements. 

What You’ll Need to File 

• Tax Returns: Last 3 years of Form 1040
• FBARs: Last 6 years of Foreign Bank Account Reports
• Certification: Form 14653 statement that your failure to file was non-willful 

Step-by-Step Process 

Gather Documentation 

• Foreign income statements and pay stubs 
• Bank statements showing foreign account balances 
• Foreign tax documents and payment records 
• Any US income documents (1099s, W-2s from US sources) 

File Tax Returns 

• Prepare returns for the last three tax years 
• Claim appropriate foreign income exclusions and credits 
• Include Form 2555 (Foreign Earned Income Exclusion) if applicable 
• Include Form 1116 (Foreign Tax Credit) if applicable 

File FBARs 

• Submit FinCEN Form 114 for each of the last six years 
• Report all foreign accounts exceeding a $10,000 aggregate balance 

Submit Certification 

• Complete the non-willful certification statement 
• Explain why you failed to file (common reasons: unaware of the requirement, received conflicting advice, thought foreign residence exempted you) 

Timeline and Penalties 

• Processing Time: 6-12 months for IRS review
• Penalties Under Streamlined: None for tax returns, minimal for FBARs (typically waived)
• Cost: Only the preparation fees and any taxes owed 

Practical Steps for First-Time Filers 

Document Collection Strategy 

Start with the most recent year and work backward: 

• Contact foreign employers for income statements 
• Request tax transcripts from foreign tax authorities 
• Gather bank statements showing year-end balances 
• Locate any US source income documents 

Missing Documents? 

• Request IRS transcripts for any US source income 
• Contact foreign banks for historical statements 
• Use reasonable estimates if exact records are unavailable (document your methodology) 

Choosing Your Tax Year Strategy 

• Calendar Year Filers (Most Common): File for tax years 2022, 2023, and 2024 to become current for 2025 
• Fiscal Year Considerations: If you lived in a country with a different tax year, you may need to carefully plan the timing of your elections 

State Tax Considerations 

Important: Determine your state tax obligations before moving abroad 

• Some states (like California) may continue to tax you as a resident 
• File final state returns if you have properly established non-residency 
• Consider the impact on your streamlined filing strategy 

Country-Specific Scenarios and Examples 

Low-Tax Countries (UAE, Monaco, Singapore) 

Strategy: Maximize Foreign Earned Income Exclusion

Example: Tech consultant in Singapore earning $120,000 

• Exclude $120,000 using FEIE 
• US tax owed: $0 
• File anyway to establish compliance and claim exclusion 

High-Tax Countries (Germany, France, UK) 

Strategy: Combine FEIE and Foreign Tax Credit

Example: Marketing manager in Germany earning $150,000, paying $45,000 German tax 

• Exclude $130,000 using FEIE 
• Apply Foreign Tax Credit to the remaining $20,000 
• Result: $0 US tax owed, $30,000+ in unused credits 

Digital Nomads and Frequent Movers 

• Challenge: Meeting physical presence requirements  
• Solution: Careful day counting and documentation  

Common Mistakes to Avoid 

Filing Errors That Create Problems 

• Double-Counting Protection: Don’t claim both FEIE and FTC on the same income  
• Incorrect Test Application: Ensure you meet either physical presence OR bona fide residence requirements  
• Missing Elections: File Form 2555 to claim FEIE (the election is irrevocable for that year) 

Documentation Mistakes 

• Poor Record Keeping: Maintain detailed travel records for the physical presence test  
• Currency Conversion Errors: Use average exchange rates for income, specific dates for taxes paid  
• Missing FBAR: Remember, this is separate from your tax return and has different thresholds 

Timing Mistakes 

• Late FBAR Filing: File even if late—penalties are much worse for non-filing  
• Premature Filing: Don’t file the current year return until you have complete foreign tax information 
• State Tax Oversights: Address state obligations before focusing solely on federal 

Moving Forward: Establishing Long-Term Compliance 

Annual Filing Routine 

Document Organization: Set up a system to collect tax documents throughout the year rather than scrambling at tax time. 

Key Dates to Remember: 

• April 15: Tax payment due date (even with June extension) 
• June 15: Automatic filing deadline for expats 
• October 15: FBAR deadline (extended from April 15) 
• December 31: Physical presence test measurement date 

Professional Support Benefits 

When to Consider Professional Help: 

• Self-employment or business income abroad 
• Multiple countries or complex residency situations 
• Significant investment income or rental properties 
• Previous filing errors that need correction 

Learn more about Greenback’s streamlined filing services for comprehensive support. 

What to Expect from Professional Services: 

• Comprehensive review of your situation 
• Strategy optimization for your specific circumstances 
• Ongoing compliance support and planning 
• Representation in case of IRS questions 

Peace of Mind: What Most Expats Discover 

Here’s what Greenback’s 23,000+ expat clients typically find after catching up on unfiled returns: 

• Financial Relief: Most discover they owe little to no US taxes after applying available protections  
• Emotional Relief: The anxiety of non-compliance disappears once you’re current  
• Planning Clarity: Understanding your obligations allows for better financial planning  
• Travel Freedom: No more worrying about IRS issues when visiting the US 

Take Action: Your Next Steps 

If you’ve never filed and feel overwhelmed: 

1. Gather basic information about your income and foreign taxes for the last three years 
2. Determine your estimated US tax liability using the expat tax protections available to you 
3. Consider the Streamlined Filing Procedures if your failure to file was non-willful 
4. Get professional guidance for complex situations or peace of mind 

Never Filed a Return? Get Expert Help with Your Expat Taxes 

Greenback Expat Tax Services has helped Americans around the world catch up on their tax filing obligations. Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts. 

This article is for informational purposes only and should not be considered legal or tax advice. Tax laws are complex and subject to change. Always consult with a qualified tax professional for advice specific to your situation.